From the Halls of Trenton: Battle Brews Over Horizon Blue’s Reserve Fund

By Hoboken Strategy Group

No real surprises: it’ll be Democrat Phil Murphy, a former U.S. Ambassador in the Obama administration, versus NewJersey Lt. Governor Kim Guadagno on the Republican side.by Hoboken Strategy Group

June is here.  The Spring pollen season is coming to a close, which equals less tissues and cleaner cars. The days are getting warmer and longer.  For those of us in the Halls of Trenton, June is shaping up to offer a lot of long days.

statecapAs a loyal From the Halls reader, you know how important this year and this month are.  With the Governor’s Office and all 120 seats in the Legislature up for grabs in November and a balanced State Budget due by June 30- there are a lot of wheels in motion.  On June 6, New Jersey voters headed to the polls to decide who will represent their respective parties on the November ballot. No real surprises: voters have chosen Democrat Phil Murphy, a former U.S. Ambassador in the Obama administration, and  New Jersey Lt. Governor Kim Guadagno on the Republican side.

With Republican Governor Chris Christie term-limited from seeking another term, political observers are closely watching the Republican and Democratic Gubernatorial Primaries.  On the Republican side, Lieutenant Governor Kim Guadagno is seeking to replace her former running mate.  The Lieutenant Governor is being challenged by Assemblyman Jack Ciattarelli (R-16), Nutley Commissioner Steven Rogers, and political newcomers Joseph Rullo and Hirsh Singh.  For the Democrats, voters will choose between former Ambassador Phil Murphy, Senator Raymond Lesniak, Assemblyman John Wisniewski, Tenafly Borough Councilman Mark Zinna, former Under Secretary of Treasury Jim Johnson and activist Bill Brennan.

The other focus of this month will be the consideration of the State Budget.  Legislators and the Governor will face a projected $527 million budget shortfall which must be filled for a balanced budget.  The administration has announced that roughly $300 million to in funding to local governments to cover Homestead property-tax relief credits will be delayed until the next Fiscal Year.  The remaining shortfall will be plugged using budget surplus funds as well as the State’s Clean Energy Fund.

The administration has also announced that the 2018 Fiscal Year revenue forecast will be increased by $200 million through a series of new tax collection initiatives enacted by the Department of Treasury.  These initiatives include the implementation of a process for collecting overdue taxes which includes more aggressive audits and the targeting of tax delinquents.  This increased revenue forecast is good news for the State given the recent reductions to the sales tax as well as the phasing out of the estate tax.

Another proposal to be considered as a part of the budget process is the Governor’s plan to dedicate lottery revenue to the State’s pension system.  The Governor has lauded this proposal as a dedicated source of revenue after decades of underfunding by both Republican and Democratic administrations.  In recently released details, this proposal includes the dedication of the Lottery Enterprise to the Public Employees Retirement System, the Teachers’ Pension and Annuity Fund and the Police and Firemen’s Retirement System for a period of 30 years.  If enacted, lottery revenue would generate a predicted $36.5 billion to the pension funds over 30 years.  This proposal would drop the State’s unfunded liability in the pension funds from their current $49 billion deficit and result in the funds being 58.9% funded from the current level of 44.7%.

Currently, lottery revenue is directed to the General Fund and dedicated towards higher education programs, psychiatric hospitals, center for people with developmental disabilities and homes to disabled soldiers.  If the plan is enacted, these programs would be funded directly through the State Budget.  According to State Treasurer Ford Scudder, if the pension payment receives a dedicated source of revenue other than annual State Budget appropriations, additional funding will be available in the Budget to be dedicated towards these purposes.

The real battle to watch will be on the Governor’s plan to tap $300 million in funding from Horizon Blue Cross Blue Shield of New Jersey’s financial reserves to be dedicated towards the creation of a fund for drug treatment programs in the State.  Since proposing the plan during his State Budget address, the Governor has waged a public campaign to urge support for his proposal including the questioning of Horizon’s non-profit status as well as the salaries of their leadership.  Horizon has been quick to defend their operations as well as the purpose of their financial reserves which equate to 75 days cash on hand to pay claims for its 3.8 million insured.

Last week, Assembly Speaker Vincent Prieto stated that “there is no appetite” in the Assembly to advance the legislation.  During the Assembly Budget Committee’s hearing on the Department of Banking & Insurance, Committee Chairman Gary Schaer (D-36) expressed his concerns that if the State took $300 million from Horizon’s reserves, the fund would have to be replenished, likely through increasing the cost of premiums to policyholders.  On the Senate side, Senator Joseph Vitale, Chairman of the Senate Health, Human Services & Senior Citizens Committee has stated that he has yet to decide on whether he will sponsor the proposal.  But hey, it’s June in Trenton and a lot can happen, so stay tuned!

On the good news front, Governor Christie recently announced that the State’s unemployment rate has dropped to 4.1 percent, the lowest that it has been at any time since 2001.  Considering that New Jersey’s unemployment rate was 9.8 percent when the Governor took office in January 2010, this has been a steady improvement for the State’s economy.

Another positive development since our last issue is that the Legislature approved the Governor’s proposed $400 million in extra spending for transportation projects this fiscal year.  For Hudson County, this supplemental appropriation has provided funding for projects include:

  • Viaduct repair/reconstruction along Route 495 in North Bergen;
  • Bridge deck and approach repairs on Route 280 in East Newark;
  • Re-surfacing of Route 185 in Jersey City;
  • Drainage reconstruction and paving of West Side Avenue in North Bergen
  • Preliminary engineering and final design for the NJ Transit Hudson-Bergen Light Rail Route 440 Extension in Jersey City
  • Completion of the Environmental Impact Statement for the Hudson-Bergen Light Rail Northern Branch Extension

Well, it’s June and we are government relations professionals, so we have to get back to work.  We will be back over the Summer reporting from a beach chair with an icy libation in hand and bring you up to speed on all of the June excitement that occurred in June in and around the Halls of Trenton!

Hoboken Strategy Group is a boutique New Jersey government relations and business development firm made up of public affairs professionals with years of experience handling legislative and regulatory challenges on the local, state and federal levels.  Kay Elizabeth LiCausi, President of Hoboken Strategy Group, serves on the Hoboken Chamber of Commerce.  Michael J. Comba serves as Vice President of Hoboken Strategy Group.  Special thanks to our Summer Intern, Alexis Bailey, on her contributions to this edition.  Alexis is a rising Sophomore at Rider University.  They can be reached online at www.hobokenstrategy.com and on Facebook at Hoboken Strategy Group.

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