September 24, 2010

GREETINGS AND SAL-UTATIONS!

Dear NJGCA Member:

REFORMING STATE GOVERNMENT: WHY IT MATTERS TO YOU!

On Monday, I sat in on a 2 hour meeting with the Governor Christie’s Chief of Staff, Richard Bagger, the State Treasurer Andrew Sidamon-Eristoff, and several of my counterparts from the New Jersey Taxpayers’ Alliance.  As you know, NJGCA is a forceful member of the Alliance and I have been a very active participant in all their efforts to reform government, education, and just about anything that takes money from your pocket.

It was a very informative meeting and laid out a series of reforms that Governor Christie will roll out soon to solve our fiscal problems.

I won’t bore you with details, but while reviewing how our state’s finances have been mis-handled for the last 15 years, I was haunted with this thought: You wouldn’t run your business like this; and if you had, you’d have been bankrupt years ago!

I’m brining this up because I’m never really sure how much attention you pay to what goes on in Washington, DC or in Trenton.  While I’m sure you try to keep yourself informed in some way, I don’t know what TV programs, newscasts, radio shows, or newspapers you regularly view.

Still, though it may be repetitious for some, I communicate with NJGCA Members as if you have not followed events in the news because you are too busy running your businesses. I can’t assume you are aware of all the issues --- or how it will affect your business!

Why is this important?  Because what we hear and see in the news is often not reality as seen from the front lines –- and may ultimately hurt you in unforeseen ways.

I learned this the hard way in the late 1970s, right after I opened up my first gas station.  Among my first lessons: If I didn’t pay attention to what was going on in government (or the poop they called policy), it could eventually come back to bite me in the ass.  I knew that I needed to be involved and do my part to influence the conversation, not only to protect myself, but my employees and fellow small business owners. 

It was at that point that I evolved into both a political junkie and a policy junkie.  I encourage you to do the same in order to see how policies enacted today will affect you (for good or ill) tomorrow!  That’s not only good business sense, that’s common sense!

In a broader sense, what affects you in this business shouldn’t be your only focus.  No matter if you are doing auto repairs, cutting lawns, selling shoes, slinging donuts, or putting up drywall, there are issues out there which affect ALL small business owners!  That’s correct; small businesses owners share many of the same burdens and obstacles.

All of which brings us back to the issue of government reform and fixing what’s broken in New Jersey.

The state pension and benefits system is in utter disarray.  Even the most conservative estimate pegs our pension liability at more than $46 BILLION dollars and something has to be done about it.  YOU ARE PAYING FOR THIS MESS in the form of high payroll taxes, sales taxes, and most importantly; high property taxes!

Following the genesis of this mess, it is fair to say that Governors and Legislatures over the last 15 years not only created the problem, they’ve accelerated it.

In the 1990s, Governor Whitman began to divert funds from the pension system in order to prevent tax increases. In order to gain favor with police, fire and teachers unions for his anticipated run for Governor in 2001, then Acting Governor DiFrancesco exacerbated the problem by gifting the unions with a 10% increase in their pension payments.  The debacle was then accelerated by Governors McGreevey, Acting Governor Codey, and Governor Corzine, as they too failed to make required payments into the public pension system, choosing to keep the funds to pay for other budget shortfalls instead.  Keep in mind that these are the same group of folks who also robbed money from the state’s once-solvent Unemployment Insurance Fund and Transportation Trust Fund.  Today you are paying increased unemployment taxes to clean up their mess!

It doesn’t take a genius to see a pattern here or the fact that Governors, with the help of Legislators from both parties and both houses, created a fine mess that gets pinned on the business community to pay for the cleanup.

So why would politicians do this?  Why sacrifice the future and put off the problems of today? 

Simple: INFLUENCE, ELECTIONS AND HORDING POWER.  Look back far enough and you’ll see that these politicos would trade benefits of some kind (which increase state spending and obligations) in order to secure votes and gain support by organized labor and special interests. 

You only have to do the math: There are roughly 80,000 state workers, 250,000 teachers, and tens of thousands of police, firemen, and county workers.  Add to that tens of thousands more local municipal workers and you have a hefty voting block that will continually vote for their interests over yours!

Now that’s not to say the estimated 500,000 people in this block (or their family members and neighbors who vote to protect those interests) are all crooks or just seeking to pull one over on the taxpayer.  To the contrary, there are plenty of good people in this group who see problems but are forced to march in step out of fear of being marginalized by their very own unions!

Still, the leadership that governs these unions and related groups keep hawking the same slogans and pushing the same strategies in hopes of keeping the status quo.

Now let’s look at your situation: You as a small business owner may have taken out a mortgage to pay for your business.  All your obligations come first, so you often don’t even pay yourself.  You don’t have any guaranteed retirement; those of you who have been smart enough to plan ahead have created personal retirement accounts, 401(k)s, IRAs, and personal retirement plans --- None of which is guaranteed or paid by anyone else other than you!!

Is it fair to have 8 million New Jerseyans, private sector residents and countless business owners (who are all suffering) be overextended to satisfy 500,000 people and their cohorts?  Is it right to drive residents out of state and send your customers to greener pastures?

I know what you’re thinking: How do we fix this mess, Sal?  Is it even FIXABLE at this point?

YES!  If Monday’s meeting is any indication, we can fix this problem – but it won’t be easy!

While the best estimate pegs our pension liability at $46 BILLION, the Governor admits that the tally could be MUCH higher.  Because of the way the books have been kept over the last 15 years, it is hard even for the Governor to determine the actual figure.  Regardless of the number, everyone agrees that if the status quo remains, we’re sunk!  Why?  Because this obligation will grow exponentially, so that the $46 BILLION owed today will grow to $181 BILLION in 30 years!

The proposals I saw Monday would have our obligations measured out much like a responsible head-of-household may look at their finances in anticipation of retirement.  The Governor wants to have all teachers, state works, policemen, firemen, and all other government workers pay more into the retirement fund.  He believes that since the system is broken, and any benefits will ultimately benefit them, it’s only fair that they should help to keep their own system solvent.  Additionally, he wants all of these groups to begin paying part their healthcare. You didn’t misread that – Some of those employed in government pay NOTHING toward their healthcare!  AND…You wouldn’t believe how generous their healthcare plans are besides!!!

Don’t think that private citizens are getting a raw deal?  Just click HERE to see a recent article outlining how the average government worker is getting far more than you and other private workers (and that’s just FEDERAL workers; New Jersey’s situation is even more generous). It used to be that you worked a government job to get job security in return for less pay and guaranteed benefits; my how the world has changed!
 
However, even with such dramatic reforms, it’s very possible that even if adopted, our liability may still total $10 billion after 30 years.  While not a perfect solution, it would be a dramatic improvement and somewhat akin to owing $300,000 on your mortgage today and still owing 15,000 in 30 years. 

If you’re asking why I’m getting involved, it’s simple: Common sense tells us that if the total obligation to live in New Jersey continues to rise (that means all forms of taxes, burdensome policies and regulations), it will be even harder for you to make a profit.

I know many of you are still upset with the Governor.  If you are a shop owner and perform inspections, I know the Governor’s decision to kill safety inspections still hurts.  Believe me; I am still angry too that he ignored my alternative plan. 

However, despite my anger over this one facet of his Administration, I hope you (and all NJGCA Members) are paying attention to the fact that he’s completely turning Trenton UPSIDE DOWN!  That may not sound appealing to some, but from the perspective of business owners, taxpayers, and the common citizen, it is LONG overdue. 

From our briefing on Monday, I can tell you that the Governor will NOT bow to any sacred cows and will NOT conduct any state business which will permit the poor policies of the past to harm New Jersey’s future.  It is no longer ‘business as usual’ in the State House, which created the fiscal mess we are in.  Honestly, if you ran your business similarly you’d be in hopeless debt, your customers would be dissatisfied, you employees would quit, and your creditors would be on your doorstep calling for blood.

Say what you will about Christie being a bully (and yes, he did bully us), but he’s finally stopping the insanity. The Governor is acting like a responsible parent reigning in his careless children, stressing that there is no money for the added luxuries and it’s time to get back to the basics and save the family home. I agree!

The simple truth is that friends and acquaintances can disagree.  Ronald Reagan once said, “Somebody who agrees with you 80% of the time is an 80% friend, not a 20% enemy.”  I think the Gipper’s sentiments ring true here and the Governor has all our collective interests (and not just one group over another’s interests) at heart.

Following up on our two Wildfire Alerts last week, I want to remind everyone to be ready to come to Trenton when the Below Cost Selling law comes up for a vote on October 7th.  We cancelled our call to arms for this past Monday because we reached an agreement to postpone the bill until we can sit down with all stakeholders and hammer out a compromise. We will update you as more information becomes available.

Thanks for reading and see you next week!

Regards,
Sal Risalvato
Executive Director

 IN THIS WEEK'S NJGCA ROAD WARRIOR                                                      

UPDATE: NEW PIF CLASSES ADDED!!
•Added All PIF and Diesel classes below!!

POLITICAL PARTICIPATON: THE NJGCA PAC
•Participate in the NJGCA PAC today and help us keep our Agenda rolling in Trenton!

NEWS AROUND THE STATE
•Poll says voters want pensions eliminated for new public workers
•Governor seeks to cut income taxes
•Christie may use Hudson Tunnel on infrastructure, transportation projects
•BP, other Big Oil companies join forces to create oil containment system

 ON THE NJGCA HOMEPAGE                                                                               

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 KNOW YOUR TERRITORY MANAGER!                                                             

Henry Darden: Territory Manager for Middlesex, Union, Part of Essex (Southern Half)
Cell: 973-477-0057
Email: henry@njgca.org

Jack Leli: Territory Manager for Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean, Salem
Cell: 732-995-1637
Email: jack@njgca.org

Bob Quirk: Territory Manager for Bergen, Hudson, Part of Essex (Northern Half)
Cell: 201-214-8836
Email: bob@njgca.org

Frank Stewart: Territory Manager for Morris, Sussex, Warren, Hunterdon, Passaic
Cell: 973-234-7403
Email: frank@njgca.org

Don Stohrer: Territory Manager for Monmouth, Mercer, Somerset
Cell: 732-539-2955
Email: don@njgca.org  

                                                                                                                                                                                    

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