Earlier in his career, Mr. Richel held a number of positions in the banking industry. He was Vice Chairman of the Board at Independence Community Bank Corp., before its sale to Sovereign Bank in June of 2006. Previously, he served as Chairman of the Board and Chief Executive Officer of Statewide Savings Bank. Subsequently, he was appointed Chairman of the Board, President, and Chief Executive Officer of Statewide Financial Corporation upon its formation as the holding company for the bank. He served on the Board of Directors of the bank from 1985 on and its predecessor beginning in 1974. Mr. Richel was appointed to the Banking Advisory Board of the New Jersey Department of Banking and Insurance in 1996 – nominated by then Governor Christine Todd Whitman. He has also served on the board of Thrift Institutions Community Investment Corporation of New Jersey (TICIC), as well as the Board of the New Jersey Savings League.

In addition to CSI•NJ, other philanthropic commitments include serving as Chairman of the Board of Trustees at Trinitas Regional Medical Center, and its parent organization Trinitas Health. Mr. Richel is also currently the Chairman of the Board at Union County College a position which he had held since 1995.

“Vic’s vast experience in non-profit management combined with his business acumen and passion for improving New Jersey’s economy make him a great addition to our growing team of board members and trusted advisors,” notes Jerry Cantrell, President and Chief Executive Officer of CSI•NJ.

Details of the briefing will be available in a few days. Click the links below for compelling Powerpoint presentation documents referenced throughout the discussion.

“New Jersey’s Budget & Tax Outlook“
By Andrew Sidamon-Eristoff

“New Jersey’s Tax System – A National Perspective“
By Joseph Henchman

Mr. Ferguson opened his introduction by saying that his colleagues in Washington, D.C. are confused that things are actually getting done in New Jersey. He described Mr. Bagger as a major contributor to positive change in the Garden State. He cited Bagger as a key ally in turning around the NJSEA. When Governor Christie took office, he had to put the Authority in turn-around. It was losing money; assets failed to perform and required subsidies. “Common sense ingenuity filled a void,” said Mr. Ferguson. “NJSEA is a prime example of how to win the battle of ideas, and it is now profitable.”

As Governor Christie’s Chief-of-Staff from the ground floor, Mr. Bagger was able to convey how the Governor boldly met New Jersey’s catastrophic fiscal situation head-on. He described the atmosphere of excitement and determination under Christie’s unwavering leadership: from facing a $2 billion deficit as he entered office and delivering a balanced budget by Executive Order three weeks later; to the his glee at vetoing the so-called “Millionaire’s Tax.”

Mr. Bagger painted a grim picture facing the State on many levels. Property taxes had increased 70% in the 11 years leading up to the 2010 election. He pointed out how CSINJ’s very first report, “Can Property Taxes Work: Lessons for New Jersey from Massachusetts” was used as the model for a two percent cap on property tax enacted by Legislature and signed into law by Governor Christie. He also cited how our leadership on health care policy helped him in the Administration, and now in his role in the private sector.

In conclusion, Mr. Bagger described the process of fiscal reform in two phases: the immediate and tactical; and the long-term and strategic. With a 20% reduction in government, unemployment slowly going down; 100,000 new private sector jobs; private investment and homes sales up; and 2011-2012 representing the best private business growth since 2000, it is time for phase two. His recommendation for New Jersey policy going forward: “Once you’ve changed the direction, step on the gas pedal.”

In March, New Jersey State Treasurer Andrew P. Sidamon-Eristoff and Joseph Henchman, Vice President of Legal & State Projects at the D.C.-based Tax Foundation will present a Road Map to Tax Reform in the Garden State.

Both events are by private invitation as seating is limited. For more information, please contact Anne Kneuer at 973.927.9860 or akneuer@csinj.org.

The new members are: Michael Horn, Esq., a Partner at McCarter & English, LLC who represents financial institutions and corporations in regulatory, corporate governance and litigation matters. He currently serves as Chairman of the Board of the Federal Home Loan Bank of New York, and is a member of the Council of Federal Home Loan Banks. He also serves as General Counsel to Union County College. Prior to joining the firm, he served as a member of the New Jersey State Assembly and was a member of the Assembly Banking Committee from 1972 to 1974. Mr. Horn served as the Commissioner of Banking for the State of New Jersey from 1982 to 1984. As Commissioner, he supervised approximately 340 financial institutions, including state chartered banks, savings banks, savings and loan associations and credit unions. In 1984, he was appointed as New Jersey State Treasurer and oversaw the collection of state taxes, budgeting and the spending of all state funds.

Arthur E. Imperatore, Jr. is President and CEO of Romulus Development Corp., a co-developer of, among other projects, the Port Imperial development site in Weehawken and West New York, New Jersey. Port Imperial is also the headquarters of NY Waterway, the nation’s largest private mass-transit ferry/bus system where Mr. Imperatore also serves as Executive Vice President. Additionally, Mr. Imperatore is an Adjunct Professor of Real Estate and Urban Development at the Graduate School of Architecture, Planning and Preservation at Columbia University (GSAPP), and specializes in the history of American Real Estate Development. He is involved in a number of community and non-profit organizations, including the Friends of the Palisades Interstate Park; the Friends of the Hudson River Park; the Friends of Gateway National Recreation Area; the Alan M. Voorhees Transportation Center at Rutgers University; and the Regional Plan Association (RPA).

Anthony Vespa served most of his 30-plus years in the financial services industry at Merrill Lynch and Co. Vespa retired from Merrill Lynch in 2001 after serving, for six years, as President and CEO of the Merrill Lynch Insurance Group, and Executive Committee member of Merrill Lynch Private Client Group. He is President of Corporate Governance Group, a corporate consulting firm, and The Vespa Group, a private investment firm. In addition, he is a trustee for St. Joseph Medical Center Foundation, President of Northern New Jersey Council, Boy Scouts of America, and President of Upper Montclair Country Club, and serves on the Council of Presidential Advisors at Fairleigh Dickinson University.

Economist Steve Moore discusses the importance and influence of state-based policy think tanks

Economist Steve Moore discusses inflation and interest rates

The Manhattan Institute’s Larry Mone Introduces Steve Moore

CSINJ President Jerry Cantrell Speaks at Steve Moore Luncheon

Governor Christie is relentless in his fight for spending restraint. An early example of his fiscal fortitude was his famous response to threats from the legislature to shut down state government over a budget fight. The governor promised he would go back to the governor’s mansion, order a pizza, have a beer and watch a ballgame until they decided to open government again.

He has shown similar determination on the revenue side, especially in the fight over putting a leash on property taxes. But there is one part of the state budget that neither the governor nor the legislature has paid much attention to: federal funds.

Federal Aid to States, which is the formal name of federal money going in to state budgets, is a very big operation. In 2011 Uncle Sam sent $630 billion to the states for spending programs that cover everything under the sun. The largest posts are Medicaid, transportation, education and programs for children and families. But there is also money in there for things like milk in our school lunch cafeterias, bullet-proof vests for police officers and recreational trails for terrain vehicles.

Even though states sometimes treat these funds as free money, obviously it has to come from somewhere. Furthermore, most programs come with a requirement that states produce matching funds.

New Jersey is no exception. In 2009 we received $13.5 billion, half of which went to Medicaid. In order to keep the federal Medicaid dollars coming we had to match the federal grant dollar-for-dollar. That balance is now about 58 percent federal, 42 percent state: the federal government has increased its Federal Aid to States spending in recent years. This is partly due to the so called “Stimulus Bill”, but the underlying annual growth is about seven percent.

The real danger with depending on these funds is that Uncle Sam borrows a good part of what he gives us. And this is where our very dependency on federal funds becomes a problem. What do we do when Congress starts cutting spending to balance its budget?

A $630-billion package of spending programs is far too big to escape the chopping board.

At that point New Jersey will have no control over what cuts Congress decides to make. All we know is that once they get around to cutting spending, it will probably be in the form of drastic, almost panic-driven, indiscriminate cuts.

This will have two problems. The first is purely political but nevertheless important. Federal Aid to States may be funded by the federal government, but it is run by the states. Therefore, Governor Christie and the legislature will be held accountable for cuts initiated by the federal government, while Congress gets to look unashamedly fiscally responsible.

Hardly a scenario that the governor and the state lawmakers should be very happy about.

Just to put in perspective what this means, consider that in 2009 New Jersey received $13.5 billion in federal funds (according to the Census Bureau). Of that, about half, $6.3 billion, was for Medicaid, $1.6 billion was transportation funds, $1.3 billion went to programs for children and families and Jersey schools got $612 million.

Suppose the federal government decided to make a small, five-percent cut in these funds. That would be equivalent to $675 million. To make up for that with tax increases, the state would have to (again considering 2009 numbers) more than double the gasoline tax, or more than double the vehicle registration tax.

If we tried another tax increase on higher incomes, we would have to double the taxes on earnings above $100,000.

But all hope is not lost. We can shield New Jersey from panic-style cuts to federal funds. One radical idea would actually involve income taxes, but not the ones that go into the state coffers. Each year New Jersey taxpayers pay personal federal income taxes; in 2009 the total personal tax liability to Uncle Sam was $44 billion. That same year we got, again, $13.5 billion from the federal government.

Common sense says that it is wasteful to have New Jersey families send a lot of money down to the federal government and then have the federal government send some of it back. What if we could find a way to re-route some of those personal federal income tax payments directly in to the state treasury? Congress would no longer need to send us $13.5 billion and therefore would not need $13.5 billion from New Jersey families.

There are, of course, several practical problems associated with this idea. But our state’s dependency on federal funds, while helpful in some ways, is also a potentially big threat to our fiscal stability. All we know is that Congress will deal with its budget deficit at some point, and when they do there is a real risk that they pull out a fiscal chainsaw. At that point, we will have no time to thoughtfully manage cuts to federal funds.

If on the other hand we start considering “big” solutions now, we may be able to shield our state from the fiscal fallout when Congress finally starts doing something about its deficit.

———-

Sven R. Larson, Ph.D., is Senior Fellow in Economics at the Wyoming Liberty Group and a guest contributor for Common Sense Institute of New Jersey. He holds a Ph.D. in social sciences with major in economics and has taught economics at colleges in three countries. His research on health policy, taxes, and government budgeting and entitlement reform has been published by free market think tanks across the country.

By invitation only. For more information, please contact Anne Kneuer at 973-927-9860 or akneuer@csinj.org.

About Steve Moore

Stephen Moore joined The Wall Street Journal as a member of the editorial board and senior economics writer on May 31, 2005. He currently divides time between Washington and New York focusing on economic issues, including budget, tax and monetary policy.

Moore has been a frequent contributor to the Journal over the years, and is previously known as the founder and former president of the Club for Growth, which raises money for political candidates who favor free-market economic policies. He left that position in 2004. Prior to joining the Wall Street Journal, he was president of a new organization, the Free Enterprise Fund.

For many years, Moore has served as a senior economist on the Congressional Joint Economic Committee, as a budget expert for the Heritage Foundation and as a senior economics fellow at the Cato Institute. Through his Cato Institute affiliation, he has published dozens of studies on federal / state tax and budget policy. Moore was also a consultant to the National Economic Commission in 1987, and research director for President Reagan’s Commission on Privatization.

Moore is the author of five books, including “The End of Prosperity: How Higher Taxes Will Doom the Economy – If We Let it Happen.” His books also include “Its Getting Better All the Time: The 100 Greatest Trends of the Last Century,” and “Bullish on Bush: How the Ownership Society Will Make America Stronger.”

Stephen Moore is a frequent guest on many TV shows, including CNN’s Inside Politics, Crossfire, and Moneyline, NBC’s Nightly News, Fox News, and The McLaughlin Group.

There are some signs here and there that the New Jersey economy is recovering. One of them is a slow uptick in private-sector employment. According to the Bureau of Labor Statistics, in June 2012 there were 3,346,000 private-sector employees in the state, up from 3,275,000 two years earlier. Admittedly, an increase of 71,000 jobs in two years is not much, and we are still nowhere near the 3.5 million jobs in the private sector we had five years ago. But every new job is welcome, and hopefully the upward trend is here to stay.

One of the worries that come with private-sector job growth is that the extra tax revenues will encourage government to take on more employees. There are good reasons to worry about this: during the good years between the Millennium Recession and the Great Recession state and local governments in New Jersey hired new workers faster than the private sector did:

• Between 2001, the bottom of the Millennium Recession, and 2007, right before the Great Recession started, the private sector added a net of 36,600 jobs in New Jersey;
• During the same period, the state and local governments added 49,300 jobs.

These numbers tell us two things. First, the Millennium Recession was not nearly as bad as was sometimes suggested at the time. Secondly, the relative growth in government jobs to private jobs was staggering:

• In 2001 there were 158 state and local government employees per 1,000 private-sector employees in New Jersey;
• In 2007 there were 171 state and local government employees per 1,000 private-sector employees in New Jersey.

You don’t need a degree in economics to realize that this implies higher taxes. Common sense says that when the ratio of government workers to private-sector workers goes up, so will our income taxes, property taxes, sales taxes, use taxes, wealth taxes…

Ultimately all the taxes we pay come out of our current earnings; no one pays his taxes out of his savings account (except in emergencies). Therefore, the growth in the government-to-private employee ratio is in effect an increased burden on our personal incomes.

But not only has the number of government workers been growing fast – their compensation has also outpaced compensation in private jobs. If we combine the employee data from the Bureau of Labor Statistics with employee compensation data from the Bureau of Economic Analysis, we get a troubling picture:

• Between 2001 and 2007 per-employee compensation in the private sector in New Jersey grew from $52,380 to $64,420, an increase of 23 percent;
• Between 2001 and 2007 per-employee compensation in government in New Jersey grew from $50,632 to $65,412, an increase of 29 percent.

Again, we have a recipe for higher taxes. In fact, if we take the total effect of growing government employee compensation and the growing number of government employees during the period 2001-2007, the total effect was big enough to require a two-percentage-point rise in taxes on private workers in New Jersey.

This does not mean, of course, that New Jersey private employees literally paid another two percent of their earnings in taxes directly to feed state and local government workers. Government workers also pay taxes. But this experiment illustrates how a rapid expansion in government payrolls inevitably increases the tax burden on the private sector.

To make matters worse, the trend of growing government payrolls did not stop in 2007. In 2009 there were 181 state and local government workers in New Jersey per 1,000 private workers, again up from 158 in 2001. Total government payroll obviously kept growing with it. State and local government employee compensation was:

• 15.3 percent of private sector employee compensation in 2001;
• 17.3 percent in 2007; and
• 19.0 percent in 2009.

The past two years have seen a reversal of this trend. There are fewer government workers in the Garden State today than there were in 2009 and private employment has gone up. But the cost of government payrolls to taxpayers is still notably higher today than it was some ten years ago. In 2011 there were still 175 government workers per 1,000 private workers, a ratio that is 10.5 percent higher than it was in 2001.

Put differently: if the state and local governments had kept their number of employees at the 2001 ratio of 158, New Jersey taxpayers would have saved $3.9 billion in 2011.

Now that the private sector is growing again, it is time to consider measures that will prevent runaway government growth again. One such measure could be to tie government payrolls to the ability of taxpayers to afford them. This can be done in many different ways, such as total budget caps or similar so called TABOR rules.

Another approach, used in some European countries, is a pay parity rule: if the employee compensation in the private sector goes up by, say, three percent per employee, then state and local government workers can receive a raise of no more than three percent.

All measures have their merits and problems and some rules that are in place elsewhere may not suit New Jersey. But now that we are (hopefully) past the worst of this recession it is time to discuss long-term solutions so that the cost of government does not run amok again.

Sven R. Larson, Ph.D., is Senior Fellow in Economics at the Wyoming Liberty Group and a guest contributor for Common Sense Institute of New Jersey. He holds a Ph.D. in social sciences with major in economics and has taught economics at colleges in three countries. His research on health policy, taxes, and government budgeting and entitlement reform has been published by free market think tanks across the country.

Kneuer’s career in fundraising for non-profit organizations includes positions at associations, in the arts and education. She began her fundraising career with the Partnership for New York City, a prestigious business advocacy organization. Her passion for pro-growth policies and advocacy work began there. Later, she joined the team that built the New Jersey Performing Arts Center in Newark. For five years, she served as Director of Development for the Georgetown Public Policy Institute (GPPI) housed at the Georgetown University’s Graduate School. There she worked closely with principal investigators studying public education reform and other key policy issues.

Said CSI-NJ President Jerry Cantrell. “Anne brings a wealth of experience and enthusiasm to CSI, and I’m thrilled to have her alongside as we grow our organization by bringing a voice of freedom to the citizens and leaders of New Jersey. Her addition adds a critical level of expertise to the Institute as we transition from start-up phase to a more mature operational model requiring an enhanced relationships with our supporters.”

Kneuer received her B.A. in English with a concentration in History from the University of Vermont. She has been a member of CASE and other organizations for fundraising professionals. Her work at GPPI led to several seven and eight figure research grants. Additionally, she brings a broad range of skills and experience to this endeavor as well as an entrepreneurial spirit. She was raised in Monmouth County, has lived in various parts of the state and currently resides in Sea Bright.

“I am delighted to join CSI-NJ in this capacity and at this time, and am dedicated to improving the fiscal health of my home state. I believe CSI-NJ implements a measured and thoughtful – yet powerful approach – to research, advocacy and ultimately change. And now is our moment. There is a great team of supporters in place at CSI-NJ which we will endeavor to grow through outreach, awareness and events. I look forward to sharing the CSI mission to like-minded citizens who want to put New Jersey back on track,” said Kneuer.