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Sense and nonsense

June 21, 2010 - John Stack
I had a friend in college who used to tell me that the best and the brightest have an obligation to help rule, or an obligation to public service. If only that were true! Just looking at our state legislature, it’s obvious it is those with the most money and most ambition and those most willing to sell their soul to be elected. But, we still hold on to the hope or belief that those we elect either understand some situations better than us, or that their plans or bills have much more analysis and peer review than we as citizens could ever accomplish. And then sometimes, we realize that no matter how big or small the subject, the ‘leaders’ really have no real clue (like sarah Palin), or even worse, they are trying to force something down our throats that looks like it will benefit us all, but we know we are getting a pig in a poke.
                Chris Christie is the governor of New Jersey. He just won election last fall running as the anti-incumbent. It was a close race, but Christie made some promises to the electorate that put him over the top (promises of course of which he has purposely flip flopped on – like the property tax rebate). Right now, he is spending all of his time trying to get a constitutional amendment passed for his state. He wants to pass a tax cap of 2.5% for all municipal entities – towns, villages, schools and counties. It would be a very hard cap in that it would be very tough to override the cap. Currently, New Jersey has a ‘soft cap’ of 4%, but he claims this is not only too high, but too easily overridden.
                His methods are truly Draconian. This year, he cut funding to school districts drastically. Then, he wished that many school districts budgets would fail. This way, he believed he could show the people how bad the schools were using taxpayer money which would lead to taxpayers to pass his amendment. Now let me say that again. Christie cut the amount of state aid he was giving school (which in some cases made up a significant portion of the budget) forcing school districts to either raise taxes significantly (just to keep with the current level of support) or lay off a lot of people. THEN – he blamed the school districts for this!! (Conveneiently not mentioning it was him who caused the problem in the first place). Now is part two of his dismantling New Jersey (and hopefully his political career).
                He is trying to pass this hard cap of 2.5. That would be 2.5% or the rate of inflation, which ever is lower. Right now, inflation is below 1 percent, so basically there would be no increase. This is with labor contracts (of which I don’t think any have negative raises) still to be fulfilled, plus rising health costs which don’t seem to care about what inflation says. Not to mention, although last year inflation was basically zero, 2008 had inflation at almost 4%! How about the great Ron Reagan years! 13.6 %, 10.35% and 6% from 1980 to 1982! What will you tell employees when inflation is 10 percent, but the constitution says you can’t raise levy over 2.5%? I’m sure everyone will say ‘Well, its helping with the real property tax, so we’ll take an effective 10% wage cut each of the next 3 years’. We have low inflation now, but it won’t last. Then what? Christie also wants to change other ‘tools’ to help localities. The ability to reopen contracts and to change pension funding. I’m not sure how this would really help, but supposedly by reopening the contracts, all the unions will agree to sharp salary cuts. I’m sure in times of higher inflation, if the unions accepted small raises, the contracts will be opened to give them bigger raises, right?
The crux of all of this is of course that every single municipal organization has been spending taxpayer dollars like a drunk at a casino. Every single public employee is grossly overpaid, has exorbitant health care with very low cost to the employee, as well as having staffing levels that are way too high and unsustainable. Every cop. Every nurse. Every snow plow driver. Every secretary. Every counselor. Every firefighter. Every one of them are overpaid and underworked. Everyone needs to work harder, longer and for less pay. And do more with less. Currently, no school, fire department, police department, town, county or nursing home or hospital is understaffed, overworked or underpaid. Christie’s plan only works if this is incredibly true.
But Christie has a magic elixir. Its called Prop 2.5 known as the Massachusettes Miracle. Back in 1989, Massachusetts (heretofore known as Taxachusettes) the legislature in Boston passed a 2.5% hard tax cap. Within a few years, property taxes had fallen, schools were doing great, and there weren’t layoffs or cuts in services. Woo Hoo! Tax Cap! Tax cap! Tax cap! How did they pull of this phenomenon without raising taxes?   The state started pumping more and more money into the schools, taking the burden off the (property) taxpayer. Just like New Jersey will, right? Oh. What? Oh. I just heard New Jersey thinks they will get the same results, but they will do it in a more novel way. They will cap tax increases to 2.5% (OK, I’m still with ya) and CUT aid from the State, rather than increase it! Oh. So there will be cuts. (yup). There will be less services provided. Uh Huh. Hmm, so if it takes the fire department longer to respond to a house fire, or the police department longer to respond to a robbery/rape/shooting – its OK because property taxes will go down, and Christie will look like a hero?
Now I understand the need for property tax reform. I have even advocated for the ‘circuit breaker’ as well as tax caps in New York. But, it’s all in what goes into the pudding. How about this kind of tax cap – the benefit for wages plus benefits cannot increase more than inflation plus 1%? This way in times of high inflation, union workers aren’t stuck in an onerous contract. If health costs increase too fast, the users of the health care (municipal employees) will bear as much of the burden as the taxpayers. In times of recession and low inflation wages would also grow slowly. Then, instead of a 2.5% cap on the increase in the tax levy, how about a max on the amount spending can increase. If the state decides to decrease state aid, why should the localities bear the brunt of the burden and relieve the state legislators of making the hard choices themselves?
                This way, a revenue stream fluctuation wouldn’t hurt a municipality so hard. If Harrietstown relies heavily upon airport revenue, but oil prices go up, causing fewer people to fly, the town loses revenue. Under a 2.5% levy cap, they have to cut deep rather than raise taxes. But, with a spending cap they could raises the levy a bit above 2.5%. If the oil prices drop/more people fly more revenue comes in. But, the town would still be limited to a 2.5% increase in spending,s o they couldn’t just spend this ‘new found’ money on something new. They would actually be forced to cut the tax rate and still be able to increase spending 2.5%!
Ahhh. But it is a lot sexier to be Chris Christie with his big hammer seeing everything as a nail and threatening towns that don’t agree with him that he will tell taxpayers the leaders don’t want real property tax reform. (Once again, leaving out they don’t want HIS tax reform, but Christie is used to this sleight of hand by now)


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