State parks, including Island Beach State Park and Liberty State Park, are reopening today for the Fourth of July holiday after legislative leaders and the governor reached a deal late Monday night to end the state budget impasse that had shut down state government since July 1.
The $34.7 million FY2018 state budget was approved by the Legislature early Tuesday morning along with separate legislation that restructures Horizon Blue Cross Blue Shield of New Jersey and caps its capital reserves without imposing unnecessary obligations on the insurer and added costs on its policyholders. Both the Horizon bill and state budget were signed by the Governor shortly afterward.
New Jersey Business & Industry Association President & CEO Michele Siekerka said the Association was thankful the budget impasse has been resolved so that state facilities can reopen for the Fourth of July and some 30,000 furloughed state employees could return to work on Wednesday, after the holiday.
“Compromise is never easy, but it can be done when all sides put the best interests of taxpayers over partisan politics,” Siekerka said. “While it is a shame that it took a government shutdown over Horizon for the concerns of the business community to be heard, we are pleased that sound reasoning has prevailed and that the policyholders and small business owners across the state will be protected.”
Republican Gov. Chris Christie had made passage of Horizon legislation — along with a proposal to dedicate lottery revenues to shore up the state pension system — a condition of signing off on $350 million in Democratic priorities in the budget. Earlier versions of the Horizon proposal had stalled in the Assembly over concerns that raiding Horizon’s capital reserves to pay for other state programs could raise premiums for Horizon policyholders or jeopardize the insurer’s ability to pay future claims.
The impasse ended when Assembly Speaker Vincent Prieto and Senate President Stephen Sweeney, after meeting with Horizon CEO Bob Marino, announced a compromise Monday night that establishes a cap on the company’s reserves at 725 percent Risk Based Capital, but stipulates that any excess above that cap must be returned to Horizon policyholders, not used for other state purposes. According to Horizon, the insurer carried a 620 percent reserve in 2016.
The compromise bill also requires the State Department of Banking and Insurance to commission independent annual audits of Horizon and adds two public members with a background in healthcare, finance or insurance to the company’s board. The latter change brings the total number of board members to 17. Eleven members are appointed by Horizon, four by the governor, and one each by the Senate President and Assembly Speaker.
The resolution of the Horizon bill, after a three-day state government shutdown, paved the way for legislative approval of the $34.7 million FY 2018 budget, which the governor also signed.
Siekerka said the FY 2018 budget is a good one that preserves the business tax cuts made in 2011, maintains the total repeal of the estate tax in 2018, and provides $100 million in new school aid to underfunded communities to help hold down property taxes. The budget also invests in research and higher education, such as $3 million for county vocational program grants; $5 million for the Rutgers Camden School of Business; and $5 million in additional support for low-income college students through the Educational Opportunity Fund.
“This budget contains no new tax increases and maintains $3 billion in business tax cuts and reforms that will make New Jersey a better place for business,” Siekerka said.