Category: Testimony

The Health Insurance Assessment Will Make Coverage More Affordable and Accessible

Posted on by Brittany Holom-Trundy

The following testimony, on A4389, was delivered to the Assembly Appropriations Committee on July 27, 2020.

Good morning Chairman Burzichelli and members of the Appropriations Committee. Thank you for this opportunity to provide my testimony on the Health Insurance Assessment. My name is Dr. Brittany Holom, and I am a senior policy analyst at New Jersey Policy Perspective (NJPP). NJPP is a non-partisan, non-profit research institution that focuses on policies that can improve the lives of low- and middle-income people, strengthen our state’s economy, and enhance the quality of life in New Jersey.

New Jersey stands at a critical juncture for our health care system. The full impact of the COVID-19 pandemic is still to be seen, but we know one thing for sure: the virus has taken a historic toll on the families, economy, and future of New Jersey. The measures needed to protect our residents and contain the virus’ outbreak have resulted not only in lost income, but also a lack of insurance coverage, rising distrust in and fear of the health care system, and uncertainty about a vast array of activities for the foreseeable future. This is a moment when New Jerseyans need to see that their leaders are not just reacting to the crisis in the short term, but are committed to protecting them in the long term.

In order to maintain the state’s vital services and build a system better able to handle these crises going forward, we need to be creative. The proposed Health Insurance Assessment (HIA) provides a golden opportunity to do just that. With the federal government giving up this source of income, New Jersey has the chance to absorb those funds without having to introduce changes to current fees.

This is why NJPP strongly supports the proposed legislation to collect an assessment on certain health insurance providers and direct those resources toward making health coverage more affordable and accessible. We understand the need for revenue to not only support current programs, but also to support new initiatives to ensure that New Jersey’s health care landscape is more equitable.

The legislation’s dedication of funds to health care gives New Jersey long-term resources to keep health care affordable. Estimates of a state HIA’s revenue come in just above $300 million. This revenue can be put toward initiatives that provide subsidies to our low- and moderately-paid working families, create more affordable coverage opportunities for our most vulnerable populations, support the reinsurance program, help small businesses with the costs of care, and much more. This is more than a simple cut of costs — this is an investment in a sustainable and affordable health care system for New Jersey’s residents for the future.

This is New Jersey’s moment to make that investment. The federal fee expires after December 31st of this year. This means that, by establishing a state fee now, we are maintaining a system that already exists and are not introducing a new fee for health insurance providers. Only by establishing the fee this year do we have the opportunity to capture this revenue without seeing an increase in rates from the previous year.

Some groups may argue that this would raise rates. This is simply not true. New Jersey would be replacing an existing fee — not introducing a new one — and, because that money is being invested back in the health care system, the state would be committing to sustainable decreases in rates. Further, by supporting increases in enrollment and improving the health insurance risk pool, the state would be directly aiding in cost decreases for New Jersey residents. In other words, this is not a one-and-done situation; rates would not just decrease for one year before increasing again. Instead, measures would support lower rates in the long term.

Again, the opportunity to establish this source of revenue and commit funds to affordability is only available this year. If we let this fee expire without replacing it, the actions needed to build this revenue in later years will face significant obstacles, and residents will be faced with greater instability in their health insurance options. Leaders need to show that they are willing to invest in their residents’ future, because if the COVID-19 pandemic has not been a strong enough lesson on the necessity for that investment, then it is clear that nothing ever will be.

Thank you for your time.

Experts Agree Corporate Subsidies Are Ineffective, Costly, and Unsustainable

Posted on by Brandon McKoy
Tim Bartik of the Upjohn Institute testifying at the Senate Select Committee on Economic Growth Strategies on Thursday, September 5, 2019 (Screenshot courtesy of NJTV News)

Earlier today the Senate Select Committee on Economic Growth Strategies heard testimony from national experts on economic development best practices and potential reforms to New Jersey’s corporate subsidy programs. In response to today’s hearing, New Jersey Policy Perspective (NJPP) releases the following statement. 

BRANDON McKOY, PRESIDENT, NEW JERSEY POLICY PERSPECTIVE: 

“Today’s testimony confirms what NJPP and critics of the state’s corporate subsidy programs have been saying for years: New Jersey must rein in and reform its tax credit programs with hard caps and stronger oversight. The testimony from national experts also calls into question the overall merit of corporate subsidies, as these tax credits are not nearly as beneficial to the state’s economy as many have claimed. 

“Continuing to provide tax incentives to already profitable corporations is a wasteful pursuit that damages the state’s finances and fails to benefit the public good. New Jersey would be far better served by investing in its workforce and crumbling public assets.

“This is a watershed moment in the ongoing debate over the future of New Jersey’s corporate subsidy programs, as national experts agree that the status quo is ineffective, costly, and unsustainable. Today’s hearing provides lawmakers with a strong framework to reform the state’s approach to economic development. They owe it to taxpayers to get it right.”

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Legislature’s Budget Built on Shaky Foundation

Posted on by Brandon McKoy

Yesterday, the New Jersey Senate and Assembly unveiled their FY 2020 budget proposal. The spending plan totals $38.8 billion, $200 million more than Governor Murphy’s budget, but does not include enough new, sustainable sources of revenue like the millionaires tax to support those investments in the long-term. In response to the Legislature’s proposal, NJPP releases the following statement.  

BRANDON McKOY, PRESIDENT, NEW JERSEY POLICY PERSPECTIVE:

“The budget proposed by the Legislature is an important, but incomplete, step in building an economy that works for all New Jerseyans. This proposal makes important investments in areas proven to lift working families like NJ Transit, property tax relief, health care, and public education. However, these new investments are not backed by sustainable sources of revenue, threatening their long-term viability and the well-being of New Jersey’s low-paid and middle-class families and children.

“This budget, like many before it, does not include the reliable revenue and savings necessary to meet the state’s long-term needs. By depending on rosy revenue projections and canceling a deposit in the state’s empty rainy day fund, the Legislature has doubled down on short-sighted fiscal practices and dismissed the warnings of budget experts and ratings agencies alike. New Jersey is woefully unprepared for the next economic downturn and the state’s window to build up a healthy rainy day fund is rapidly closing. This is a missed opportunity to bolster the state’s reserves and protect New Jersey families, workers, and businesses from the next recession.

“Lawmakers should have learned by now that new investments must be paired with reliable sources of revenue. The fact remains that after eight years of tax cuts under the previous administration, New Jersey is a national outlier in that it still collects less revenue than it did prior to the Great Recession. Without restoring proper tax rates on wealthy residents, the state will continue to put its long term economic growth — and its chances of closing enormous economic and racial inequities — at risk.”

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Corporate Subsidy Proposals Lack Necessary Reforms

Posted on by Brandon McKoy
NJPP President Brandon McKoy delivering testimony to the Assembly Commerce and Economic Development Committee on Thursday, June 13, 2019.

This testimony on A4730 and A5343, proposals to extend New Jersey’s corporate subsidy programs, was delivered to the Assembly Commerce and Economic Development Committee on Thursday, June 13, 2019.

Good morning Chairman Johnson and members of the committee.  My name is Brandon McKoy and I am the President of New Jersey Policy Perspective. I appreciate this opportunity to testify on this very important issue.

New Jersey Policy Perspective has researched and analyzed the state’s economic development programs for over twenty years. We closely monitor the tax credits awarded by the state Economic Development Authority, how many jobs created and maintained the state gets in return, and we regularly compare New Jersey’s corporate subsidy programs — and the laws that guide them — against those in other states across the nation.

These decades of research and analysis bring us to a simple conclusion: New Jersey’s economic development programs have been improperly designed, poorly measured, and insufficiently examined since the implementation of the 2013 Economic Opportunity Act, which I will heretofore refer to as the 2013 EOA. While the Economic Development Authority in and of itself is not a problematic entity, the legislation guiding its operations leaves much to be desired. 

Since the passage of the 2013 EOA, New Jersey’s corporate tax subsidies have risen to unprecedented levels, with an enormous financial reward to very few corporations and an enormous cost to Garden State taxpayers. New Jersey is now a national outlier for how much it spends on corporate subsidies and how little it receives as a return on investment. But it doesn’t have to be this way. As the current laws guiding the state’s corporate subsidy programs are set to expire on June 30, this legislative body has an incredible opportunity to revamp the state’s approach to economic development so it benefits businesses, their workers, and taxpayers alike. 

The purported goals of the legislation being considered today may have good intentions, but they lack the critical reforms necessary to get New Jersey’s economic development strategy back on track. It is NJPP’s position that the extensive flaws in the 2013 EOA must be addressed before any consideration of extending these programs. 

While bill A4730 would slightly improve eligibility requirements for the Grow New Jersey Assistance Program, it lacks key reforms that would reel in an out-of-control corporate tax subsidy initiative. It contains no annual spending caps, no mandated reporting to verify outcomes, no recurring evaluation process, no annual forecasting or multi-year cost projections, and no labor protections. In fact, this legislation rewards corporations that hire contract workers. 

Meanwhile, A5343 would simply extend the existing program to January 31, 2020. For a program with well-documented flaws that is projected to rob the state budget over $1 billion in revenue annually for the foreseeable future, this makes little sense. Rational and attainable fixes have been suggested time and time again to this legislature, both by NJPP and national experts, and yet they remain conspicuously absent from both of these proposals.

Before considering extensions, we must recognize that these programs have not produced results as intended. The cost to the state remains too great, and the means to verify impact remain insufficient. 

Before 2013, New Jersey’s corporate subsidy spending was in line with the national average, at about $16,000 per job created or maintained. Since the passage of the 2013 EOA, the state has awarded enormous corporate subsidies that are more than five times the national average. In return, the state has received little verifiable performance or uptick in jobs, development, and economic growth. Simply put, rather than being another tool in the toolbox of economic development, corporate tax subsidies became theeconomic development strategy of New Jersey. 

For years, NJPP has raised the alarm about the enormous cost of these programs to our state, at a time when New Jersey can least afford to gamble away future tax revenue. These bills proposed today do not sufficiently assuage the concerns we have documented.

And you don’t have to just take my word for it. Other than the findings of multiple reviews and analyses by other independent actors, the Fiscal Impact Statement that accompanied the final version of the 2013 EOA clearly states that the loss of revenue to the state’s Treasury, due to credit redemptions, would be enormous. It also says that the levels of Corporate Business Tax uncertainty and losses, even with implied increased local spending and jobs development, could be substantial and result in a decade of direct business tax revenue reductions and losses. While some would like to deny the reality, those warnings have come to fruition.

Without implementing annual spending caps for awards, shorter term lengths for awards, penalties for bad actors and known tax dodgers, wage protections for workers, and nationally recognized best practices for assessment and review, New Jersey Policy Perspective cannot support these bills as currently constructed. 

I understand that this body and the legislature are on a short time line with regard to the sunset of the 2013 EOA, but NJPP and others have been commenting on these issues to lawmakers for years. None of this should come as a surprise to anyone.

Given the scope and cost of New Jersey’s corporate subsidies, the laws guiding the Economic Development Authority will be among the most consequential pieces of legislation passed this session. Passage of any extension without the inclusion of critically necessary reforms leaves the state extremely vulnerable to uncertain and insufficient economic outcomes.

This presents you an incredible opportunity to fix the problems with New Jersey’s existing corporate subsidy programs and ensure future economic development benefits all New Jerseyans — business owners, their workers, local communities, and taxpayers alike. 

Thank you again for this opportunity to testify. I look forward to working with you all as New Jersey revamps its approach to economic development.

 

Gov. Murphy’s EDA Reforms Are Necessary to Correct Flaws in EDA Programs

Posted on by Brandon McKoy
Governor Murphy announcing a corporate subsidy reform package in Cherry Hill on June 5, 2019.

Earlier today, Governor Phil Murphy unveiled a package of reforms to New Jersey’s corporate tax incentive programs. The proposals follow months of independent reports and task force hearings highlighting fraud and waste at the state Economic Development Authority. In response to the proposed reforms, New Jersey Policy Perspective releases the following statement.

BRANDON McKOY, NEW JERSEY POLICY PERSPECTIVE PRESIDENT:

“The tax subsidy reforms proposed by Governor Murphy are necessary to correct the serious flaws in New Jersey’s economic development programs. Since the passage of the Economic Opportunity Act in 2013, New Jersey has been a national outlier in how it operates its tax incentive programs, with the state spending five times the national average on corporate subsidies. With the programs guiding the Economic Development Authority set to expire at the end of the month, there has never been a more opportune time for meaningful reform.

“This package of reforms is forward thinking and, more importantly, follows best practices from across the nation. Hard caps on awards and stronger oversight will protect taxpayers and the state’s budget, while better targeting of awards and improved labor protections will ensure the benefits of corporate subsidies are shared broadly among business owners, their workers, and local communities alike.

“We look forward to working with Governor Murphy and members of the Legislature in the pursuit of economic development policies that are fiscally responsible and prioritize the best interests of everyday New Jerseyans.”

New Jersey Policy Perspective (NJPP) is a nonpartisan think tank that drives policy change to advance economic justice and prosperity for all New Jerseyans through evidence-based, independent research, analysis and advocacy. NJPP has long-advocated for reforming New Jersey’s corporate subsidy programs.

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Pension and Benefit Cuts Are Bad Public Policy and Even Worse Optics

Posted on by Brandon McKoy

Earlier today Senate President Steve Sweeney unveiled a package of 27 bills from his Path to Progress working group. In response to proposals to reduce working class pensions and health benefits, NJPP President Brandon McKoy released the following statement.

NEW JERSEY POLICY PERSPECTIVE PRESIDENT BRANDON McKOY

“Trickle down economic policies got New Jersey into its current fiscal mess and more of the same will not lift the state out of it. It is bad public policy — and even worse optics — to ask more than 350,000 working families to make further sacrifices while protecting 17,000 millionaires from a modest tax increase. In this era of historic inequality and wage stagnation, the choice before lawmakers is clear. They can continue to balance budgets on the backs of middle class families or ensure the wealthiest among us pay their fair share.”

“Lawmakers must not forget history. Under the Christie administration, the state cut taxes time and time again for the wealthiest individuals and largest corporations. As a result, middle class families now pay a higher share of their income in state and local taxes than millionaires do.

“Last year, lawmakers challenged Governor Murphy to find significant savings before they would consider a millionaires tax, and he did just that. It’s time for lawmakers to fulfill their promise and ask the wealthiest among us to pay a little bit more.”

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Treasurer’s Testimony Highlights Need for Sustainable Revenue

Posted on by Sheila Reynertson

Earlier today the Office of Legislative Services and State Treasurer Muoio testified at the Senate Budget Committee hearing and delivered updated revenue collection figures for FY 2019. In response to today’s testimony, NJPP releases the following statement.

NEW JERSEY POLICY PERSPECTIVE SENIOR POLICY ANALYST SHEILA REYNERTSON

“Today’s budget testimony delivered good news that revenue collections are above projections for the remainder of the fiscal year. But just as the non-partisan Office of Legislative Services warned, this is good news that should be taken with caution. This year’s budget relies on over $1 billion in one-shot revenue sources that are set to disappear. Lawmakers must pursue reliable and sustainable sources of revenue, like the proposed millionaires tax, to make up for these lost funds and continue investing in assets proven to grow the economy. A millionaires tax would also promote tax fairness, as the current tax code results in middle class families paying a higher share of their income in state and local taxes than the state’s top earners.

“The $317 million deposit into New Jersey’s rainy day fund — the first in eleven years — is a noteworthy accomplishment and a good budgeting practice that will reflect well in credit agency evaluations. However, more can and must be done to help prepare the state for the next recession or natural disaster. The state must build on last year’s successes and commit to new, renewable sources of revenue, robust surpluses, and continued deposits into the rainy day fund.”

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Lobbyists Drafting EOA is Privatization of the Legislative Process

Posted on by Brandon McKoy

Earlier today New Jersey Policy Perspective (NJPP) President Brandon McKoy testified at the Economic Incentive Task Force hearing on the NJ Economic Development Authority and crafting of the Economic Opportunity Act of 2013. In response to the hearing and yesterday’s exposés by WNYC and the New York Times, NJPP releases the following statement:

NEW JERSEY POLICY PERSPECTIVE PRESIDENT BRANDON McKOY

“The fraud and abuse at the Economic Development Authority extend far beyond lax oversight and personnel — they are a direct result of the legislation guiding the state’s tax subsidy programs. Quietly drafted by corporate lobbyists who had a financial interest in the bill, the Economic Opportunity Act of 2013 is riddled with narrowly tailored loopholes ripe for exploitation. There is no question that this law was written to benefit already wealthy and well-connected individuals and corporations, not ordinary New Jerseyans. This represents a privatization of the legislative process and corporate cronyism at its worst. New Jersey taxpayers deserve better.

“Nothing about the laws guiding New Jersey’s economic subsidy programs is normal. New Jersey is an outlier in how much it spends on incentives and how little it gets back in return. Taxpayers cannot afford for the Economic Development Authority to continue doing business as usual. New Jersey must follow best practices utilized by other states and reform its subsidy programs so they are targeted, properly monitored, and capped. These common-sense reforms will ensure the EDA promotes developments that benefit all New Jerseyans, not just a select few.”

Watch Brandon McKoy’s testimony to the Tax Incentive Task Force here:

https://youtu.be/U-GG3tP7chA?t=22410

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EDA Task Force Exposed Culture of Corruption

Posted on by Sheila Reynertson

In response to today’s task force hearing on New Jersey’s economic subsidy programs, NJPP releases the following statement calling for a moratorium on Christie-era subsidies and meaningful reforms to prevent future abuse: 

SHEILA REYNERTSON, SENIOR POLICY ANALYST, NJPP: 
“New Jersey Policy Perspective commends Gulsen Kama for shining a light on the fraudulent tactics that have flourished under New Jersey’s tax subsidy programs. Kama’s testimony exposed a culture of corruption that has robbed the state of critical taxpayer dollars. This first hand account detailed just how easy it is to cheat the system and lie on applications for tax credits. Today’s hearing should give lawmakers pause about the integrity of existing corporate subsidy programs. The need for reform has never been more pertinent.
“The hearing also exposed the cottage industry of relocation firms and consultants that help corporations cheat on their EDA applications. In her testimony, Ms. Kama described how a consulting firm produced a detailed, yet bogus portfolio of out-of-state relocation options even though her employer was finalizing plans to move to a new office in Jersey City. This calls into question the value of offering tax subsidies for job retention and further highlights the need for a moratorium on tax credits given out under the Christie administration.”
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EDA Whistleblower Suit Describes Corruption, Plain and Simple

Posted on by Brandon McKoy

In response to a report by WNYC suggesting the Christie administration pressured officials at the New Jersey Economic Development Authority (EDA) to give out fraudulent awards, NJPP releases the following statement calling for a moratorium on EDA awards and a full investigation by the Attorney General:  

BRANDON McKOY, PRESIDENT, NJPP:

“These allegations describe corruption, plain and simple, and taxpayers should be furious. For years, NJPP and advocates for good governance have questioned the overly generous tax subsidies awarded by the Economic Development Authority, but the allegations in this whistleblower lawsuit extend far beyond lax oversight and into fraudulent, and possibly criminal, conduct.

“New Jersey taxpayers deserve to know that decisions are made with their best interests in mind, not what’s best for a few select corporations. We call for a full moratorium on EDA subsidies awarded under the Christie administration and a full investigation of these claims by the New Jersey Attorney General.

“Further, as lawmakers consider renewing the state’s tax subsidy programs, they must pursue broad reforms that have been proposed by NJPP and Governor Murphy, including hard caps on annual and per-job awards, tighter reporting requirements, and targeting awards to emerging industries and home grown businesses.

“Only a full and complete investigation, combined with robust reforms that follow best practices, will enable the state to regain the trust of the public.”

NJPP has long-advocated for reforming the EDA. A full list of possible reforms is included in this 2017 report: It’s Time for New Jersey to Rebalance the Economic-Development Scales

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