governor – Page 10

Faux reform

At least Gov. Jon Corzine knows that the legislation he signed enacting a 20 percent tax credit is only a pebble in the ocean as far as the reforms needed in New Jersey.

“I’d be skeptical too, if I was a taxpayer. Until I see the results, it’s show-me time,” Corzine said, adding that those results will take years to happen. “The reforms take time. It’s not one of those things where you’re going to get instant gratification.”

Certainly not. The fact is that the legislation signed yesterday was a small Band-Aid on a huge problem — property tax bills that are growing at about 7 percent a year and that are already the highest in the nation; a tax system that reinforces the state’s economic disparities; a political system that rewards campaign contributors and ethically challenged legislators; too many towns and school districts; an illogical school funding formula. The list is long.

And it’s why, as the Asbury Park Press points out, the credits are far from the “landmark” reforms touted by the governor and Legislature.

The only thing remarkable about it is how Corzine and the Legislature believe voters will be fooled into thinking it is worthy of the adjective “landmark.” Clearly, they are counting on the gullibility of the electorate. All 120 seats in the Legislature are up for election in November.

Instead of reducing spending by cutting government programs and jobs, and bringing public employee salaries and benefits into the 21st century, they have opted for a shell game instead — demonstrating once again their low regard for the intelligence and attention span of the voter.

Would the Republicans do better? Doubtful. They had a decade in the majority to improve the system and all they came up with was an income tax cut that helped create the fiscal problems the state currently faces.

Jon Shure of New Jersey Policy Perspectives had it right in February when he wrote in an op-ed that so-called reformers dismissed the most logical proposals — an expanded state income tax, realignment of local and county governments — in exchange for what they thought was politically palatable. (Even those proved too extreme for the risk-averse Legislature.)

When we get beyond slogans and sound bites, New Jersey is left with this reality: we collect more from local property taxes than from the state sales and income taxes combined. It’s also true that the lower your income is in New Jersey the higher percentage of it you pay in the form of sales, income and property taxes combined. Real reform of the tax system would put all of this on the table. And it would also accept the fact that as bad as New Jersey’s tax system is (and it is) it is really a symptom of the larger problem: 566 municipalities and 613 school districts-an archaic, unsustainable structure more reminiscent of the Ottoman Empire than a 21st century state.

He describes “real reform” as “looking not just at how much New Jersey spends, but where we spend it and who we call on to pay it.”

An honest assessment of tax burdens that squarely confronts who pays how much, and in which taxes, would point the way out of the morass. It would recognize the value of raising and spending more of our resources at the state and even county level and less locally.

And it’s only likely to happen if we empower citizens — via a tax convention — to do the work.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog

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To sell or not to sell

Editorials in the state’s major papers over the last few days are asking that voters and legislators keep an open mind on the governor’s “asset monetization” proposal, asking that critics hold their fire until the governor puts a plan on the table.

The Record, for instance, calls legislators’ attempts to block the plan — essentially a privatization of state assets — premature and “flat-out wrong.”

They have decided they are dead set against the sale or lease of a major highway or other asset before they even know what the Corzine administration will come up with.

Their premature opposition is a disservice to the public. It threatens to kill the proposal for an asset sale before it has even been made.

Of course, that’s the game plan. The idea of selling off the Turnpike is dangerous at the very least, raising the specter of some unregulated business raising tolls and shirking on maintenance, leaving the state’s drivers holding the bag for years.

The Record admits that

there are serious, legitimate concerns about the notion of giving a private company control of any major highway or other state asset. Would tolls rise unreasonably high? Would the highway be properly maintained?

Most important, would an asset sale benefit the state over the long run, or would it bring only temporary relief that would lead the state into a deeper fiscal hole in the future?

These concerns need to be fully debated. But it is impossible to debate a proposal that doesn’t yet exist.

The Asbury Park Press also remains skeptical, but is open to some options,

such as the sale of naming rights and air rights — developing the empty space above state properties — and the use of financial techniques to generate regular income from state assets. None of the alternatives should involve ceding control over the assets, such as the roadways, which would hurt commuters most with nonstop toll increases.

And it wants voters to have the final say — which only seems reasonable, given what may end up being proposed.

Let’s be fair here. “Asset monetization” is a dangerous gamble, as I said. Handing off public assets, even if safeguards are built into the contract, means handing off control. You can’t have it both ways.

I wouldn’t take the proposal off the table, necessarily, but before anyone can take this discussion seriously, the governor has to show the state that there are no other options. The governor says that voters will not stand for an income tax hike. My answer is: Let’s ask them. He says they won’t stand for service cuts: Explain the potential cuts and then ask them whether they can live with them.

If, in the end, “asset monetarization” is the only way to stave off financial ruin, then we can talk about it.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog

E-mail me by clicking here.

A boost in aid

Aid figures are out and it appears that the governor is keeping his word to suburban schools. South Brunswick is looking at a 5 percent increase ($20.16 million from $19.2 million), Monroe ($4.33 million from $4.2 million) and Cranbury 3 percent ($727,735 from $706,539) and Jamesburg a whopping 8.3 percent ($3.96 million from $3.66 million) — not huge increases by any stretch, but more than any hike in a long time.

While the aid increases should help offset the need for some property taxes, they remain far below what is necessary to help growing districts like Monroe and South Brunswick keep up with the particular intersection of enrollment hikes and inflation with which they must live.

Consider, however, that South Brunswick will be looking at a budget of something in the neighborhood of $125 million, meaning that state aid makes up just 15 percent of the total. The percentage in Cranbury is about 6 percent.

For the state to address the property tax problem, it will need to address this funding flaw. I don’t know what the correct number is, but if the state paid about half the cost of education in a district like South Brunswick, it would cut between 50 and 60 cents off a $2-plus tax rate. The same kind of percentage cuts would be felt across the state.

That said, the state would need to come up with the money for the aid — either by raising taxes or through some other creative, but sustainable way of raising revenue.

I don’t know if this is the correct approach, but it a drastic approach, a wholesale revision of the way we do business as opposed to the nibbling at the edges envisioned by the four joint committees.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog

E-mail me by clicking here.

Delaying tactic:Budget puts off necessary reforms

I am trapped in the office, so I didn’t hear the governor’s address. But I have read it and have some thoughts — some of which should be familiar to those who have read my columns over the past year.

The proposed budget offers some good — $300 million to cover an expansion of the state’s earned income tax credit, a nominal increase in aid to schools and towns, money for stem cell and autism research, a reduction in the state workforce through attrition and his call to end “Christmas tree items,” or those spending items tacked on to a finished product without discussion. The rest of the budget address, however, glosses over a single fact: that the governor and state Legislature failed horribly in their attempts to reform state government.

The governor speaks of “$9 million for the new comptroller’s office to root out waste, prevent fraud and reduce spending.” But the comptroller will have few real powers.

He speaks of the new property tax credits — which will offers savings this year, but are unsustainable beyond this year as they are currently constituted.

He speaks of a new $20 million consolidation fund “to provide meaningful incentives for schools and local governments to share services and reduce costs,” but doesn’t acknowledge that the consolidation panel is just advisory and unlikely to result in much real streamlining.

The biggest question mark, however, remains his commitment to “asset monetarization,” essentially using state assets to generate short-term cash. He makes an interesting case, arguing that it represents the only way the state can raise the kind of revenue necessary to provide the programs desired while also offering property tax relief.

The one option that is new and that we are now studying is asset monetization. It’s something that has been implemented in other states and, I can assure you, successfully around the globe. I think it’s fair to say that most governmental entities across the country, led by Democrats and Republicans, are examining its feasibility and appropriateness.

The economic potential from restructuring the state’s interest in our asset portfoliois too significant to ignore, whether that asset is the Turnpike, the lottery, naming rights, air rights, or whatever.

Potentially, asset monetization could reset the state’s finances by dramatically reducing our debt burden, and consequently reducing debt service.

Monetization could free up as much as a billion dollars or more in every year’s budget — long into the future.

Sounds good on the surface, but the potential pitfalls — loss of control over the “asset” (toll hikes and maintenance on the Turnpike and Parkway, for instance) — are hard to quantify. The issue remains how we account for the hidden costs and the nonmonetary costs. The governor address this issue this way:

Make no mistake – with any proposal, we would insist on protective conditions.

If we can’t ensure that the high standards of operations and maintenance will continue, we won’t proceed.

If we can’t ensure public safety will be maintained, we won’t proceed.

If we can’t ensure the state will maintain oversight in the governance of the asset, we won’t proceed.

If we can’t ensure that price increases will be predictable and reasonable, we won’t proceed.

I’m not feeling any more confident about the proposal, nor am I convinced that the choices the governor is taking off the table — income tax increases and streamlining of government — are as unpalatable as he thinks.

A broader-based progressive income tax coupled with a significant reduction in property taxes, forced municipal mergers and regionalization, elimination of county government taken together could go a long way toward fixing our problems.

In the end, “asset monetarization” may still need to be considered — I hope not — but at least we will have forced a reconsideration of New Jersey government before being forced down that path. To sell the Turnpike first will only put off the necessary reforms.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog

E-mail me by clicking here.

Finding his inner-Spitzer

A good column from Tom Moran in The Star-Ledger comparing the disappointing Corzine administration with that of New York new Democratic governor, Eliot Spitzer.

Spitzer (right) has been a bulldog; Corzine (left) a lapdog.