Category: Testimony

Still No Answers to Key Questions on Casino Expansion

Posted on by Gordon MacInnes

These are prepared remarks to be delivered to the Assembly Judiciary Committee this morning.

Chairman McKeon and members of the committee, thank you for the opportunity to examine a crucial constitutional amendment proposed for a public vote this November.

Given the public support of the governor and legislative leaders, ACR-1 feels like one of those bills destined for swift, uncritical and incomplete review. I hope not. There are numerous issues posed by expanding casino gambling that deserve careful attention by this committee, your legislative colleagues and the public. Given New Jersey’s track record with gambling – one of big promises, a lack of delivery on those promises and little long-term economic benefit – one would think there’d be more caution and skepticism about expanding casinos to North Jersey.

There’s time. The legislature has 198 days before final action to place ACR-1 on the November ballot. That is plenty of time to more closely inspect of the implications and consequences of the issues raised by expanding casino gambling to North Jersey. Before voting to proceed so quickly with approval of ACR-1, I would hope the committee would address three glaringly obvious questions:

Won’t North Jersey casinos only accelerate Atlantic City’s economic decline?

At the beginning of 2014, Atlantic City had 12 casinos. Today, it has eight. And Wall Street analysts expect at least two more to close in the next two years, long before any of the proposed North Jersey casinos would be operating. These new casinos would be competing in a saturated Northeast market that is becoming even more saturated, with eight new casinos slated to open in the next three years. Common sense dictates – and financial analysts agree – that expanding casino gambling in New Jersey would only accelerate the closure of weakened casinos in Atlantic City. What is worse is that the saturated Northeastern market is not growing, even without the approved new casinos.

Given these known facts, it is fair to ask proponents of casino expansion if their stated goal of saving and rebuilding Atlantic City is realistic – and how exactly they think that will work.

Given that North Jersey is already among the most heavily traveled and congested regions in the nation, how will the public transit and highway infrastructure be improved to accommodate new casinos – and who will pay for such improvements?

The Meadowlands and the Jersey City waterfront have drawn the strongest developer interest, complete with schematic plans. Routes 3 and 17, the Turnpike extension and Jersey City’s surface streets are already congested and in sub-par conditions. The opening of new casinos only stands to make this worse – unless a new plan to improve traffic flow and upgrade public transit is drawn up, implemented and, crucially, financed. The Transportation Trust Fund currently has no funding to pay for new projects and the governor made that situation worse by promising that there’d be no increase in the gas tax.

Presently, two large-scale developers have shown strong interest in building casinos in the Meadowlands, one attached to the Meadowlands racetrack, the other to the American Dream mall. American Dream is scheduled to open next year. With the TTF near bankruptcy and Routes 3 and 17 and the Turnpike already jammed, just one casino at the Meadowlands could convert Route 3 into an 18-hour a day parking lot. New Jersey’s transportation capital plan for 2016-21 makes no provision for any improvements to the Meadowlands area, and the 2014 Super Bowl is a reminder of how poorly mass transit deals with increased patronage.

How does the Committee know how new casinos will aid Atlantic City and the state’s perilous financial condition without proposed tax rates?

Promises of windfall tax revenues for New Jersey can’t come true without an aggressive tax rate on new casinos, if they can come true at all. The state has paid the price – literally, in hundreds of millions of dollars of lost revenue – for failing to take advantage of its East Coast monopoly in 1976 by foregoing a tax rate on Atlantic City’s casinos that reflected that monopoly. Yet no tax rate is defined in this casino expansion plan.

Some developers are telling the press that they’d be happy to tax rates as high as 55 percent for their new casinos. That’s welcomed news, and generous of said developers, particularly given another developer’s expectation that the current rates will prevail. While the tax rate should not be carved into the Constitution, it’s in everyone’s best interest to secure agreement on a proposed tax rate now, to avoid getting steamrolled by developers down the road and, once again, seeing extravagant promises broken.

Any sensible investor or citizen would want answers to these – and other – questions before putting up cash or a vote. New Jersey should learn from its past. Taking swift action on ACR-1 suggests that those lessons have not been learned by the legislature.

New Jersey Should Apply for Local SNAP Waivers to Prevent Needless Hunger

Posted on by Raymond Castro

These are prepared remarks to be delivered to the Senate Health, Human Services and Senior Citizens Committee on S-993 this morning.

Requiring the Department of Human Services to apply for a waiver for New Jerseyans living in high unemployment areas of the state, as Senator Vitale’s bill would do, would prevent some of the poorest residents of New Jersey from needlessly going hungry, or hungrier. And, every dime required would come from the federal government.

According to the Department’s own estimates, 11,000 adults may lose SNAP benefits for three years unless they are placed in the right work activities within three months, due to the ending of a statewide waiver on December 31. But the Department won’t guarantee that such training and job opportunities will be made available by the state. In fact, just a week ago state officials said they were trying to get approval from the federal government for a new work activity called “workfare.” But it’s too little, too late: the clock is ticking on the three-month limit that started January 1 in many counties, but it is only now that the state is planning for the necessary work activities, despite the fact that it has known about this for about a year.

There is no excuse for this inaction, which will have catastrophic results. The longer these New Jerseyans can’t participate in training, the closer they get to the three-month limit, which cuts them off from nutritional benefits for three full years. Worse still, the time is cumulative over a three-year period. In other words, if a person spends two months this winter out of work activities, and then one month in the fall of 2017, they will lose their benefits. And even worse, the state failed to seek federal approval for New Jersey to require work in a way that does not result in an overly harsh three-year penalty, an option under regulations that strengthens the need for this bill’s enactment.

Department officials emphasize that the federal government won’t allow New Jersey to continue with the statewide waiver it’s had for the last six years. While that is correct, it is only part of the story. New Jersey is still allowed to apply for local waivers in areas with high unemployment, which would cover the approximately 80 percent of the people losing benefits who live in 15 counties and five additional municipalities. For the state to willingly worsen the plight of struggling New Jerseyans is an indefensible policy that borders on the immoral. Legislators should do everything in their power to force the state to reverse course.

Two Key Decisions on SNAP in New Jersey Will Increase Hunger for Vulnerable Residents

Posted on by Raymond Castro

These are prepared remarks to be delivered to the Senate Legislative Oversight Committee this morning.

Thank you for the opportunity to testify on the Supplemental Nutrition Assistance Program (SNAP) in New Jersey. In the past few years, the state has acted not once, but twice, to reduce these crucial benefits, which are completely funded by the federal government. The state’s decisions, make no mistake, will increase hunger for thousands of New Jerseyans.

The state’s actions are all the more severe because they come right after the federal government cut SNAP benefits for everyone in November 2013. SNAP also serves the most vulnerable people in our state, and further cuts to the program will continue to push these families further to the brink. About three quarters of all households receiving SNAP in New Jersey have incomes below the federal poverty level – about $20,000 a year for a family of three – and about one third of all households include families with elderly or disabled members. In short, this is not a program that can sustain any more cuts.

The state cut SNAP in two ways.

First, it decided not to extend the so-called “Heat and Eat” program, which made it easier for New Jerseyans to receive a higher level of SNAP benefits even if they had difficulty documenting their energy costs. A disproportionate number of these households included the elderly and disabled.

The federal Farm Bill passed in 2014 allowed states to maintain their Heat and Eat programs, as long as states provided $21 per household in energy assistance to trigger the SNAP option. We estimated this would cost New Jersey about $3.2 million annually, but would save up to $170 million in federal SNAP benefits. Because of the multiplier effect of SNAP benefits, we also estimated up to a $300 million economic drag from this cut.

Maintaining the Heat and Eat program should have been an easy decision for New Jersey. Making it even more of a no-brainer was the fact that the state apparently had federal funds in its Low Income Home Energy Assistance Program that could have covered the modest state cost. In the end, most states with a Heat the Eat program decided to continue it, including our neighboring states, Pennsylvania and New York.

Second, the state recently decided not to apply for a waiver to time limits on SNAP for able-bodied childless adults. If these individuals don’t meet new work requirements for just three months they will now lose access to nutritional benefits for three years. Such an overly harsh penalty is not needed because SNAP already includes work requirements for all able-bodied adults which could be implemented by the state without triggering such a major loss in benefits. It is also unfair because the three-month time limit also applies to individuals who are working part time or are doing everything they can to search for employment.

While the state could not apply for a statewide waiver because its unemployment rate improved, it could have applied for a waiver for those areas of the state that still had high unemployment. About two-thirds of the states have already applied for similar local waivers. In New Jersey, those areas include 15 counties and five municipalities, which would have covered about 80 percent of the 11,000 New Jerseyans who the state estimates will be affected by this time limit. The average benefit for these individuals is about $160 a month.

Theoretically these individuals could continue to receive their benefits as long as they participate in a work activity for 20 or more hours a week as arranged by the state. However, is unclear whether the state has enough slots or the right type of slots in work activities to meet this requirement. Unfortunately, even if the state does not have the capability of providing these work activities the individuals still become ineligible for SNAP. Many of them will also not be able to find employment for themselves because they do not have the skills or education. For example nationally only about 40 percent of childless adults in SNAP have a high school diploma or GED. Many people will drop out simply because they cannot deal with the increased bureaucracy. The state also has broad latitude to determine exemptions, such as for disabilities, but again it is unclear whether the state will use this new flexibility. As a result of the decision not to apply for these waivers it is likely the state will lose millions of dollars in federal SNAP benefits that would have helped many avoid hunger and stimulated the state’s economy.

We strongly recommend that the state submit a waiver for those childless adults in SNAP who live in high unemployment areas of the state. There is still time to do so. If that is not possible, we urge that legislation be introduced to at least require that the state monitor on a monthly basis, and make public, the status of all able-boded childless adults in SNAP by county and the extent to which the state provided the work activities they needed to avoid the three-year loss of their benefits. This will not only promote transparency and accountability, but such data would be helpful to community organizations who will need to provide food for those individual who lose their SNAP.

Thank you.

New Jersey’s Middle Class is Shrinking & Poverty is Rising – But We Can Reverse the Tide

Posted on by Raymond Castro

These are prepared remarks to be delivered to the Assembly Human Services Committee this morning.

Thank you for the opportunity to testify on the urgent issue of poverty in New Jersey. While this is a very complicated subject, we are optimistic that we can begin to address it by changing state policies that we already know are contributing to this problem, particularly in neglecting New Jersey’s poorest children.

A solution cannot come fast enough. As Speaker Prieto has pointed out, the level of poverty in New Jersey is the highest it has been in modern history. New Jersey’s middle class is shrinking, with poverty and income inequality increasing, even during the economic recovery. Unlike past recoveries, where nearly all groups saw increased incomes, in this recovery those at the very top are seeing nearly all of the gains.

Between 2010 and 2014, the number of very, very poor households in New Jersey grew at a faster pace than any other group – followed by the number of very wealthy households. Meanwhile, the middle continued to hollow out. Households with incomes less than $10,000 a year grew by 14 percent, more than twice the national average of 6 percent, while those with incomes over $200,000 grew by 6 percent. The largest decrease was in households right in the middle, earning between $75,000 and $99,999 – which shrunk by eight percent – twice the national average.

These disturbing trends mean:

  1. We cannot rely only on a growing economy to reduce income inequality and grow the middle class. As long as virtually all the income that increases goes to the wealthiest, income inequality will worsen.
  2. The shrinking middle class and growing poverty are two sides of the same coin. More and more middle-income families are falling into poverty and relying on temporary assistance to get back on their feet, and with a tattered safety net, it is harder than ever for families to climb the ladder out of poverty into the middle class.
  3. State policies and actions have been woefully inadequate in addressing these problems, in some cases, contributing to the downward spiral.
  4. Unless something is done soon, New Jersey will continue to suffer economically and socially.

We can make a real difference if we at least eliminate those state policies and actions that are acting making poverty worse in New Jersey. In the past few years, for example, the state has eliminated the Heat and Eat program and imposed SNAP time limits for childless adults, resulting in needless hunger for tens of thousands of New Jerseyans. And a lack of any state-funded outreach for SNAP is one of the main reasons why New Jersey’s participation rate continues to be among the lowest in the nation. We are also proposing legislation to monitor what has happened to childless adults on SNAP, and whether the state offered them the training and education they need to remain eligible.

Another new problem is the decline in Medicaid enrollment. After a major increase in enrollment as a result of the Medicaid expansion that started in January 2013, enrollment dropped by 43,000 from June to December of last year. One of the main reasons for this decrease is that many households are becoming ineligible due to the county welfare agencies’ redetermination of their income, which is required annually by the federal government. There have been reports that some these redeterminations have not been accurate, resulting in the unnecessary loss of Medicaid, so improved quality control may be needed. Also, in some cases, the household’s income increased just barely – enough to kick them out of the Medicaid system but not enough to afford quality health coverage on their own. To address that problem, we recommend that the state explore a waiver or the Basic Health Program, which allows the state to increase the income limit for Medicaid from 138 percent of the federal poverty level to 200 percent.

The state should also invest in outreach to offset normal attrition in Medicaid enrollment. Outreach is also essential now because most New Jerseyans who were motivated to apply for Medicaid have already done so leaving those who have many barriers to enrollment that must be overcome.

Given that these choices on SNAP and Medicaid are also costing New Jersey tens of millions of federal dollars that could boost the state’s economy – both programs are almost entirely covered by federal dollars – they simply do not make any sense.

However one of the most effective things that the legislature can do is begin to restore cutbacks in TANF (Temporary Assistance To Needy Families), also known as Work First New Jersey – a crucial anti-poverty program that helps the poorest of the poor, but that hasn’t been increased in New Jersey in 29 years. Yes, 29 years.

It also makes sense to start with children because that is where the greatest need is.

New Jersey’s children represent the largest age group who are poor (25 percent) and they also have the highest poverty rate (16 percent). They are disproportionately Black and Latino, which speaks to the enormous racial inequities in our state.

The newest research shows that poverty has a dire impact on the cognitive and social development of these kids, which is one reason many states have increased their TANF benefit in recent years. Adjusting for the cost of housing, New Jersey has the tenth lowest TANF benefit in the nation. Our neighbors in New York have raised their TANF benefit three times since 2000, and it’s now almost twice the size of New Jersey’s.

The erosion of TANF benefits is one of the main reasons why there are 140,000 children who live in extreme poverty in New Jersey (which is defined as half of the Federal poverty level or $10,000 a year for a family of three). The average family of three only receives $424 dollars a month, the same as it would have received three decades ago. Adjusting for inflation, the purchasing power has been cut in half. As a result, New Jersey’s TANF benefit has dropped to only a quarter of the federal poverty level, down from about 60 percent in 1981.

As a result, TANF has virtually disappeared as a viable safety net for children. Since 1987, when the TANF benefit was last increased by Gov. Kean, enrollment decreased by about 80 percent. And whereas in the past, most children living in poverty received TANF support in New Jersey, less then 20 percent of poor children receive any help now.

Restoring the TANF benefit is a moral and economic imperative. New Jersey cannot afford to leave children behind. Granting billions of dollars in tax credits to corporations while cutting back on basic assistance to children is unconscionable. It is also a poor investment. Child poverty costs New Jersey an estimated $13 billion each year – so we can either pay now to support these children, or pay much more when they are older.

It’s bad enough that governors and legislative leaders have not requested any funding to increase the TANF benefit. But it’s worse because the state has known for many years that it was not enough to live on. State guidelines have been in effect since 2002 that show how much the TANF benefit needs to be in order for children to live in a decent and healthy environment. In 2014 that standard was $2,636 for a family of three – seven times higher than the TANF benefit.

On February 8 we will be releasing a comprehensive report on TANF with specific recommendations for legislative action. I look forward to working with you to protect and support children in our state and make a real difference in reducing poverty in New Jersey.

There Are Too Many Unanswered Questions on Casino Expansion

Posted on by Gordon MacInnes

These are prepared remarks given at today’s Senate Budget Committee hearing on SCR-1, which would put North Jersey casino expansion on November’s ballot.

Thank you, Chairman Sarlo, and committee members for this opportunity to weigh in on expanding casino gambling to North Jersey.

I begin with a request: please do not act on SCR-1 until better information on essential questions is available for both legislative and public consideration. This is particularly germane because of the sad history of earlier advocates over-promising the public on the benefits of legalizing gambling – whether it was casinos in Atlantic City, internet betting, harness races in the Meadowlands or the privatization of state lottery operations.

The stated rationale for expanding casinos to North Jersey is that this will save Atlantic City, generate thousands of new jobs and create millions if not billions in new economic activity. Hefty promises, all. Yet casino expansion’s ability to even come close to delivering on any – to make no mention of all – of these promises hinges on a number of obvious and crucial questions – questions that have yet to be sufficiently answered. Here are just a few:

1. Given the saturation of the casino market in the Northeast, won’t two new North Jersey casinos only accelerate Atlantic City’s decline?

There are already eight new casinos expected to open in the Northeast within the next three years. Eight. Yet gambling experts agree that the industry has little room to actually grow. More casinos will just compete against each other for shrinking profits. North Jersey’s new casinos would be no different. The latest affirmation of this fact – which has been continually ignored in this expansion push – came yesterday from Moody’s: “The additional competition will likely cause more casinos to close,” the agency wrote.

2. Given that North Jersey is already among the most heavily traveled and congested regions in the nation, how will the public transit and highway infrastructure be improved to accommodate new casinos – and who will pay for such improvements?

The Meadowlands and the Jersey City waterfront are currently the most prominent sites with developer interest. Routes 3 and 17, the Turnpike extension and Jersey City’s surface streets are already congested and in sub-par conditions. The presence of billion dollar casinos only stands to make this worse – unless a new plan to improve traffic flow and upgrade public transit is drawn up, implemented and, crucially, financed. In the context of a Transportation Trust Fund that is almost unable to pay for new projects, it seems unfair that the state’s scarce dollars for capital projects should be siphoned off to benefit private developers of casinos.

3. What tax rate will be levied on these new casinos?

Promises of windfall tax revenues for New Jersey can’t come true without an aggressive tax rate on new casinos, if they can come true at all. The state has paid the price – literally, in hundreds of millions of dollars of lost revenue – for failing to take advantage of its East Coast monopoly in 1976 with an aggressive tax rate on Atlantic City’s casinos. Yet no tax rate is defined in this casino expansion plan.

Developers are telling the press that they’d be happy to pay very high tax rates for their new casinos. That’s welcomed news, and generous of said developers. It’s in the state’s best interest to stake its claim on a proposed tax rate early, to avoid getting steamrolled by developers down the road.

Any sensible investor or citizen would want answers to these—and other—questions before putting up cash or a vote. New Jersey should learn from its past. The swift action being taken on SCR-1 suggests that it has not.

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