Accounting Corner

Last year, we had already begun many of our audits prior to the pandemic’s onset, so the impact was less significant as we were down to wrapping up and reporting. This year-end, we will face a full audit cycle with restricted physical client interaction. Be sure you meet with your auditors to be certain you understand their approach, timing, and the impact that this new process will have on your staff and the timing of your audits. This is new for all of us, and we will work through it. Frequent communication and a commitment to technology will be required. Your accounting staff must be vigilant in its process of checks and balances.

Looking Ahead

One of my priorities is to keep my focus on the horizon. Last year, we were experiencing strong tail winds and seeing much promise while remaining cautious about the unknown “Black Swan.” The Black Swan of 2020 appeared in the form of a pandemic. The strong backlog did carry most of you through a solid 2020, but what lies ahead for 2021 and beyond is much less clear.

It is no secret that the state of New Jersey along with all its agencies and municipalities have experienced great financial strain with no short-term recovery in sight. The impact of this has already been felt in a slowdown of existing contracts and projects coming out to bid. Last December’s COVID-19 recovery legislation provided funding to state agencies such as the DOT, to airports, and to water and energy projects. That said, a change of administration has historically created a lag as the former administration’s initiatives will be refocused to those of the new administration.

Certainly, New Jersey hopes to have much more cooperation from the incoming administration than from the prior. Time will tell if the large infrastructure initiatives will get the attention needed to speed economic recovery. What is clear with the naming of Boston Mayor Martin Walsh as Labor Secretary is that the incoming President is signaling that he will keep his promise of being the most union-friendly president ever. How this will impact New Jersey utility work will be interesting.

Events such as those that occurred at the Capitol suggest that 2021 will be a year of uncertainty and change. To best prepare for this, meet with your internal management team. Talk to your external team of trusted advisors. Assess where your company stands from a workload, labor, and technology position. Analyze the various options you have that can help you prosper through this period of change. With all that happened in 2020, there were still some big winners. Take the necessary steps now to help your company be one of those big winners in 2021.

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in the lobby

By: zoe baldwin

Thankfully, we’ve made it through 2020 and the new year is finally upon us. As an industry, we are incredibly grateful to have been able to keep working through the worst of the shutdown, and we now look forward to regaining a sense of normalcy as 2021 commences. While the Federal government is right now largely focused on COVID-19 relief and stimulus, New Jersey is gearing up for an election year in which both houses of the Legislature and the Governor are up on the ballot.

SPEAKING OF STIMULUS In one of his first actions of 2021, Governor Murphy signed a $14 billion corporate tax incentive program that replaces controversial economic development programs that expired 18 months ago. Under the new law, up to $1.5 billion in tax breaks could be awarded annually for six years. The new package, while criticized for being rushed, will make it more attractive for companies to build in New Jersey, rehabilitate historical sites, clean brownfield properties, and invest in urban areas. A5196, which would create a new bond program within the New Jersey Infrastructure Bank to finance climate mitigation and adaptation projects. Possible projects could include sea barriers, water storage systems, or the relocation of at-risk public infrastructure, among others. The program would be capitalized through a $0.0003 per-kilowatt hour charge on electric utility bills and through the sale of New Jersey Climate Bonds.

ON THE WATERFRONT UTCA water infrastructure priorities are also seeing progress in the Legislature. In early December, the Assembly Special Committee on Infrastructure and Natural Resources heard the following bills, all of which reflect stated UTCA water infrastructure priorities:

•A2200 - Requires water purveyors to conduct, and report to DEP, water loss audits

CLEARING THE WAY UTCA-led legislation to facilitate funding for local transportation projects has passed the Senate. S767/ A4552 (Gopal/Houghtaling) would eliminate a five percent down payment requirement for projects involving New Jersey Infrastructure Bank transportation projects. This down payment is not required on the water side of the program, and Senator Gopal’s legislation levels the playing field to facilitate opportunities in more communities. The bill now awaits a committee hearing in the lower house. •A4825 - Revises cybersecurity, asset management, and related reporting requirements in "Water Quality Accountability Act"

•A5015 - Reduces allowed diversion of funds from stormwater, water, and sewer purposes to municipal and county budgets; requires municipalities and counties to notify Division of Local Government Services of diversions

BUILDING ON SUCCESS UTCA is also tracking two bills that would expand the scope of I-Bank programs to include aviation and, separately, climate change resilience.

Assemblyman Daniels has advanced legislation to expand the purview of the transportation side of the I-Bank to also finance aviation and marine projects, as well as make it easier for the NJIB to provide emergency, relief, or disaster loans to clean water, drinking water, or transportation projects in the event of an emergency like the COVID-19 pandemic. A5057 has passed the full Assembly and is now awaiting committee hearing in the Senate. The I-Bank is one of New Jersey’s most efficient and successful programs, and this expansion will help facilitate projects statewide.

Similarly, Assemblyman Karabinchak recently introduced UTCA is pushing hard to increase funding at all levels of government by supporting rate mechanisms that accelerate the work of investor-owned utilities. We are also focusing on reforms to create a more structured process to ensure accountability and transparency. We maintain that by instituting a more transparent and cyclical statewide planning process (along with a corresponding annual capital program), more work will be available for the construction industry.

Additionally, we were successful in obtaining a budget line item in FY21 for water infrastructure projects and are renewing that advocacy for the upcoming FY2022 budget cycle.

PREVAILING WAGE CERTIFICATION S2414/A4869 (Singleton/Wirths) As currently drafted, the bill would require a firm whose low bid is 10% lower than the next lowest bidder to “provide proof to the satisfaction of the public body that the