New Jersey Real Estate Report

From the Daily Record:

Economic woes loom large as N.J. closes ‘08

It’s a bad sign when mild-mannered nonpartisan legislative analysts start measuring the depth of the state’s budget problems by how many decades back you have to look to find similar distress.

The answer, by the way, is three or four.

Then again, Gov. Jon S. Corzine says the economy is in “without doubt, the most serious recession” since the 1930s. That has created a big deficit in the current state budget and a massive one in the plan that must be adopted by the end of June.

Not to mention a throbbing political headache for Corzine and his Democratic colleagues in the Assembly in an election year that could test whether the voters’ recent interest in change goes in both political directions or applies to cuts in popular programs such as rebates.

“We have an economic emergency. … There is a real problem out among the people of this state and across the country with regard to economic conditions. And they’re not getting better,” Corzine said.

“Everyone has to adjust their thinking to the circumstances of the moment,” he said.
…
The unemployment fund is nearly broke. The transportation fund lacks long-term funding, as does the open-space fund. New Jersey’s income tax relies heavily on the year-end bonuses Wall Street has slashed. Car sales are down more than 40 percent, a direct hit on a big sales-tax driver. Businesses are losing money. New Jersey is down 34,400 jobs in 2008.

“It’s about as bad as we’ve seen in several decades,” said Sen. Barbara Buono, D-Middlesex, the budget committee chairwoman. “Unemployment, foreclosure, bankruptcy — government is not immune to the fallout. Tax revenues support our budget.”
…
Corzine might look to save money by freezing employee wages or forcing workers to take unpaid furloughs — if unions agree to such moves. Layoffs are also possible, although the governor said he wants to avoid that.

“I’d prefer to save jobs, but that means I need cooperation, because under the contract the only one of those you can execute independently are layoffs,” Corzine said. “I’d rather see people on payrolls with health insurance rather than accentuating a problem, but that may not be possible.”

From the Record:

Corzine looking for another $1.2B to cut from budget

Governor Corzine will announce new spending cuts early next month, his response to a recession-fueled budget deficit that is now $459 million and likely heading to well over $1 billion.

Thanks to another bleak report on state revenues released Tuesday, Corzine said the budget deficit — and a series of new spending cuts — could total more than the $1.2 billion he predicted just last month.

“We need to find at least $1.2 billion and, as I have talked about, if we are in error, it will probably be larger numbers as we go forward if we sustain the kind of declines in revenue that we’ve been seeing the last two months,” Corzine said Tuesday in Trenton.

November’s revenue report indicates state tax collections came in about $200 million below the projections included in the $33 billion spending plan Corzine and the state Legislature approved this summer. Revenue collections in October also came up short, by $211 million.

In all, state revenue collections are $459 million behind original budget estimates for the first five months of the fiscal year that began on July 1.

“They are very indicative of a weakening economy,” Corzine said.

About $400 million has already been cut in response to the declining revenue and the governor has asked department heads to find another $600 million. He said those cuts and at least $200 million more will be detailed in January.

“We will be out very early in the New Year with the specifics on this,” he said. “We’ve had an ongoing serious scrub of every element of our budgetary options.”

“We’re making adjustments in spending as we speak,” he said.

The total revenue shortfall of $459 million marks a 4.2 percent gap between the $10.57 billion that was collected and what was projected for the first five months of the fiscal year.

The state’s three major revenue sources — the corporate, income and sales taxes — are all seeing deficits between 2 percent and 5 percent.

“These revenue numbers paint a sobering picture of how the deepening economic downturn is impacting New Jersey jobs, businesses, personal income and consumer spending,” state Treasurer David Rousseau said.

From the Press of Atlantic City:

State down $73.1 million amid low home sales, gaming, retail

The housing-market downturn isn’t just affecting property owners looking to unload their homes; the state, too, is feeling the pinch, collecting $17.6 million less this year as fewer sales translated to less realty-transfer tax.

Collections of the fee, a sliding percentage based on the value of the home, fell nearly 17 percent over the past year, according to comparisons of July, August and September.

The state collected $86.2 million this year during the same three months, more than 15 percent less than expected.

But the realty tax is the only area in which the state is hurting. An array of similar figures shows the ongoing economic downturn collectively resulted in more than $73.1 million less in taxes collected.

While some tax collections went up, state declines included a gap of more than $56.4 million in sales tax, almost $12.8 million in lottery funds and more than $7.1 million in casino revenue taxes.
…
But while the economy may be worsening, it is unclear what the overall impact on the state’s finances and its $33 billion budget will be.
…
Speaking with reporters last week, state Treasurer David Rousseau said the state still looked at a potential $400 million budget deficit next year, repeating a figure initially used by Gov. Jon S. Corzine in an Oct. 15 speech before a joint session of the state Legislature as he laid out an ambitious recovery plan that would aid the neediest households while increasing short-term employment and pushing long-term development and keeping state spending in check.

Rousseau said he might update the potential deficit figures in the coming weeks.

He said last month it was difficult to diagnose the state’s fiscal health from one quarter’s figures. But some shortfalls during the three months have been steep.

First, go vote.

Second, talk about it here.

Third, assume the identity of a dead relative and vote again. (Hudson Country Residents only, please!)

From the Lower Hudson Journal News:

Middle-income earners priced out of homes

Joel Bodian wants a cozy, two-bedroom home with a tiny yard to share with his black Labrador retriever, Delilah.

The single 63-year-old self-employed mechanical engineer is finding it increasingly difficult to work in his small Brewster apartment.
…
“I sometimes have to a make a model out of sheet rubber, and the glue smell - you can’t do it in an apartment. In a house I can do it,” he said.

But Bodian’s search for a modest house at an affordable price in Putnam County has been a challenge in a county where the median single-family home price is $418,000, according to the most recent figures from the New York State Association of Realtors. Even though prices in Putnam have fallen in the past two years, the prices are still too high for some.

“I put a (price) cap at $200,000 - that may seem ridiculous - and it’s ridiculous to real estate agents when I say ‘up to $200,000′ and they hang up on you,” he said.

The scarcity of affordable homes is not just Bodian’s experience. First-time homebuyers in Rockland and Westchester are experiencing a similar challenge, even as home prices drop in both counties. In Westchester, where the median income for a family of two is $77,200, and in Rockland, where the median income is $67,852, families are struggling to find places they can afford.

Bob Paul is a 28-year-old system network administrator in Nanuet, where his wife also works as a teacher. They married during the summer and, after living in a cramped apartment for three years, are ready for their first home to start a family. But he said the search has been harder than they expected in a market where the median home price is $461,750, according to the New York Association of Realtors’ figures.

“The amount of money a moderate-income family would have to come up with - for a house that’s $400,000 you have to come up with $40,000 down. Who’s got that kind of money?” he said. “It’s also hard to save when you are renting. To save and rent is mission impossible.”
…
Norton is working to get a master’s degree in teaching from Manhattanville College and hopes to eventually purchase her first home with her husband, an electronics technician. She tried joining a first-time homebuyers program through Westchester County, but gave up when she was told there was a long waiting list to enroll.

The $720,000 median home price in Westchester County has convinced Norton she should start looking elsewhere.

“All the politicians seem to be talking out of both sides of their mouth,” she said. “They say we need to save housing, but we also need to keep property values up. We can’t keep property values inflated. The properties are really overvalued and have been for quite a while.”

From the Wall Street Journal:

Senate Vote Gives Bailout Plan New Life

The Senate handily passed a controversial financial rescue package Wednesday, giving the bill its first legislative victory but adding provisions that could complicate efforts to push the $700 billion plan through the House of Representatives.

The compromise bill represented a marriage of the rescue proposal with a host of measures designed to win the support of reluctant lawmakers. Additions include an increase in bank deposit insurance limits, a suggested change to accounting rules, and a $150.5 billion package of unrelated personal and corporate tax cuts.

The additions boosted support in the Senate, which voted 74 to 25 in favor, the latest twist in the proposal’s roller-coaster ride this week. Opposition came from conservatives, populists and senators facing tight races where the rescue bill is drawing criticism.

Senate Majority Leader Harry Reid of Nevada said he expected the House would pass the bill, a sentiment echoed by other senators. House leaders expressed cautious optimism they could secure passage, but couldn’t be definitive.
…
The 10-year, $150.5 billion package of tax proposals includes a measure to ease the bite of the alternative minimum tax, as well as research-and-development tax credits coveted by high-tech companies and drug makers. Its addition is designed to secure the support of Republicans, who were overwhelmingly opposed in the House. But it could irk conservative House Democrats because the measure will add to the deficit.
…
The bill also reaffirms the Securities and Exchange Commission’s authority to suspend so-called mark-to-market accounting, an issue that gained surprising traction among lawmakers looking for less costly alternatives to the Bush plan. The practice, adopted in the aftermath of the savings-and-loan collapse in the 1980s, pegs the value of assets to their current market price, rather than the price paid for them.
…
The bill, which started out less than three pages long, now comprises more than 400 pages.
…
The move to raise deposit insurance offered by the Federal Deposit Insurance Corp. to $250,000 from $100,000 adds billions of dollars of new liabilities to the federal government. As part of the bill, the FDIC earned expanded authority to borrow taxpayer dollars to back the higher coverage. The agency’s deposit insurance fund is already at historically low levels. It now has a $30 billion line of credit with Treasury.

Through 2009, the bill would permit the FDIC to request unlimited amounts to cover losses related to the higher limits.

From the Star Ledger:

How N.J. congressmen voted on the bailout

House leaders in both parties urged their members to approve HR 3997, the bill authorizing the Treasury to spend up to $700 billion acquiring shaky assets from weak financial firms to prop up the economy. But the vote split both parties, with more than two-thirds of Republicans and 40 percent of Democrats joining to defeat the bill.

Among New Jersey’s House delegation, five Democrats and one Republican voted in favor of the bailout while four Republicans and three Democrats voted no.
…
Here are the votes of New Jersey’s members of the House of Representatives:

Voting yes:
Rob Andrews (D-1st Dist.)
Jim Saxton (R-3rd Dist.)
Frank Pallone (D-6th Dist.)
Mike Ferguson (R-7th Dist.)
Rush Holt (D-12th Dist.)
Albio Sires (D-13th Dist.)

Voting no:
Frank LoBiondo (R-2nd Dist.)
Chris Smith (R-4th Dist.)
Scott Garrett (R-5th Dist.)
Bill Pascrell (D-8th)
Steven Rothman (D-9th Dist.)
Donald Payne (D-10th Dist.)
Rodney Frelinghuysen (R-11th Dist.)

From the Daily Record:

Corzine: No new budget cuts, at least for now

New Jersey will not follow New York City in reopening its budget to make additional spending cuts in response to the Wall Street turmoil, Gov. Jon S. Corzine indicated Wednesday.

New York Mayor Michael Bloomberg Tuesday directed city agencies to cut spending by about $500 million in the fiscal 2009 budget year, which began July 1. Bloomberg’s order for more spending cuts came after $1.3 billion was already removed from this year’s budget, said Marc Lavorgna, a spokesman for the mayor.

“Approximately 10 percent of all city tax revenue comes from Wall Street,” Lavorgna said.

Financial services are also a major sector of the New Jersey economy. According to state labor department statistics, some 266,000 New Jerseyans work in the sector — down 8 percent in the past year, but still accounting for one of every 15 nonfarm jobs.

Corzine has called New Jersey “vulnerable” to the Wall Street turmoil and has projected a sharp decline in tax revenue coming to the state. Nonetheless, he’s holding off for now on making more budget cuts, his staff said.

“The governor had the foresight to recognize that the national economy was in a downturn, and he took unprecedented measures to ensure fiscal responsibility in his budget by reducing overall spending, cutting the size of government and dedicating money to reduce state debt,” said Robert Corrales, Corzine’s spokesman.

In a prepared statement Tuesday, Corzine himself said this year’s budget is the first one in state history to cut hundreds of millions of dollars of spending. He said he had not seen numbers to warrant reopening the budget but added “we will take responsible action as the facts unfold.”

Across the Hudson River, New York City Budget Director Mark Page in a letter to city agency directors predicted there will be fewer finance sector jobs well into the future and cautioned this will hurt the city’s budget because of its reliance on tax revenue from workers in the financial services industry.

Even though the full effect of the financial crisis on the city’s budget won’t be known for some time, Page told department heads that New York must start cutting costs now because forecasts show billion-dollar budget deficits in each of the next three fiscal years.

“(O)ur forecast future deficits will not be cured, as has been the case for the last few years, by an improvement in that forecast and higher than expected revenues,” Page wrote.

“We assume that every job loss on Wall Street causes two other job losses somewhere else in the city economy,” Lavorgna said.

Assemblyman Joseph Malone III, R-Burlington, reiterated his call Wednesday to reopen the state’s current budget and look for potential areas to cut.

“If Bloomberg can do something similar to what I’m asking for, why can’t the governor do it?” asked Malone, who sits on the Assembly Budget Committee. “I’d hate like hell to wake up in two months and have serious financial problems in the state because we didn’t stand up and take a look at our budget.”

Don’t forget to buy your tickets for the I.O.U.S.A. Screening GTG
Thursday, August 21st at 8:00pm

AMC Clifton Commons 16
405 Route 3 East
Clifton, NJ 07014

Tickets can be purchased online, click here.

—————————-
From the NY Post:

JERSEY: A LESSON IN FAILURE FOR NY

From 2003 through 2007, while the nation’s private economy soared, only tax-supported government jobs grew robustly in Jersey. Private employment increased a meager 1.8 percent, mostly in low-wage service jobs. In 2006, when the country was in the midst of an economic boom that produced government surpluses everywhere, Jersey faced a crushing $4.5 billion budget shortfall that prompted an embarrassing shutdown of state government.

Jersey’s decline has been rapid and astonishing. In the ’60s, one study judged it to be among the most business-friendly states because of its light tax burden. That helped attract a steady stream of businesses and residents from New York and produced robust economic growth.

Although there were occasionally signs of trouble over the years (like the pension shenanigans of Gov. Christie Whitman, in which government shirked its long-term obligations), the state’s real decline started with the election of Gov. Jim McGreevey and a Democratic-controlled Legislature in 2001.

McGreevey, aided by the Legislature, raised taxes and fees an astonishing 33 times, totaling $3.6 billion, amid a recession. The state also passed a heap of new labor-friendly, anti-business laws that rapidly worsened conditions.
…
The fallout has been swift. In 2002, the Beacon Hill Institute rated Jersey 26th among the states in overall competitiveness; by 2004, it had plummeted to 44th. Recently, corporate executives surveyed voted it one of the states where they’re least likely to expand.
…
Despite the constant stream of bad news, reform has been difficult because the kind of big-government, tax-consuming politics ruining Jersey have given too many residents a stake in the system.

The rapid growth of state and local government - whose employment increased by 15 percent from 2000 through 2006 alone - has created a huge public work force not about to vote for eliminating its perks and benefits.

Meanwhile, the state’s recent tax increases have fallen almost entirely on upper-income residents, so that those earning more than $200,000 a year (just 4.9 percent of households filing tax returns) are paying 60 percent of all income taxes. Jersey has even managed to make its onerous local property-tax system progressive by instituting a state rebate program - but only for those earning below certain incomes.

The effect of all of this is to make Jersey a place where businesses and a few residents pay the freight. So many people are on the public dole that reform becomes virtually impossible.
…
he question for New Yorkers is whether their pols learn anything from this. While for years people pointed to Jersey as a business environment New York should emulate, Jersey now stands as a cautionary tale. With Albany’s own dysfunctional politics, only Wall Street’s enormous earning power and Gotham’s international tourist appeal has insulated New York (and only Downstate) from Jersey’s fate. But with a prolonged crisis now possible in financial markets, New York may face the prospect of a Jerseyfication of its own budget and economy.

From MarketWatch:

Buyer’s recourse

There’s a big, annoying ad campaign for a popular insurance company where the punch line of every commercial is “I saved a bundle on my car insurance.”

If people actually behaved like the actors in the commercials, you might soon hear some of your friends and neighbors saying “I saved a bunch on my real estate commissions.” And after that it could be “I saved a bundle on my financial planning.”
…
The proof may have come last week, when the Justice Department reached a tentative settlement with the National Association of Realtors that essentially forced traditional real estate brokers to give Internet-based agents access to home-listing information that they had previously been denied.

Online real estate agents often charge discounted commission fees and let buyers review listings at their own pace, but for years those Internet-based brokers in many parts of the country could not access more than 800 Multiple Listing Services nationwide affiliated with the national Realtors group. An MLS is a database of regional properties for sale.

The traditional argument against opening the MLS system to online brokers was that it would result in a significant cut in commissions for traditional real estate agents. Indeed, that’s precisely what government officials wanted.
…
In the fall of 2005, government lawyers filed suit against the national Realtors group, saying that the lack of access amounted to discrimination against online brokers. Last week’s settlement, filed in Chicago, opens the listings databases to traditional and online property agents, which should effectively allow brokers to decide exactly how they want to compete in the marketplace.
Last year, the Justice Department and Federal Trade Commission found that home buyers and sellers were missing out on the kinds of cost savings and benefits that consumers in other businesses have reaped as a result of Internet technology. The main stumbling block was perceived to be the access issue.

Whether the settlement — which is likely to take effect in late summer or early fall, 60 days after final approval, and which will be in place for 10 years — actually gets the job done and lowers commissions remains to be seen.

In Delaware, for example, the two listings services — including one that extends into southern New Jersey and eastern Pennsylvania — never barred access to online agents, so long as those brokers were properly licensed.
…
That schism is where consumers can potentially make some money. In a real estate market that has significantly slowed in most parts of the country, there’s nothing wrong with demanding the services you need, and paying only for what you use. Rather than lose your business — something a broker might have done a few years back when they were flush with clients — you may find that you can get both traditional and online agents to give you the best of both worlds.

From the AP:

Property tax rebates — touted as not being “an election year gimmick” — now ready to be cut

They’ve talked of keeping parks and the state agriculture department open and maybe boosting aid for towns and cities, but legislators have devoted scant debate this year to sustaining property tax rebates they so highly touted just a year ago.

Democrats who expanded the rebates last year and promised they weren’t an election-year gimmick seem ready to accept Democratic Gov. Jon S. Corzine’s proposal to eliminate rebates for households earning more than $150,000 and scale them back for others.

That has Republicans saying, “We told you so.” They spent last year deeming the expanded rebates a ploy to ensure Democrats — as they ultimately did — kept their legislative majorities in November’s elections.

“Why should the public believe anything we say here based on that experience?” asked Assemblyman Declan O’Scanlon, R-Monmouth.

But Democratic leaders said they couldn’t have foreseen the national economic woes that helped threaten state tax revenues and prompt Corzine to propose a $33 billion budget with $2.7 billion in spending cuts.

“No one could have foreseen the national recession to this degree when we passed that rebate program a year ago,” said Assembly Budget Chairman Lou Greenwald, D-Camden.

He noted the massive financial troubles that hit several leading Wall Street firms that employ many New Jersey residents, thus threatening state income tax collections.

“You just don’t see some of these things,” Greenwald said.
…
The proposed rebate cuts would save the state $519 million.

Households earning up to $100,000 would still get rebates averaging $1,115 under Corzine’s $33 billion budget plan, and senior citizens would still get about $1,270.

But households earning between $100,000 and $150,000 would get $665, or about $300 less than last year.

Households earning between $150,000 and $250,000 would get nothing after getting $745 last year.

Renters would see rebates cut to $80 from as much as $350 last year.

Some fear further declines in tax revenue could lead to sharper rebate cuts, but Assembly Speaker Joseph Roberts Jr. _ who has proposed converting the rebate checks to state income tax credits said the rebates have been cut enough.

From the Star Ledger:

Rebates won’t rise along with property taxes

Homeowners hit with steep property tax increases last year have a second shock coming in Gov. Jon Corzine’s proposed state budget: New Jersey’s 20 percent property tax rebate will not apply to any increases in property tax bills that kicked in last year.

The Treasury Department said yesterday that basing this year’s rebates on 2006 property tax bills — not the 2007 bills — would save the state $85 million, including $34 million on rebates to senior citizens and $51 million on the checks to others.

As a result, most homeowners will receive the same rebate this year as last year, regardless of any increase in their tax bills.

“I don’t understand why he is doing this,” longtime Perth Amboy resident Alan Silber said of Cor zine. Silber said his property tax bill jumped by $1,255 last year. “There are only 15 municipalities in New Jersey whose taxes went up higher than ours. To base it on 2006 means none of that counts. That’s totally unfair.”
…
The budget Corzine presented to lawmakers in March projected a $534 million cut in the property tax rebate program, largely through the elimination of rebates for homeowners earning more than $150,000 and a reduction in rebates for those earning more than $100,000.

The budget proposal also specified that 2006 tax bills would be used to calculate the rebates. That’s a change from the legislation that set up the rebate program last year, which based them on the property tax bills in effect each October.

Treasury Department officials yesterday submitted materials to the Senate Budget Committee spelling out how much the decision to ignore 2007 tax increases would trim the rebates that homeowners would otherwise receive.
…
With rebates ranging from 10 percent to 20 percent of a homeowner’s taxes, exempting the $1,255 that Silber’s local tax bill grew by last year means he won’t get the extra $125 to $250 that otherwise would have been added to his rebate check.

From the AP via the Philly Inquirer:

Democrats are split on a subprime bailout

Democrats are split over how to respond to the housing debacle, with House leaders focusing on helping homeowners who face foreclosure while the Senate moves to take care of businesses affected by the subprime crisis.
The Senate could pass its bipartisan, business-friendly measure - which showers $25 billion in tax breaks on home builders and banks - as early as today. That’s also when a key House panel is to consider a rival Democratic plan that instead steers tax breaks toward first-time home buyers and investors in low-income rental housing.

The emerging rift casts in doubt the prospects for a broader housing-rescue plan that would have the government step in and insure $300 billion in restructured loans for homeowners staring at foreclosure. Rep. Barney Frank (D., Mass.), the House Financial Services Committee chairman, begins hearings on that measure today.

The debate unfolds as Democratic leaders consider using a forthcoming war-spending bill as a vehicle for additional economic aid, such as an extension of jobless benefits and food aid for the poor.

House Speaker Nancy Pelosi (D., Calif.) and Senate Majority Leader Harry Reid (D., Nev.) are calling for a follow-up plan to the stimulus package President Bush signed in February, which included tax rebates for most wage earners.

“We’re going to look at the supplemental not only for the war funding, which is about $109 billion, but also what we can do . . . for summer jobs programs, extending unemployment benefits, some things that would be stimulative to the economy,” Reid said yesterday.

Pelosi has made little secret of her distaste for the Senate’s approach on housing. “Hopefully, the balance will swing to being more in favor of the families who are in danger of losing their homes,” she said last week.

The House plan would give first-time buyers a 10 percent credit - up to $7,500 - on the purchase of a new home. It is targeted toward lower earners, with smaller credits to people who make $70,000 (or $110,000 for a couple).

“We need to provide relief to the buyers and families themselves, not just the banks and builders,” Rep. Charles B. Rangel (D., N.Y.), the Ways and Means Committee chairman, said yesterday.

Rangel’s panel is scheduled to consider the measure today, and House leaders plan to add it to the broader housing overhaul expected to come to a vote in May.
…
The White House weighed in against the Senate bill Tuesday, opposing provisions to fund state and local government purchases of foreclosed homes and opposing the $7,000 tax credit.

“The bill will likely do more harm than good by bailing out lenders and speculators and passing on costs to other Americans who play by the rules and honor their mortgage-debt obligations,” White House press secretary Dana Perino said.

Jim Manley, Reid’s spokesman, said those comments “sound like yet another excuse to do nothing to help the thousands of American families facing foreclosure each day.”

From the APP:

Corzine wants $260M to replenish jobless trust fund

Gov. Corzine said Tuesday he wants to move $260 million from the current state budget to shore up the unemployment trust fund and avoid a trigger that would mean higher payroll taxes for employers.

The decision came after state projections showed the fund that pays unemployment benefits might not have enough money to meet its obligations.

“This really was brewing,” said David J. Socolow, commissioner of the state Department of Labor and Workforce Development. “We’ve been right on the bubble of this happening for years.”

Unemployment benefits are given to workers who lose their jobs through no fault of their own, and they are funded by taxes both on employers and workers. The state is required by law to maintain a balance that ensures the program will be adequately financed.

But lawmakers diverted $4.7 billion from the fund for other projects for 14 years until Corzine took office and ended the practice. The program is under more strain, given the shaky economy; the state’s jobless rate rose to 4.8 percent in February from 4.5 percent in January.

The result: The unemployment fund on March 31 was projected to have $999 million for the next fiscal year, less than the $1.04 billion it needed to be considered financially healthy. That would automatically trigger a hike on employers’ payroll taxes that would generate another $350 million, Corzine officials said.

Employers’ tax rates for the unemployment program depend on how often their workers use it; an employer with heavy turnover pays more than an employer with a relatively stable work force. If the trigger were to go into effect, an employer paying a 1.7 percent tax rate, for example, would see it rise to 2.1 percent. Workers’ taxes would remain the same.

The governor “will not burden employers with taking care of an obligation that is not their fault,” Corzine spokesman Jim Gardner said.

Corzine’s solution is to change the date on which the fund balance is calculated from March 31 to June 30 for this year, and to transfer $260 million from the state’s current budget surplus to the unemployment plan. The plan first needs the Legislature’s approval.

From the Asbury Park Press:

Family leave narrowly passes Senate

The full Senate narrowly approved a proposal that would give workers a paid family leave program to care for a newborn, a newly adopted child or an ill family member, even though a majority of senators said they had concerns with it.

Largely along party lines, the Senate voted 22-16 — closer than might have been expected, given that it has been pushed by high-ranking Democrats such as Gov. Jon S. Corzine and Senate Majority Leader Stephen Sweeney, D-Gloucester.

If the debate — which touched on the struggling economy, equity to the poor and New Jersey’s perceived anti-business climate — accurately depicted the senators’ vote, the measure likely would have failed.

But advocates who argued with their hearts that the leave allows workers who may not get days off to spend time with a new or ill loved one won over those who argued with numbers that New Jersey’s struggling economy and business sector cannot afford a burden that other states don’t have.

“We have a heart for it, we don’t have the wallet for it,” Sen. Kevin O’Toole, R-Essex, said.
…
While critics said the measure would shutter businesses when a vital employee leaves, or keep them from opening up in New Jersey, proponents said similar dire circumstances were predicted from restaurants when indoor smoking was banned, bars when the blood alcohol limit was raised or business in general when the minimum wage was raised.

Business can find a way to accommodate the program, they argued.

“If you don’t provide backup to your key employees, one day that key employee is going to get run over by a bus, and you’re out of luck,” Sen. Raymond Lesniak, D-Union, said.
…
“Despite the best of intentions, this really is something that is going to tremendously harm the economy in the state,” said Philip Kirschner, president of the New Jersey Business and Industry Association, preparing to continue to the fight against the program in the Assembly.
…
“It was a good vote for working families,” said Ev Liebman, of Citizen Action.