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Democrats question donations to Kean
The Star-Ledger/NJ.com
September 15, 2006

The same day state Sen. Tom Kean Jr. voted twice to let Horizon Blue Cross Blue Shield of New Jersey keep a $40 million tax exemption, he collected $13,300 in contributions for his U.S. Senate race from 17 company executives and their family members.

Kean (R-Union) cast the votes in the final, frenetic day of the fight over the 2005 state budget.

Democrats, trying to close a $500 million budget gap, put up a last-minute bill to close what they called a loophole in the tax that health care insurers pay on premiums. Republicans called it a tax increase aimed only at Horizon, the largest health insurer in the state, and said it would cost the company as much as $40 million.

In party-line votes on June 30, 2005, Kean joined other Republicans on the budget committee and on the Senate floor to oppose the measure introduced three days earlier. The legislation won approval anyway, with the support of the Democratic majority.

On the day of those votes, records show Kean received $13,300 in campaign donations from the Horizon executives, including $4,100 from Horizon CEO and president William Marino and his wife, Paula.

Aides to Kean said there was no connection between the votes and the contributions. "Tom Kean Jr. has never taken contributions with strings attached," campaign spokeswoman Jill Hazelbaker said.

Hazelbaker and Horizon spokesman Thomas Rubino both suggested that the timing of the checks was a coincidence. The payments were actually for a Kean fundraiser held eight days earlier at the Newark Club, they said, and it took a few days to get the checks in hand.

"Since this (tax) measure was not even in existence until after the fundraiser, there was no connection whatsoever," Rubino said. "Any contention to the contrary is simply untrue and ignores the facts."

An aide to Kean's opponent, Democratic Sen. Robert Menendez, argued that "coincidence" simply could not explain why all 17 contributions were collected on the same day as Kean's votes, especially eight days after the fundraiser. The timing, spokesman Matt Miller said, raises questions about Kean's ethics.

The donations fit a pattern, said Miller, citing previous reports that Kean had received $62,500 in contributions from members of corporate boards on which his father, former Gov. Tom Kean Sr., served. That includes $21,000 contributed by United Health Group executives at a fundraiser held the same day as a board meeting. Kean said the event was organized by Sen. Norm Coleman (R-Minn.) and the timing was a coincidence.

"He's a hypocrite," Miller said of Kean. "This shows he's not the reformer he portrays himself to be. It also shows that while his vote may be for sale, at least we know the price."

Menendez also has taken campaign donations from Marino, including $1,000 for his Senate campaign in April 2005, two months before Marino contributed to Kean's Senate campaign. Miller said there was no issue there because, unlike Kean, Menendez wasn't voting on a bill affecting Horizon.

Democrats in Trenton took exception to the characterization of the bill as a tax hike. Its sponsor, state Sen. Barbara Buono (D-Middlesex), said the aim was not to raise taxes on Horizon, but to put it on the same plane as health maintenance organizations statewide.

Horizon, registered as a nonprofit in New Jersey, has enjoyed a unique tax status since its creation in 1932. What Buono termed a "loophole" allowed Horizon to pay only 12.5 percent of the tax on premiums that other insurers paid.

In 2004, according to a study by the treasurer's office, Horizon paid $2.5 million in taxes on premiums. Without the loophole, it would have had to pay $34.5 million.

"We were just trying to level the playing field," Buono said.

The fight with Horizon over the premium tax played out against the backdrop of a Democratic proposal to tap a $1.2 billion surplus Horizon had amassed. If the company was socking away that much money, Democrats argued, it shouldn't be getting a tax break from the state.

Kean issued a public statement to the media June 29 siding with Horizon.

"The Blue Cross surplus is not 'extra' money that politicians can take at their pleasure," Kean said in the statement. "Taking $300 million to balance the state budget could result in the company being unable to write new policies and possibly endanger its solvency."

In the end, amid threats by Horizon to sue the state if it tried to tap the surplus, Democrats backed off and passed the premium tax bill instead. They ended up balancing the budget by cutting $500 million in property tax rebates.

Original Text