Monday, July 03, 2006
I certainly never expected to support Jon Corzine, but I must say I admire his political courage. New Jersey has an enormous budget problem that does not square with its hot economy and tremendous wealth. The huge structural deficit is also not the product of low taxes -- our property taxes are among the highest in the country, and the state income tax increases imposed on the affluent during the last five years have taken away more than half the reductions from the Bush administration's cuts in federal taxes. New Jersey has a budget deficit because its state government is astonishingly incompetent.
Jon Corzine, somewhat to my surprise, is determined to clean up New Jersey's fiscal mess, and he is doing it intelligently. In addition to politically costly spending cuts, he wants to raise additional revenue with a 1% increase in the state sales tax. The Democrats in the legislature, who are in the majority, oppose the increase, favoring still higher property and income taxes. Since I believe that it is far more intelligent to tax consumption than assets or wealth creation, I very much agree with Corzine.
Thing is, the Democrats in the legislature won't enact a budget. The Democrats are at an impasse with their own governor. Corzine isn't flinching, and has signed an order shutting down the non-essential services in the government.
Good. As long as the continuing "essential" services include the toll-takers on the Garden State Parkway this afternoon, I'm all for it. Let us learn whether New Jersey misses its government. The legislature and its patrons in the public sector unions might not like the answer.
UPDATE: Fausta takes a rather dimmer view, pointing out that Corzine is hiding the ball big time.
When this Polish Revolutionary's family arrived in New jersey, the state had neither a sales nor personal income tax. By 1966, we had a sales tax to pay for state services. 1976 brought the first income tax to help pay for public schools. I have no idea of the business and corporate tax situation in New Jersey, but I assume that it is onerous.
As for property taxes, New Jersey residents (and the rest of the North East) are doomed. Having 567 incorporated municipalities and nearly as many school districts, does not make for efficient taxation or services. My hometown in New Jersey has a mayor and nine elected councilmen to serve 26,500 residents. My current home county has 240,000 people served by an executive and seven councilmen. There are three incorporated areas in this county. A much larger county next door has none. Needless to say, our property taxes a dwarfed by New Jersey's.
Jon Corzine may be doing the right thing to shut down services in the face of a budget gap. However, a single point increase in the sales tax, along with any cuts, will not help the long term structural deficits New Jersey faces. To fix that will take much more than political courage. It will take changing a way of life.
While I have no issue with state government shutting down (the public just may learn it can do without these thousands who drain their tax dollars), Corzine's plan to raise the state budget 9.2% does not "clean up" the mess and is not "intelligent".
The basic premise is that because of salary and healthcare benefits, NJ needs more money this year to pay for the same level of services it had last year. Yet as blogger after blogger has shown, Corzine is adding to state government.
The shutdown is a showdown over how best to take money from the taxpayers' wallets. Corzine wants to increase the sales tax 16%. The Assembly Democrats want to increase taxes across the board. The net result is that New Jerseyans will be paying a lot more next year to live in this state.
That is not intelligent government.
I don't think this proves anything about Corzine's political courage. New York is a good guide of what will happen in New Jersey. Things might get uncomfortable for some folks - especially with the casinos scheduled to shutdown on Wednesday morning unless the courts step in.
However, Trenton will figure out how to pass their tax increases to cover their state spending increases. And it will be business as usual in Trenton as businesses decide to pull up the stakes and take their business elsewhere as the tax burden becomes too great to bear.
How and why does New Jersey need to increase spending by 9%? That's the great unanswered question.
There's no reason that the budget needs to grow by that amount. None.
And no one is questioning anyone over the budget figures either. Enlighten NJ has the details.
As Fausta notes - 9% budget increase to go along with a 16% increase in the s/u tax - other taxes and fees will increase the overall tax burden even more, and no reduction in state spending to deal with structural deficits.
The Transportation Trust Fund is still a mess, as is the pension funds.
I'm obviously not a student of the New Jersey budget -- I find it too painful to focus on -- and I did not mean to suggest that I liked the total result. However, Corzine is a liberal Democratic governor presiding over a Democratic legislature. I would have expected much worse out of him. It is interesting to me that he is going to the mat over the size and nature of the tax increase, and he is doing so in a way that I approve of. That's all.
As I understand, the truly huge problem with the New Jersey budget is health benefits, both for current employees and retired employees.
I guess it's courageous and worthy of being admired unless you're one of the state employees who won't be getting a paycheck. I can't imagine they will find this predictament so wonderful. And while we can all wail about how the government payroll is bloated and should be brought under control, we are still talking about ordinary people with families to support and bills to pay. Maybe Corzine can just caption his TV appearances with the following: "No rich people were injured while I played hardball with the legislature."
Well, Jackson, lots of private sector employees go without paychecks from time to time. I am not sure the principle under which public sector employees should be immune. That is why Ben Franklin said to save money for a rainy day. In New Jersey, it's raining.
While you may have the means to prepare for a possible job loss, many other people don't. They live paycheck to paycheck, of necessity and not by choice (and keeping in mind that a private sector employee often will have severance or unemployment benefits to fall back on which presumably isn't the case with these state employees you so casually dismiss). Celebrating grand political gestures is always easy when your own life and family aren't adversely affected. But perhaps the governor will be motivated to reach into his own fairly large pockets and help fund the budget shortfall.
Jackson, for the looks of it, all state employees will get paid
We have serious problems in Jersey and the country on a whole.
We try to expand the budget instead of cutting back. We need someone who can look at efficent cutbacks. Making government agencies more efficent and lower the amount of employees. As with regular employment we should not guarantee healthcare for life. the problem is politicians. They work thier way up in the same broken system of ripping off the citizens who they are suppose to represent. I believe i was reading that the budget was above 45 billion in NJ. I am sure with smart business ideas the budget could be cut down 10 to 20 percent of the current amount. I think the biggest problem is how well the money is being spent. The biggest cutbacks should be made in wasted spending.
This is a great state in many aspects, however, we are being bled to the point of not being able to live a good life.
These articles are fantastic; the information you show us is interesting for everybody and is really good written. It’s just great!! Do you want to know something more? Read it...:Great investment opportunity in Costa Rica: condos resort, destin beach, destin condos. Visit us for more info at: http://www.jaco-bay.com/