Category: Blog

State of the State 2021: Rapid Reaction

Posted on by Louis DiPaolo

Welcome to NJPP’s State of the State 2021: Rapid Reaction, your source for commentary and data analysis on Governor Murphy’s address. The transcript below was taken from NJPP’s Zoom room and has been lightly edited.

Lou (Louis Di Paolo, Communications Director): On Tuesday, Governor Phil Murphy delivered his third annual State of the State address — the first virtual address of its kind in New Jersey history. In his speech, the governor highlighted some major policies enacted during his first term, reflected on the COVID-19 pandemic, and laid out some priorities for 2021.

It should go without saying that this past year was an absolute dumpster fire. New Jersey was one of the first states hit by the COVID-19 pandemic, which has spread to more than half a million residents and taken the lives of nearly 20,000 of our friends, family members, and neighbors. In the absence of any meaningful federal response, Governor Murphy and state lawmakers were tasked with the difficult work of keeping everyone healthy by slowing the spread of the virus, as well as keeping the economy afloat.

Given that the pandemic recovery was a big theme in the governor’s speech, let’s start with that. What did you all think about Governor Murphy’s remarks and reflections on COVID-19 and the path forward?

Sheila (Sheila Reynertson, Senior Policy Analyst): Given the historical weight of the pandemic and its second wave, Governor Murphy absolutely hit the right tone in his address. He highlighted upfront the collective pain and trauma brought on by the pandemic, the inequitable impact on communities of color, and the need to put struggling families at the center of the recovery efforts. His commitment to the idea that “public health creates economic health” continues to drive the state’s recovery, which I believe is a great relief to New Jerseyans who have witnessed other states falter under dismissive leadership.

The after-effects of the pandemic cannot be overstated, and Governor Murphy mentioned deliberate steps that have already been taken to get the state back on track. Things like the development of safe and affordable homes and robust and reliable public transportation, the expansion of high quality, affordable education, and child care support for essential workers.  These are drivers of a robust recovery. And, thankfully, they received vital funding in the current annual budget — a policy decision that rejects austerity and protects New Jerseyans.

Lou: All great points, especially that last one about rejecting austerity. It’s a huge relief that the governor recognizes that you can’t cut your way out of an economic crisis like this one. But when we talk about a strong and fair recovery, we have to recognize that far too many families are being left behind. I’m thinking specifically about our immigrant communities here.

Vineeta (Vineeta Kapahi, Policy Analyst): That’s right. Many New Jersey residents have been left out of most forms of federal and state pandemic relief. Immigrants who file taxes using an ITIN number, for example, are ineligible for both the federal stimulus payments and unemployment insurance. While many states stepped up to provide much-needed relief to families who are excluded from many public programs, New Jersey lawmakers have yet to take action.

Lou: Thanks, Vineeta. As we’ve said many times, excluding these folks is not only cruel but bad economic policy.

As Sheila mentioned above, the governor made a strong point that there is no economic health without public health. I know you liked that line, too, Brittany. What did you think of the speech, especially as it relates to public health?

Brittany (Brittany Holom-Trundy, Senior Policy Analyst): I was happy to hear how this speech highlighted the interconnectedness of health, the economy, and social inequities. The Governor’s remarks made evident that the state has learned two important lessons during this crisis: first, that disparities have worsened the pandemic for our Black and Latinx communities in particular; and second, that there cannot be a healthy economy without healthy individuals and communities. And to thrive, everyone needs access to comprehensive health insurance, easy access to a full range of reproductive health services, worker protections, and child care support, to name a few things.

Vineeta: I was glad to hear Governor Murphy acknowledge the challenges that workers and their families have faced both during and before the pandemic. The state could also do more to protect workers’ safety and rights and to help families balance job and caregiving responsibilities by expanding access to paid leave, sick days, and job protections. Some recommendations are included in the report below:

Lou: Pivoting a bit. This was Marleina’s first State of the State address. What was your takeaway of the address?

Marleina (Marleina Ubel, Crotty Fellow): I thought it was great, if not a little eerie. The empty room was a stark reminder of the ongoing pandemic.

Sheila: Given the severity of the pandemic, obviously this was the only option. But perhaps it was the most appropriate. This isn’t the time for pomp and circumstance, you know?

Lou: I was surprised by how short the speech was. But I guess that’s what happens when the governor doesn’t have to wait for everyone in the audience to finish clapping after every other line.

What was everyone’s favorite part of the speech?

Marleina: I liked that the governor addressed systemic racism and policing. The work that has been done on criminal justice reform over the last few years is an important step in the right direction. Next, I would like to see an end to the grant programs and civil forfeiture policies that incentivize the over-policing of marginalized communities.

Vineeta: I second that. Too many New Jersey residents face trauma and live in fear because of the criminal justice system. The state could also do more to prevent collaboration with ICE.

Sheila: I appreciated the governor’s thoughtful remarks on the economic damage done to women by not having a robust childcare support system in place. His words weren’t just an afterthought, which is how the childcare crisis has been treated for far too long. His acknowledgment that “we cannot afford to miss out on the contributions of half our population” matters. A lot.

Vineeta: To piggyback onto that, the governor also mentioned the Child and Dependent Care Tax Credit (CDCTC). While this is a good policy that helps some families cover the costs of care, New Jersey’s CDCTC is not refundable. As a result, many of the households with the lowest incomes cannot benefit from the credit. That needs to be fixed.

Brittany: I liked how he highlighted the many ways that New Jersey leads in health care, particularly with our new state exchange and the additional subsidies available to help improve affordability. With the loss of employer-based insurance threatening the health of so many people during the pandemic, finding a path to get all New Jerseyans insured is crucial for better protecting public health going forward.

Lou: To answer my own question, I really enjoyed the beginning of the governor’s speech where he highlighted some of the bigger laws enacted during his first term. $15 minimum wage. Earned sick days. Expanded pre-k and free community college. This is how you build a strong foundation for a robust economic recovery.

Since Brandon isn’t here, I’ll ask for him: Did the governor mention poverty during his address?

Marleina: He did not say the word “poverty,” but to his credit, he did speak at length about how many people were struggling before COVID, highlighting that economic insecurity is not a problem the pandemic created. He also proposed some solutions, including addressing New Jersey’s affordable housing crisis by building more units and expanding tax credits for those that need them.

Lou: Speaking of tax credits, the governor went to great lengths to highlight the newly enacted corporate tax break bill. Sheila, I’m sure you have some thoughts on this.

Sheila: The Governor was right to highlight the EDA grants or loans to 55,000 small businesses ravished by the pandemic. More New Jerseyans should be aware of these efforts. It makes an enormous difference to the owners, employees, local communities, and ultimately the state economy.

Having said that, tying this assistance to the newly enacted tax break legislation is a bit disingenuous. Yes, the new generation of corporate tax subsidies has a number of safeguards like worker protections and strong reporting requirements. And the new law does emphasize innovative industries, environmental cleanup, food deserts, and affordable housing. But the overall price tag of $14.4 billion is out of line with the rest of the country and sets the table for massive budget shortfalls in the not too distant future.

Lou: Yeah, giving tax breaks to corporations isn’t exactly my idea of small business relief, either. And let’s remember that this bill was rushed through the Legislature in less than a week. Can’t think of a better example for why we need serious ethics and transparency reforms in Trenton.

 Sheila: This is long overdue, and not because the pandemic slowed down the initial efforts to address it. For the past several years, access to the lawmaking process has become tighter and, in some cases, impossible. All too often, lawmakers rush bills through committee, shut residents and advocates out of the process, and intentionally block popular legislation. This trend reached a pinnacle last year when the State Police forcefully removed Sue Altman from New Jersey Working Families from a public hearing — a spectacle that received unflattering national attention.

Given the events of last week at the US Capitol, public access to the legislative process could get even worse in the name of safety. We can’t let that happen. So I appreciated hearing the Governor say “the way to combat this contagion in our democracy is to further strengthen that democracy…give more power back to the people by expanding democracy.”

Lou: That’s for sure. Brandon and Michele Sierkerka did a great job making that point in this op-ed from earlier this week:

But let’s wrap this up. Anything else from the speech that’s worth mentioning? Let’s go rapid fire for this one.

Brittany: The vaccination efforts! They are underway, and fighting misinformation and getting everyone, particularly vulnerable New Jerseyans, vaccinated is really important at this time. I’m hoping people talk to trusted expert sources on this and visit the website that the Governor highlighted for more information and to pre-register. Let’s get vaccinated!

Sheila: Continued and meaningful efforts to drive down New Jersey’s horrendous racial disparity of maternal and infant mortality rates. It’s anti-Black racism in action — and it’s deadly.

Marleina: Ending mandatory minimums and getting the marijuana legislation done! It is time to end the drug war.

Lou: Wait, marijuana isn’t legal yet?

Marleina: Nobody knows! But in all seriousness, no.

Lou: Here’s hoping that’s signed into law by the time we’re back for our budget reaction…

New Jersey’s Minimum Wage Rises to $12 on January 1

Posted on by Nicole Rodriguez

New Year’s will bring some relief to New Jersey’s lowest paid workers when the minimum wage rises from $11 an hour to $12 an hour. This is the latest scheduled increase under the 2019 law to raise New Jersey’s minimum wage to $15 an hour, for most workers, by 2024. This raise will help workers better afford basic needs, ensure more families can cope with the increased financial pressures brought on by the COVID-19 pandemic, and better maintain the economic demand for goods that small businesses need to thrive.

Other low-wage workers will also see an increase in 2021. The minimum hourly wage for both seasonal workers and workers of small employers (businesses with five or fewer employees) will increase to $11.10. Meanwhile, farmworkers will see their minimum hourly wage increase to $10.44, and the tipped wage will increase to $4.13. Last year’s increase boosted the economic security of over 460,000 workers. For 2021, it’s unclear exactly how many workers will see an increase as the accuracy of estimates are complicated by the pandemic.

While this is a welcomed rise in wages, more work remains to be done to ensure that all workers can live with dignity, meet basic needs, and have an opportunity to thrive. For example, housing remains unaffordable for most minimum wage workers, making it difficult to afford other necessities like transportation and medical care.[1] And this crisis has exacerbated these problems for low-paid workers, who suffered the most from job losses in 2020.

Thankfully, New Jersey’s minimum wage law has positioned the state for a stronger pandemic recovery. In the years leading up to the pandemic, low-wage workers in states that raised their minimum wages experienced much faster wage growth than those in states that didn’t. Moreover, raising wages during recessions helps to both hasten and strengthen the economy’s recovery.

While we still have a long way to go to ensure that everyone can succeed in New Jersey, the latest increase to the minimum wage is a welcomed improvementduring these difficult times.

Chart: New Jersey's Path Towards a $15 Minimum Wage

End Note

[1] National Low-Income Housing. 2020.  Out of Reach 2020: New Jersey. https://reports.nlihc.org/oor/new-jersey

Slow Down: Horizon’s Restructuring Plan Raises Red Flags

Posted on by Brittany Holom-Trundy

In the final weeks before the holidays, New Jersey lawmakers have introduced a new bill with an old goal: the corporate restructuring of Horizon Blue Cross Blue Shield, the state’s largest, and only charitable, health insurer. This is one of the most complex pieces of legislation, if not the most complex, that state lawmakers have considered all year. Horizon is the largest insurer in the individual, small group, and large group markets; covers approximately 3.6 million New Jerseyans, or more than one out of every three residents; and has significant influence over the quality and affordability of health insurance in the Garden State. As such, this proposal is crucial to the future of the state and must be carefully considered in an open and transparent manner. There is no reason to rush the process and doing so would simply invite shortsighted decision making and regrettable mistakes.

In short, the bill would change Horizon’s corporate structure to separate its health insurance operations from other business ventures; it would also change Horizon’s tax liability. This complexity, paired with a lack of critical information and transparency, means that big questions remain unanswered regarding the bill’s potential impact on the access to and affordability of health care for millions of New Jersey residents. State lawmakers would be wise to slow down the process — as the bill is currently being fast-tracked through the Legislature — to better assess the proposal and ensure that any such restructuring centers the needs of the public interest, both in regard to improving health coverage for all as well as protecting the state’s finances.

Restructuring Is Not New, but it Remains Complex

According to the proposed legislation (S3218/A5119), Horizon, which is currently a health service corporation with a charitable mission, would restructure into a not-for-profit mutual holding company. This holding company could then own stock in both non-profit and for-profit subsidiaries. The insurance portion of the business would be reorganized into a stock company, with the stocks wholly owned by either the mutual holding company or intermediate holding companies, which in turn are fully owned by the not-for-profit mutual holding company (simply put, a sizeable chunk of Horizon’s assets would be invested in for-profit business ventures instead of initiatives that promote public health). The bill states that the not-for-profit mutual holding company would remain committed to its charitable mission, while also allowing Horizon to invest more funds in for-profit subsidiaries than is currently allowed by law. The purpose of this restructuring lies, according to Horizon, in the company’s desire to invest more actively in newer technologies, gain ground in the ever-developing health care market, and better serve its millions of customers.

While this is a new bill, restructuring is not a new concept. Over the last few decades, Horizon has attempted to convert its corporate structure many times and in varying forms. Blue Cross Blue Shield affiliates in other states have similarly restructured, dating back to the 1990s, with varying impacts and outcomes. Some, like the conversion in California, resulted in the transfer of a full value of the company’s assets to charitable foundations focused on health. This is what a 2001 conversion law passed in New Jersey requires the company to do if they attempt to become a for-profit company. Some of the most recent conversions in other states — such as Michigan, Florida, Nebraska, and North Dakota — have involved a change to a not-for-profit mutual holding company as proposed in New Jersey, but with varying investment commitments of Blue Cross Blue Shield’s assets. While not a new or unique move on the part of Horizon, the challenge of determining how the change will impact New Jersey’s health care market remains.

Legislators Can Address Market Shifts While Still Ensuring a Fair and Just Process

The health care market has changed significantly over the last three decades. The speed of new technological advancements and a growing understanding of racial disparities in health and health care means that the ideas and investments underpinning health outcomes in the United States are shifting. It is understandable that companies look to increase their competitiveness and further invest assets in these new innovations and goals. However, this does not lessen the need for informed decision making, especially as it relates to the impact on the state’s budget and access to health insurance coverage.

Since the 1990s, public health experts have rigorously studied health insurer conversions and offered key recommendations for states considering similar proposals. In a 2003 Rutgers Center for State Health Policy report, researchers stressed the importance of a deliberate and transparent policy making process. Given the complexity of health insurer restructuring, as well as the unknown impact it would have on health care in New Jersey, state lawmakers should adopt the following improvements to the current legislation and process:

Recommendation 1: Do Not Proceed Without an Independent Evaluation of Horizon’s Assets

The bill does not include the current value of Horizon’s assets — critical information which has determined the fair value of tax payments from Blue Cross Blue Shield when it restructured in other states — nor does it have a fiscal note provided by the Office of Legislative Services to help stakeholders understand its broader budgetary impacts (basic information that should be provided to all elected representatives before voting on any bill). This missing information limits lawmakers’ and the public’s ability to determine whether the proposed changes to Horizon’s tax liability are fair for the state. The changes would result in Horizon making an upfront payment of $600 million to the state by June 2022 (a detail that adds to the question of why this bill needs to be rushed now when the first payment won’t be made for 18 months), along with an additional $650 million payment over seventeen years. Further, there is no guarantee that Horizon will make all of the latter annual payments, as they can be deferred — and expire — under certain conditions. Overall, the proposed change from a health service corporation into a not-for-profit mutual holding company would significantly reduce Horizon’s tax liability.

Until now, the most recent valuation of Horizon’s assets has not been publicly available. The insurer’s annual financial statement for 2019 was just released Thursday, December 10 by the Department of Banking and Insurance (DOBI) on its website, well after the Assembly concluded their second hearing on the bill and despite the report being submitted to the state this past March. It will take time for lawmakers and the public alike to digest this newly available information and determine what a fair deal might look like. The best way to accomplish this would be to have Horizon’s financial statements independently analyzed and discussed in an open hearing to estimate the current fair market value of the company.

State lawmakers need to carefully understand this information before proceeding with any restructuring proposal in order to avoid what happened in Michigan, where lawmakers underestimated the value of their Blue Cross Blue Shield affiliate’s assets when they restructured and, as a result, received lower annual payments than they otherwise would have.

New Jersey has a bad history with receiving lump sum and limited long-term payments like those outlined in this proposed legislation. Experiences like the tobacco settlement of 1998 and Governor McGreevey’s subsequent bonding to fill budget holes proved to be regrettable mistakes for the state budget in later years. State lawmakers should exercise caution, then, on pushing through an opaque plan that has not been fully vetted.

Putting aside the grave mistake of accepting limited payments instead of maintaining long-term funds, the proposed payments of $600 million and $650 million are not clearly dedicated in the legislation. At the very least, receipt of these funds should be explicitly dedicated to improving health insurance coverage and health care in New Jersey — a goal that is consistent with Horizon’s charitable mission.

Recommendation 2: Conduct a Health Impact Study

Any change to the state’s largest health insurer must address its impact on the health of New Jerseyans. So far, there has been no health impact study to allow state decision makers and the public to understand what the effects of this proposed restructuring may be on premium rates, coverage, and choice of plan in the insurance market.

When Blue Cross Blue Shield restructured in other states, it had clear impacts on health insurance markets, and there is no reason to suggest this would not be the case in New Jersey. Statistical analyses of earlier for-profit conversions in other states showed increases in premium rates and possible increased risk selection, which is when insurers have incentive to enroll those in good health, rather than those who are in worse health and may cost more in claims. States that avoided these adverse effects of restructuring often did so by establishing a health-focused charitable foundation with conversion funds. For example, the lifting of the Medigap rate freeze in Michigan was addressed, at least temporarily, by subsidies from the Michigan Health Endowment Fund, which was formed through the restructuring in 2013. The establishment of a foundation is not proposed in the current restructuring legislation in New Jersey.

It’s clear that with changes in corporate structure come changes in behavior, all of which is shaped by the unique market conditions of the state. Understanding the impact that the proposed restructuring may have on New Jersey’s health insurance market is essential to making an informed decision that prioritizes quality and affordable health care for all New Jerseyans.

Recommendation 3: Demonstrate a Commitment to the Public and Horizon’s Charitable Mission

In its current form, Horizon has a charitable mission which, according to S3218/A5119, would remain the case after restructuring — but more can be done to affirm Horizon’s commitment to the public good. Because the state Attorney General (AG) has jurisdiction over charitable organizations, clear and publicly available guidance from the AG’s office on whether Horizon would be able to adhere to their charitable mission under a new structure would be welcomed, as it would help ensure Horizon’s commitment to the public is vigorously protected. Additionally, the public’s voice should be brought to the forefront in the legislative process. Holding more hearings with adequate notification to receive input from the public, as well as committing a position on the new mutual holding company’s board to a representative of consumer voices, would show that the commitment to the charitable mission is not solely in word, but in deed.

This is a Complex Bill That Should Not be Fast-Tracked

Rarely has it paid off for lawmakers to rush through a bill where crucial details are not fully understood. Mistakes made with the three-month budget bill highlight that haste can lead to regrets. Lawmakers should demand a full picture of the impact of this legislation before committing to changes that will affect the state’s budget and access to health insurance for all New Jerseyans for years to come.

Redistricting Commission Fails to Reflect New Jersey’s Increasing Diversity

Posted on by Brandon McKoy

Democratic and Republican party leaders have made their picks for New Jersey’s Apportionment Commission — the ten-member body tasked with redistricting the state’s 40 legislative districts — and they do not come close to reflecting the true diversity of the Garden State. Of the ten voting members, there are only two women; there are no women of color; and there are no Latino participants. White men are already overrepresented in the New Jersey Legislature, and it’s apparent by these picks that this unfortunate trend will not change anytime soon. This lack of diversity is compounded by the recent passage of Public Question 3 on the November ballot, which will likely delay the implementation of a new legislative district map.

When New Jersey voters marked their ballots on November 3, one of the more important, and undercovered, measures was Public Question 3. The ballot initiative, which was passed with more than 57 percent of the vote, will “postpone the state legislative redistricting process until after the election on November 2, 2021, if the state receives federal census data after February 15, 2021.” While it may be seemingly benign on its face — the justification given is that the Trump administration’s ongoing efforts to sabotage and delay the census will harm the redistricting process — it will ultimately mitigate the political power and representation of New Jersey’s non-white communities who have significantly grown in population over the last decade. By delaying the redistricting process, New Jersey will use the current legislative map for an additional two years, even though it is based on 2010 census data that is woefully out of date and dramatically unrepresentative of New Jersey’s increasing diversity. This issue was so serious that landmark civil rights organizations including the New Jersey Institute of Social Justice and League of Women Voters of New Jersey led campaigns against the measure, urging residents to vote no.

To compile a commission that is unrepresentative of the state, after the passage of such a harmful ballot measure, is simply adding insult to injury. Rather than continuing to cement a process that benefits political insiders — who are overwhelmingly white men — leaders should have taken the opportunity to include community members who could help produce a more democratic and representative outcome. Far too often, our elected leaders express support for racial equity in word, but when it comes time to do so in deed, they fall short. This is, disappointingly, another chapter in that story. 

Proposed Cap on Legal Marijuana Licenses Undermines Racial Equity

Posted on by Brandon McKoy

Throughout the campaign to legalize cannabis and develop a regulated marketplace, advocates and state lawmakers alike have highlighted the importance of centering racial equity and economic justice, invoking the need to repair the many harms created by the War on Drugs — especially among marginalized communities of color. While the specific language of the legalization bill (S21/A21) continues to evolve, there are currently provisions within it that severely threaten New Jersey’s ability to reach these goals. The legislation must be amended, especially as it relates to the number of licenses available to cultivators, to ensure our state can lead by example and create a market that realizes the values of equity and justice that have been espoused from the start.

The legalization bill currently implements an arbitrary and incredibly low cap on the number of licenses that will be made available to cultivators, leaving it at just 28. This stipulation is set to remain in place for the first 18 months following the first sale by a newly licensed recreational dispensary. Considering this first sale is likely to be more than a year after the Cannabis Regulatory Commission is formed, the actual wait period is closer to three years.

Allowing this to remain in place would not only limit competition and privilege larger corporations at the expense of other applicants, it would also create a situation where New Jersey’s recreational and medical cannabis markets are unable to provide adequate supply and meet the level of demand that exists, thus inflating prices and allowing nearby states — once they get their legal markets up and running — to siphon off business from New Jersey operators.

As of today, there have already been 12 licenses awarded, with 9 pending from the 2019 Request for Applications, meaning that a total of 21 licenses have already been claimed. If the proposed cap of 28 were to remain in place, only 7 remain to be disbursed.

When placing this in context with other legal cannabis markets across the country, it is clear that a limit of just 28 licenses is irrationally low, especially for a state with as many residents as New Jersey.

Cultivator Licenses for States with a Legal Cannabis Market

State

Number of
Cultivators

State Population

Number of Cultivators per 100,000 residents
Alaska 200 731,545 27.34
California 5,700 39,512,223 14.43
Colorado 700 5,758,736 12.16
Illinois 20 12,671,821 0.16
Massachusetts 130 6,892,503 1.89
Michigan 330 9,986,857 3.30
Nevada 160 3,080,156 5.19
Oregon 1,150 4,217,737 27.27
Washington 1,120 7,614,893 14.71
New Jersey
(proposed)		 28 8,882,190 0.32

Source: NJPP Analysis of Legal Cannabis Markets across the United States

For the vast majority of cannabis markets, where the number of licenses and cultivators are better able to meet state demand, the prices for recreational cannabis are approximately $200 per ounce. In the only other state where the number of licenses is arbitrarily low, Illinois, market prices for recreational cannabis are well over $300 per ounce. This is an important consideration due to the excise fee structure that state lawmakers reportedly agreed upon earlier this week, which would be implemented nine months following the first recreational sale, per reporting by NJ.com.

Proposed Excise Fee Structure for New Jersey’s Legal Cannabis Market

Average Price per Ounce of Cannabis

Excise Fee
$350 and above $10
$250 to $350 $30
$200 to $250 $40
$199 and below $60

Source: Bill to launch N.J. legal weed industry is back on track, could pass by Monday, NJ.com, Nov 17, 2020.

If the number of licenses remains low, and the average price per ounce in the market remains well above $300 as it has in Illinois, the amount of revenue that could be collected and distributed back into communities harmed by the War on Drugs would be severely limited. The bottom line is that the bill’s current approach to licenses would allow a limited number of companies to wield outsized control, undermining the state’s goals of centering racial equity and economic justice in the legal cannabis market.

In order to fix the weaknesses in the bill, the following must occur:

  • Eliminate the arbitrary cap on the number of licenses and enable the Cannabis Regulatory Commission to determine and award licenses as it sees fit.
  • Exempt micro-licenses and conditional licenses from any caps so that equity candidates can truly take part in the legal market.

 

If these actions are not taken, the cap on licenses will create an unnecessarily restricted market during the early years of its formation. As a result, there will be little-to-no opportunity for equity candidates who have less capital and limited resources to break into the market; it would also drastically reduce funds collected from the excise fee on legal cannabis that could be directed into communities harmed by the War on Drugs.

Budget Breakdown: Everything You Need to Know About the FY 2021 State Budget

Posted on by Sheila Reynertson

New Jersey’s recently enacted $32.7 billion budget is an anomaly in many ways given the extraordinary circumstances under which it was crafted. Covering a 9-month period, it relies on borrowing billions of dollars through a federal loan program to avoid deep cuts and stay on track with pension payments. It raises taxes on those who actually prospered during the pandemic 一 the state’s wealthiest individuals and most profitable corporations. It advances equity by repealing a racist policy in the state’s cash assistance program and by expanding a tax credit for low-income workers and their families. And it puts aside a healthy surplus in case the state gets slammed by a second wave of COVID-19.

Some of NJPP’s most important policy recommendations made it into this year’s budget as a progressive response to tough times: raising revenue, providing support to those who need it the most, and expanding investments in health care and education. In the midst of a public health crisis, New Jersey is setting an example for the nation by heeding lessons learned from the Great Recession.

A Fairer Tax Code

Millionaires Tax  — With a Caveat
New Jersey’s tax code just got more progressive with the creation of a new tax bracket for the state’s wealthiest earners. Income over $1 million per year is now taxed at 10.75 percent; this is estimated to generate over $400 million annually. However, a rebate program for 800,000 families earning less than $150,000 in annual income will largely eat up the new revenue gained starting next fiscal year.

Corporate Business Tax Surcharge
After receiving a windfall from the 2017 federal tax cuts, successful corporations will continue to pay a 2.5 percent surcharge on the corporate business tax to help fund critical programs that all New Jerseyans rely upon. This surcharge will generate over $200 million in new revenue per year through Fiscal Year 2023.

Health Maintenance Organization (HMO) Tax
The HMO tax will increase a state assessment on certain health insurance premiums from 3 to 5 percent, which will generate $107 million to supplement funding for charity care. Most of these premiums are tied to Medicaid plans that will draw down this increase with federal matching dollars.

Health Insurance Assessment
While technically passed before the budget deadline, this revenue raiser replaces the recently repealed federal fee on health insurance companies that was meant to help fund the Affordable Care Act (ACA). The state will collect 2.5 percent on net premiums of individual and large group plans, raising roughly $200 million in new revenue. Funds will support health insurance affordability measures, including the reinsurance program and additional state subsidies on the new state exchange for those with incomes below 400 percent of the federal poverty level.

Important Investments

Maintaining Pension Payments for Retired Public Workers
The retirement fund continues on its pathway toward stability with a $4.7 billion state pension contribution. Despite the fiscal challenges, New Jersey chose to make this contribution 一 the largest in the state’s history 一 because postponing or reducing it meant risking a total collapse of the retirement system.

Property Tax Relief
The final budget restores $500 million in funding for two property tax relief programs geared toward vulnerable homeowners.The Homestead benefit program provides 580,000 seniors, disabled, or low-income homeowners with a credit on their property tax bill. The Senior Freeze program reimburses eligible seniors and people who are disabled for property tax increases and mobile home park site fees.

Tax Credits for Working Families
The Earned Income Tax Credit (EITC), one of the state’s most effective anti-poverty measures, increases from 39 to 40 percent of the federal EITC level, marking the final stage of a three-year phase in. Further, the minimum age requirement for workers who are not raising children at home drops from 25 to 21 years old, increasing the after-tax earnings of up to 58,000 low-paid young workers. This eligibility expansion is estimated to add up to $12.1 million to the state and local economies.

Helping Students Cope and Excel
From K-12 to college, public schools across the state will receive their rightful state aid as required by the school funding formula. This budget also restores $15 million in funding for the School Linked Services Program, which provides mental health treatment services to students; this investment is critical as students continue to struggle with mental health issues caused and/or compounded by the ongoing pandemic. Community college funding was also restored in the budget deal, guaranteeing $25 million in tuition aid.

Keeping Families Together
This year’s budget expands funding for free legal counsel for New Jersey immigrants in detention. While this funding will only meet a fraction of the need, this increase, from $3.1 million last year to $6.2 million this year, substantially expands access to representation and due process.

Maintaining Health Care Access
New Jersey will maintain state support for medical care through Medicaid, a sorely needed move as enrollment numbers have skyrocketed due to the loss of employment insurance during the pandemic. The Charity Care program, which supports hospitals treating uninsured and underinsured residents, and the Graduate Medical Education program, which supports teaching hospitals, also maintained funding in the budget deal. It’s good to see New Jersey prioritize access to health care and improved outcomes as we recover from the pandemic.

Addressing Child Poverty
New Jersey’s budget takes a major step forward in dismantling a harmful, racist policy with the permanent repeal of the “family cap” in the state’s Temporary Assistance for Needy Families (TANF) program. The family cap, which originated in the Garden State in 1992, prohibits recipients of Work First New Jersey cash assistance from receiving additional per-child assistance if they choose to have another child. This coercive law — meant to reduce pregnancies in low-income families through punishment, rather than increased resources — only pushed families deeper into poverty. Still in place in 13 states, the policy was effectively dropped from Governor Murphy’s 2019 and 2020 budgets. The signed law makes the change statutorily permanent.

Expanding Environmental Justice
The final budget avoids a $5 million cut, as proposed in the Governor’s original budget proposal, to the Lead Hazard Remediation Fund. This fund supports the removal of lead-based hazards in homes and schools, which harm children’s lifelong health, education, and developmental, especially for those exposed at a very young age. These hazards are generally higher amongst children of color living and learning in older buildings. The budget also dedicates $60 million for the replacement of lead service pipe lines, a small portion of the projected price tag of $2 billion, according to the Department of Environmental Protection.

Supporting Energy Efficiency
Consumers who purchase mid-range electric cars and trucks will receive rebates from the state through the Clean Energy program, which received $23 million in funding in this year’s budget.  However, the budget also diverts $100 million from the Clean Energy Fund ($60 million to NJ Transit and another $40 million to the General Fund), which reduces energy efficiency programs for homeowners and low-income households.

Improving Transportation
Significant federal help — $1.4 billion — was provided to NJ Transit through the CARES Act. This aid helps to offset losses due to lower ridership during the height of the COVID-19 outbreak. The state-owned system is also expected to receive a subsidy of $386 million using borrowed funds.

Budgeting Best Practices

New Borrowing Instead of Harmful Cuts
New Jersey lawmakers have tapped into the new federal borrowing program to help address revenue shortfalls brought on by COVID-19 without resorting to austerity measures. This borrowing also allows the state to fund long-term obligations like the state’s underfunded pension system. With extremely low interest rates, any borrowing approved by the legislative committee will allow New Jersey to manage immediate cash flow problems until the economy begins to improve. Should more federal aid be available to states in the near future, New Jersey could fast-track the repayment schedule to lessen the state’s debt load and alleviate concerns about its widening structural budget deficit.

Big Surplus
The budget’s surplus of $2.5 billion, the largest in over a decade, has been set aside as an insurance policy against any economic damage from a potential second wave of COVID-19. Should any surplus funds remain at the end of the fiscal year, half could then be deposited into the state’s empty rainy day fund for future emergencies.

What’s Missing

Repeal of Christie-era Tax Cuts
With economic projections showing a sluggish rebound, New Jersey can’t depend on economic growth alone to make up the difference once borrowed dollars are gone and debt service payments come due. Recapturing over $1 billion in lost revenue by repealing two key tax cuts must remain on the table. New Jersey must fix how inherited wealth is taxed by either bringing back the estate tax or reforming the state’s inheritance tax. The repeal of the 2016 sales tax cut, which left a $600 million hole in the state budget every year, must also be prioritized.

Full Expansion of Tax Credits for Workers
The Earned Income Tax Credit (EITC) still excludes far too many low-paid workers in New Jersey. State lawmakers should further improve access to the credit by expanding it to workers who file taxes using an Individual Taxpayer Identification Number (ITIN) and eliminating the minimum and maximum age thresholds altogether. In the absence of a federal EITC for ITIN filers and childless workers under 25 and over 64 years old, the state should also increase the credit amount for these groups from 40 percent to 100 percent of the federal credit.

Economic Relief for Immigrant Families
More than six months after the onset of COVID-19, over half a million New Jersey residents are still without economic relief. Unlike those who qualify for publicly funded programs like unemployment insurance and federal stimulus payments, many immigrants have been left behind. Despite months of advocacy by affected workers, the final budget neglects to include any relief for these New Jersey workers and their families.

Addressing Deep Poverty in a Pandemic
Enrollment in cash assistance programs have increased due to the pandemic-induced economic crisis, yet the final budget fails to reflect that. The benefit level for families receiving assistance is flat funded, while overall state funding for Work First New Jersey benefits was cut. State lawmakers have defended the funding cut with the argument that federal funds can fill that gap. However, it is unclear whether federal dollars will be sufficient to cover the increased number of residents enrolling in poverty alleviation programs.

New Jersey’s School Re-openings Are Racially Unequal

Posted on by Mark Weber

This past month, New Jersey’s public schools reopened for the 2020-21 school year, and not all students are having the same back-to-school experience. As the state continues to limit the spread of COVID-19, some school districts are starting their school year fully remote, some are offering a “hybrid” of in-person and remote instruction, and a few are fully in-person. As a result, the pandemic appears to be surfacing ongoing problems with segregation and school underfunding that translates into unequal access to in-person instruction.[i]

As of September 13, most districts settled with the state on how they would begin the school year, according to data released by NJ Spotlight.[ii] Slightly more than half of New Jersey students are in school districts with fully remote programs; about one-third are in districts offering hybrid programs; eight percent of students are in “combination” districts, which offer different reopening plans within the district; and two percent are in districts with fully in-person instruction (six percent of students are enrolled in districts for which there is no data).

It is important to note that even if a school district offers in-person schooling, that district must offer a fully remote option for students, as required by the Murphy administration.[iii] The figures below, therefore, do not represent how many students are enrolled in each option; instead, they show what options are available to families and students. A student in a “hybrid” district, for example, may still choose to attend school entirely remotely; a student in a “remote” district, however, does not have the option of enrolling in a hybrid program.

The Murphy administration has emphasized the importance of allowing school districts to make re-opening decisions “…that best fits the district’s local needs.”[iv] It is well documented, however, that New Jersey’s school districts are highly segregated.[v] Therefore, it is important to determine if the state’s school reopening plans are equally available to students of different races and ethnicities.

White students, for example, are more likely to be enrolled in a district that offers at least some in-person instruction. Six out of ten New Jersey students enrolled in a hybrid district are white, while only three out of ten students in a remote district are white.

In contrast, six out of ten students in fully remote districts are Black or Hispanic, while only one-quarter of the students enrolled in hybrid districts are Black or Hispanic. This demonstrates a clear difference in the racial and ethnic characteristics of districts that do and do not offer in-person instruction. 

There are several possible reasons for these disparities. Polls have shown that Black and Hispanic parents are generally more wary about sending their children back to school buildings during the pandemic.[vi] It may be that school districts offering only remote instruction believe putting their focus on improving that instruction is more aligned with parents’ desires.

However, it may also be that these parents perceive that their children’s schools are less safe than others, due to a lack of adequate resources. Recent national polling has found that Black and Hispanic parents perceive that there are large disparities in school funding across racial lines.[vii] Families of color may, therefore, be responding to systemic inequities that leave their children’s schools less able to offer in-person instruction safely.

New Jersey’s School Funding Reform Act (SFRA) sets an “adequacy target” for school districts; the target is the amount of funding that is needed for students to receive an adequate education, per the state’s funding formula calculations.[viii] Many districts, however, do not spend enough to meet their targets; some districts are below their per pupil target amount by more than $5,000. 

Many more of the students enrolled in “remote” districts are also enrolled in districts that are underfunded, according to SFRA targets. About 128,000 of those students are enrolled in districts that are severely underfunded; in fact, the vast majority of New Jersey students in districts underfunded by more than $5,000 per pupil are also in districts that offer no in-person learning option.

Overall, inequities in funding appear to be translating into inequities in access to in-person instruction. It would be a serious mistake, however, to assume that these inequities should be addressed simply by forcing districts to begin offering hybrid programs. School districts that suffer from chronic underfunding are almost certainly not able to provide the same level of safety during the pandemic as well-resourced districts. Differences in building ventilation, square footage per student, student-to-staff ratios, health care services, and many other important factors – which are caused by chronic underfunding – will undoubtedly impact a district’s ability to safely educate its students.

The racial and ethnic disparities in school reopening programs should be a wakeup call to New Jersey policymakers: it is yet another example of how inadequate and inequitable funding is creating different systems of schooling for different students.

End Notes

[i] In this post, I merge the data on school re-openings with student enrollment and fiscal data from the New Jersey Department of Education (https://www.nj.gov/education/data/). By combining these sources, it is possible to determine the enrollment of students in districts employing different learning models, and the demographic characteristics of the students in each type of model.

[ii] John Mooney & Colleen O’Dea, 9/4/20, updated 9/13/20. “NJ Schools Reopen: What Districts Are Remote, In-Person or Hybrid?” NJ Spotlight. https://www.njspotlight.com/2020/09/nj-schools-reopen-plan-list/

[iii] Amanda Hooper, 7/20/20. “N.J. to allow all-remote learning option for students when schools reopen in the fall, Murphy says” NJ Advance Media for NJ.com. https://www.nj.com/coronavirus/2020/07/nj-to-allow-all-remote-learning-option-for-students-when-schools-reopen-in-the-fall-murphy-says.html

[iv] State of New jersey, Governor Phil Murphy, 6/26/20. “Murphy Administration Announces Reopening Guidance for New Jersey Schools.” https://www.nj.gov/governor/news/news/562020/20200626b.shtml

[v] Orfield, G., Ee, J., Coughlan, R. (2017) New Jersey’s Segregated Schools; Trends and Paths Forward. https://www.civilrightsproject.ucla.edu/research/k-12-education/integration-and-diversity/new-jerseys-segregated-schools-trends-and-paths-forward/New-Jersey-report-final-110917.pdf

[vi] Matt Barnum and Claire Bryan, 7/14/20. “Despite stress of closures, most parents wary of rush to return to school buildings, polls show.” Chalkbeat. https://www.chalkbeat.org/2020/7/14/21324873/school-closure-reopening-parents-surveys

[vii] The Leadership Conference Education Fund (2017). The Second Annual New Education Majority Poll. http://civilrightsdocs.info/pdf/education/new-education-majority/New-Education-Majority-Summary-FINAL.pdf

[viii] Baker, B.D. and Weber, M.A. (2019). New Jersey’s School Funding Reform Act at 10 Years. New Jersey Policy Perspective. https://njppprevious.wpengine.com/reports/in-brief-new-jerseys-school-funding-reform-act-at-10-years

 

Census 2019: Poverty in New Jersey Remains Higher Than Pre-Recession Levels

Posted on by Vineeta Kapahi

Last week, the Census Bureau released new data that provide insight into New Jersey residents’ economic security and access to healthcare. The data for 2019 show that, even before the COVID-19 pandemic hit, many New Jersey households struggled to afford basic needs. Since the onset of the current health and economic crises, even more New Jerseyans have faced hardships, while the difficulties faced by many households who were already struggling have intensified.

Racial and Gender Disparities Persisted During Economic Expansion

According to newly released data from the 2019 American Community Survey (ACS), New Jersey’s poverty rate (9.2 percent) had still not fully recovered to pre-recession levels (8.7 percent in 2008). Even though 2019 marked the end of a period of economic growth, nearly one in ten (798,262) New Jersey residents lived in poverty last year.

Racial and gender disparities in poverty rates persisted in 2019. The poverty rate among women (10.0 percent) remained higher than that of men (8.3 percent) in New Jersey. Black (15.6 percent) and Latinx (15.8 percent) New Jersey residents were nearly three times more likely to live below the federal poverty line than white (5.8 percent) and Asian (5.6 percent) residents.

Despite improvements in the child poverty rate, children continued to be more likely to live in poverty than New Jersey residents overall. In total, 229,978 children in New Jersey lived in poverty in 2019. Fortunately, the rate of poverty among children in New Jersey finally decreased to pre-Great Recession levels (12.1 percent) in 2019 after rising steadily for years and spiking at 16.4 percent in 2013.

Similarly, median income finally surpassed pre-recession levels in 2019 following a long and slow recovery from the Great Recession. The real median household income in New Jersey in 2019 was $85,751, a slight increase from 2018 ($83,221, adjusted to inflation). While household income increased overall, not all New Jerseyans benefitted from these gains. Median household income among Black ($56,301), Latinx ($61,624), and American Indian ($72,816) households remains lower than median household income among white ($98,092) and Asian ($126,278) households.

COVID-19 Exacerbates Economic Inequality

The American Community Survey 2019 estimates demonstrate that despite overall improvements on many economic indicators, many New Jerseyans were left behind during a long period of economic growth. Further, more recent data collected through the Census Bureau’s new Household Pulse Survey  this summer suggest that conditions have changed drastically since the onset of the pandemic, deepening existing inequities.

According to the most recent Household Pulse Survey, which includes data collected between August 19 and August 31, 2020, the majority of New Jersey residents (53 percent) reported loss of employment income since the onset of the pandemic. The survey also finds that over half of respondents (56 percent) reported difficulties paying for usual household expenses during the coronavirus pandemic. These data also suggest that challenges caused by the current public health crisis disproportionately harmed people of color and households with very low incomes who faced challenges prior to the pandemic. White households were less likely to report difficulties paying for household expenses than all other racial and ethnic groups.

Urgent Action Needed to Build an Economy for the Many

The new Census data highlight the critical need to swiftly pass a robust federal stimulus package that boosts key safety net programs for struggling households. While the economic relief put in place by the federal CARES Act helped many New Jersey residents, the amount and duration of federal relief has fallen far short of the need. Further, many of the households hardest hit by the pandemic, including immigrants and those working in the cash economy, are most likely to be excluded from existing forms of relief. New Jersey lawmakers should take steps to provide relief where the federal government has fallen short in removing barriers to economic stability, such as providing income replacement and stimulus payments to workers excluded from federal support. In addition, federal lawmakers should provide aid to state and local governments to avert cuts to critical services that are more important than ever in a public health emergency. In order for New Jersey to recover from the current crisis successfully, it’s critical that all households have access to the resources they need to live safely and with dignity.

Click here for the latest Census data on access to health care in New Jersey.

Census 2019: New Jersey’s Uninsured Rate Increased for the First Time in Years

Posted on by Brittany Holom-Trundy

As the COVID-19 pandemic has taught the country, access to health care is essential for all residents to lead a healthy life, protect public health, and build an economically and racially just future. While New Jersey outpaces other states in prioritizing access for all, newly released data on health insurance coverage from the United States Census Bureau show that the Garden State still has a long way to go in guaranteeing a healthy and equitable future.

New Jersey’s Uninsured Rate Increased for the First Time Since 2013  

The number of uninsured New Jersey residents increased in 2019 from the year prior, according to newly released American Community Survey data.  This represents the first increase in the state’s uninsured rate since the Affordable Care Act (ACA) was fully implemented, and is likely due to the Trump administration’s ongoing efforts to sabotage the landmark health law. Approximately 692,000 New Jerseyans were uninsured in 2019, representing a 6.8 percent increase in the uninsured rate from 2018. Residents under the age of 19 made up 88,000 of those uninsured in the state, representing a 10.3 percent increase in the uninsured rate for this age group.

These increases were not spread equally among all New Jerseyans. A hostile national environment toward people of color and immigrants, including the fear and uncertainty caused by the Trump administration’s public charge rule, have made it increasingly difficult to boost health care enrollment. In New Jersey, approximately 343,000 Latinx residents were uninsured in 2019, an increase of 7.5 percent in the uninsured rate from 2018. Residents identifying as Latinx, Black, or American Indian/Alaska Native remained the most likely to be uninsured.

Despite these challenges, New Jersey is still out-performing many other states in getting more residents covered. Nationally, 9.2 percent of people remained uninsured in 2019, a continuation of the increases experienced every year since 2016. While the Garden State’s uninsured rate (7.9 percent) crept closer to the national rate between 2018 and 2019, it remained well below that national average — and far below the state’s 2010 uninsured rate of 13.2 percent. New Jersey was able to expand health coverage thanks in great part to the implementation of the ACA. The state’s decisions to adopt many of the health law’s key provisions, particularly the expansion of Medicaid in 2014, have helped the state provide affordable coverage options. Similarly, New Jersey’s proactive decisions to codify key ACA provisions in state law — including the establishment of a reinsurance fund, banning junk plans, and restoring the individual mandate — helped protect these gains amidst the Trump administration’s ongoing efforts to undermine the ACA.

The COVID-19 Pandemic Promises Hardship … and New Jersey Needs to Prepare

New Jersey’s increasing uninsured rate must be viewed with careful consideration of the extraordinary conditions of 2020 that have yet to be captured by census data. With the COVID-19 pandemic, more individuals and families have been losing employer-based coverage, facing not only threats to their health but also to their economic well-being. This has been particularly true for people of color, who have fought the effects of structural racism that put them at greater risk for contracting, being hospitalized, and dying from the virus, in addition to facing more devastating and long-term economic repercussions.

In the Census Bureau’s most recent Household Pulse Survey — with data gathered between August 19th and 31st — over 8 percent of New Jersey respondents reported being uninsured, indicating a concerning increase from the 2019 estimates due to the pandemic. Without health coverage, people are unable to access needed care, a dilemma faced disproportionately by Black and Latinx residents in the state, according to the survey. The long-term health consequences of this lack of coverage will further exacerbate the overarching social and economic consequences of COVID-19 in the coming months and years.

There is hope, however. New Jersey has already seen that strong state action to protect the ACA and prioritize health care access improves outcomes. The 2014 Medicaid expansion in New Jersey has played a key role in dampening the overall effects of the COVID-19 crisis, as enrollment numbers have shown that the program has served as an important safety net for many residents who have lost employer-based coverage. Furthermore, Get Covered New Jersey, the new state-based health insurance exchange, opens for enrollment on November 1, 2020. With state subsidies available for those with incomes below 400 percent of the federal poverty level (annual income up to $51,040 for an individual or $104,800 for a family of four), the exchange will increase affordable coverage options for many of New Jersey’s populations who have suffered most during the pandemic.

Click here for the latest Census data on economic security in New Jersey.

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