Op-Ed: How to Keep New Jersey From Becoming a Failed State

July 28th, 2014  |  by  |  Published in Editorials & Op-Eds, NJPP Blog: As a Matter of Fact ...  |  1 Comment

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This op-ed appeared in the July 27, 2014 edition of the Star-Ledger.

NJPP Op-EdNew Jersey is in danger of becoming a failed state. Not in the same way as Somalia and other truly desperate places, but compared to its peers in America, New Jersey is sliding toward failure, with statistic after harrowing statistic to prove it. We’re not yet Detroit, but the warning sirens can no longer be ignored.

Unfortunately, the timing for a candid discussion of the state’s problems and the emergent actions to start fixing them couldn’t be worse. The governor’s schedule and foreign policy pronouncements confirm that he still has eyes on the White House. When the governor’s priorities are driven by the radical agenda of national Republicans, New Jersey suffers. Meanwhile the senate president’s actions suggest a serious 2017 gubernatorial bid, with priority on repairing relations with public-sector unions.

The political positions that are convenient to their ambitions only intensify the danger to New Jersey’s future.

These leaders and the assembly speaker must take a chance if New Jersey is to have a chance. August is the time to start, with a special session modeled on the successful precedent set in 2006.

Just summoning everyone back to Trenton in the summer heat would strongly signal urgency and cooperation. The Republican and Democratic leaders of the Assembly and Senate should select two members each for committees focusing on four pressing issues: the budget, transportation, pensions and retiree benefits, and property taxes. The committees should be led by Democratic and Republican co-chairs and given a November 15 deadline, so that useful recommendations can be incorporated in the 2016 budget to be presented next February.

Yes, time is running out on owning up.

Lawmakers on the budget committee should determine the services and assets the state must sustain and enhance to prosper and then outline initial steps to prudently pay for those investments – without reverting to the politically safe path filled with the accounting gimmicks and borrowing that got us in this mess.

The heart of New Jersey’s economic advantage – its location in the middle of the world’s largest market – is only an advantage if our transportation network is protected and modernized. Right now, New Jersey is falling way behind. Next year, the bank for these investments, the Transportation Trust Fund, goes broke. Smooth roads and safe bridges are costly and require stable, secure funding (unlike the patchwork “plan” now in place). This problem requires immediate attention and bold recommendations.

The pension and benefits committee must begin by acknowledging that 2011’s reforms are dead and that the new 2015 budget only deepens the hole.

In addition to determining a new state payment schedule for the pension fund, the committee should explore everything from eliminating payments to retirees for unused sick and vacation time to reinstating the 25-year minimum service obligation for police and fire personnel.

The committee should also consider fair and practical revisions to retiree health benefits and how to address the costs of lifetime benefits for relatively young retirees.

Given the state’s inability to pay its bills, the property tax committee’s capacity to offer noticeable tax relief immediately is zero; its ability to do so in the mid-term is next to zero. With residential property taxes exceeding $21 billion and income tax revenue already supplying about $14 billion of relief to property owners, there is no ready source to do what every candidate promises: cut everyone’s property taxes.

Admitting the fantasy of that perennial promise would be a healthy start. Afterwards, everything should be on the table, from significant shifts in how income tax revenues are spent to a statewide property tax to help level the playing field between towns to a ceiling on property taxes for families earning less than, say, $75,000.

Two decades of gimmicks and borrowing dug New Jersey’s financial hole. It won’t be filled in one or two years, but it will only get worse if the emergency is not acknowledged and acted on soon. The governor, senate president and assembly speaker need to “put Jersey first” and there’s no time like the present.


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Responses

  1. skip3house says:

    July 29th, 2014at 8:13 PM(#)

    $21B from cruel and regressive property tax? $14B from fair and progressive NJ Income Tax?
    Simple ! Double the NJ Income Tax and cut 2/3 property taxes – likely schools portion.

    Results in replacing unfairness with income tax based on ability to pay!
    And, no need for Rebate systems.

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