Chris Christie inherited a mess in New Jersey. Jon Corzine's tax-and-spend legacy left him with a $10 billion budget hole caused by years of rampant overspending. State government raised taxes by $1 billion less than a year ago, and legislative Democrats have already vowed to push a massive "millionaire's tax" (oddly enough one that hits everyone making over $400,000) again this year.
The governor has vowed to change the status quo in the Garden State. He has declared a moratorium on any tax increases this year. Deep but necessary cuts to bloated state and local governments are his roadmap to a solvent budget. Christie has proposed $820 million in cuts to public schools along with a teacher pay freeze, which has teachers unions crying foul. Of course they are: Much of school funding increases in the recent history have gone to rising teacher salaries and new hiring, despite the fact that administrative hires have outpaced enrollment growth more than threefold.
Christie has also proposed cutting hundreds of millions of dollars in state aid to local governments. This can often put upward pressure on local property taxes, but the governor has a solution for that too. He's calling for a measure, like those in Massachusetts and California, that will limit the annual growth in local property tax levies. Had this gone into effect a decade ago, the average property tax bill in New Jersey would be $1,600 lower today.
These measures are bold, but necessary. New Jersey simply cannot continue to raise taxes to pay for frivolous overspending. Government is already too big in the Garden State, and it's refreshing to see a governor who understands the need to reverse course.
For ATR's letter to the legislature in support of Gov. Christie's proposed reforms, see below. For a PDF of the letter, click here.
May 19, 2010
New Jersey’s economic climate is in dire straits. State and local governments collect more in combined taxes than anywhere else in the country. The budget is $10 billion out of balance. And after multiple rounds of punishing tax increases, some in the legislature are looking to continue the tax-and-spend trend in Trenton. I urge you to heed Gov. Christie’s call to oppose state and local tax hikes while pursuing meaningful spending restraint.
The governor has proposed an $820 million reduction in education spending and $445 million less in local government aid along with a 2.5 percent cap on annual property tax growth. New Jersey already levies the highest per capita property taxes in the nation, and homeowners face a host of economic challenges due to the recession. Had Gov. Christie’s property tax cap been enacted 10 years ago, property tax bills would be $1,600 lower on average.
Teachers unions argue that cooling the growth of property tax levies will harm New Jersey’s students – an argument that hardly passes the laugh test. New Jersey already spends an average of $19,000 per pupil, the highest in the country, and a number that grew 8 percent last year alone. Sadly, much of that growth has gone toward employee salaries: In the past decade, according to Excellent Education for Everyone, student enrollment grew only 3 percent, while school hiring has increased 14 percent.
Because the state budget is so bloated – fueled by per capita tax increases of $2,601 between 2002 and 2009 – there is plenty of room to cut. The $2.9 billion in budget cuts proposed by the governor in March are not only feasible, but necessary. The days of unfettered hiring of public employees and collective bargaining laws that allow government workers’ compensation to vastly outstrip their private sector counterparts are over. New Jersey literally cannot afford to continue the Corzine legacy.
It is important to couple spending restraint with tax reform, so as not to use cuts at one level of government as justification for tax increases at another. Gov. Christie’s plan relies on sustainable budgetary reform, rejection of all tax increases, and a cap on growth in local tax rates. It is a positive step toward fiscal sanity in the Garden State, and one I urge you to wholeheartedly support.
CC: Gov. Chris Christie