State of the State 2020: Rapid Reaction

Welcome to NJPP’s State of the State 2020: Rapid Reaction, your source for commentary and data analysis on Governor Murphy’s address. The transcript below was taken from NJPP’s conference room and has been lightly edited.

Lou (Louis Di Paolo, Communications Director): On Tuesday, Governor Phil Murphy delivered his second State of the State address, where he touted major policy wins from the last year and outlined his vision for 2020. 

As the speech made apparent, this was a big year for New Jersey lawmakers. In 2019, the state passed landmark legislation to raise wages, expand access to health care, create opportunities for immigrant communities, and so much more. New Jersey’s families are certainly on a stronger footing today than they were a year ago, and that’s a direct result of policies enacted over the last twelve months. 

One major theme from today’s speech: changing the culture in Trenton. The governor reiterated this time and time again in his remarks, insisting his administration is “putting the needs of families ahead of the well-connected and entrenched special interests.”

My first question is, what does changing culture look like in practice? 

Brandon (Brandon McKoy, President): I think it means a few different things. The governor mentioned this refrain — changing the culture in Trenton — with regard to economic justice and fiscal responsibility, transparency in government leadership, and the toxic culture of sexual violence that harms women throughout politics in New Jersey. These are all crucial issues that have been long overdue for impactful change and it’s heartening to see the governor highlight them in his State of the State remarks.

Concerning economic justice and fiscal responsibility, turning one-off occurrences into recurring habits is key, especially for policies like boosting our budget surplus, increasing the state’s rainy day fund, and reliably paying for our obligations and critical assets. All of these require a shift from focusing on what it takes to get to the next fiscal year or election, and towards a vision of what New Jersey needs to be ready for the challenges of the next decade and generation.

Sheila (Sheila Reynertson, Senior Policy Analyst): That’s right, and one concrete way to put the needs of the people before those of special interests is to rein in corporate tax subsidies. Study after study shows that these tax breaks are both costly and ineffective at growing the economy. 

If the governor truly wants to limit the influence of special interests, this is the place to get it done. 

Lou: All good points. I was a little surprised the governor didn’t say more about corporate tax subsidies, but at the same time, he didn’t really have to. Every investigative article and study that’s come out over the last year shows that significant reforms, including hard caps on awards, are sorely needed. 

Nicole, I’m curious to hear your thoughts on the governor’s comments on culture change, especially as this was your first State of the State here in New Jersey (some helpful context here is that Nicole is from Massachusetts). 

Nicole (Nicole Rodriguez, Research Director): I was very heartened to hear him single out misogyny and inappropriate behavior. Unfortunately, every woman has a story to tell in this area. We will need to keep each other accountable not only with creating a better culture for women, but also with holding men accountable for their actions through actual repercussions, and creating better protections for women to be able to tell their stories without fear. 

New Jersey has done good work in putting accountability into action, such as pay equity, but we can do a lot more. The state can eliminate the subminimum wage for tipped workers. We know that low wages and dependence on tips creates a culture where tipped workers must tolerate inappropriate behavior at work. Dignity shouldn’t be an add-on but a prerequisite.

Sheila: Was this the first time misogyny was referenced in a governor’s State of the State address? I wouldn’t be shocked if it was.  

Lou: I wouldn’t doubt it. New Jersey could definitely do a better job of living out its purported values, and that starts at the top. Fortunately, Governor Murphy made this a big pillar of his speech, along with ethics reform and addressing rising inequities.

Sheila: Yes, it was refreshing to hear a leader of state government acknowledge that the old ways of addressing disparities hasn’t moved the needle nearly enough and more often than not has left communities behind, which hurts New Jersey’s ability to become stronger and better. The governor announced a task force to take a deep dive into the complex causes and concrete solutions to close the wealth gap, especially for Black and Latinx families.

Nicole: Unfortunately, I have seen these types of task forces before with no real change being done. Why? Because it is hard. Meaningfully addressing racial inequities requires complex approaches with sustained commitment from many different sectors and from all levels of government. What I would like the state to do — and hope that this task-force does — is create long-lasting mechanisms to build assets for families, particularly for those who have been left behind. 

Wealth enables families to make long-term investments in their future. Unfortunately, policy decisions made over the course of generations are inhibiting people, mostly people of color, to thrive and prosper. 

Lou: Agree 110% with Nicole. I’m really excited to see what the wealth inequality task force finds and ultimately recommends, especially as it relates to the tax code. Lawmakers need to recognize that tax policy is a tool to advance racial equity, as Chye-Ching Huang from the Center on Budget and Policy Priorities makes clear in this thread:

Pivoting a bit, the task force wasn’t the only new agency unveiled by the governor, as he also announced the creation of a new office, within the Governor’s office, to rein in the cost of health care. Ray, want to weigh in on this? 

Ray (Raymond J. Castro, Health Policy Director): Yes, the governor’s proposal to establish an office to reduce health care costs statewide is an important first step in controlling health costs. Unaffordable health care costs is the number one problem that consumers face in New Jersey. 

Historically, the state has done a lot to reduce billions of dollars in public health care costs, such as in Medicaid and for public employees, but very little to reduce costs for the average resident. This is one of the reasons why New Jerseyans pay the third highest premiums in the nation for employer based coverage and why the state uninsurance rate ranks so poorly. 

Unaffordable health coverage makes businesses less competitive and consumers less healthy than in some other states that are doing a much better job. However, we will need to obtain a lot more information about the office before we know whether it will tackle the biggest health cost issues facing New Jerseyans.

Lou: Keeping health care affordable is critical, especially if the state wants to make a real attempt at ensuring all residents have comprehensive health coverage.

Ray: Agreed. It is very unlikely that the state will ever be able to make inroads in reducing the 700,000 New Jerseyans who are uninsured until health coverage can become more affordable. There could be major pushback to any substantial proposal from this office by some health interest groups (read: special interests), which is one of the reasons this office has not been proposed before, but the benefits to the public could be enormous if the office has an ambitious enough agenda. 

Lou: Another major theme was a shift in thinking from short-term thinking to long-term solutions. That came up in almost every major issue area.

Sheila: Yes, this was one of the strongest elements of the speech, especially in his closing remarks. 

Good stuff. 

And an appropriate way to frame New Jersey’s precarious fiscal standing after years and years of tax cuts for those at the top, short-changing key services and programs, and expecting New Jersey families to make up the difference. 

Taking on the long-term goal of becoming more fiscally responsible should give the state a fighting chance of digging out of an outsized fiscal hole. Things like creating a healthy surplus, making the first deposit into the Rainy Day Fund in over 10 years and working in collaboration with public workers to find savings in health care benefits are all great steps in the right direction. 

Brandon: Those are critical steps, along with making the tax code fairer for everyday families. The nation’s tax code is upside down, with the wealthiest families paying a lower effective tax rate than anyone else. 

Granted, New Jersey’s tax code is less regressive than most but there’s still much more work to be done. The state is precisely in the situation it’s in because of three decades of short-sighted budgetary decisions. There’s no silver bullet or one policy to fix that. 

Sheila: That’s right — and the governor said as much in his speech. These issues will not be solved in one election cycle. 

It’s an important reminder now that the governor has called again for a true millionaire’s tax. A common reaction to this perennial proposal is that it “won’t fix New Jersey’s problems.” That’s an unfair and oversimplified characterization of long overdue tax reform. Increasing the tax rate on earnings of $1 million and above would not only provide at least another $450 million to property tax relief for middle class families, but also be an appropriate counter reaction to the widening gap between the highest earners and everyone else. 

Lou: What was your favorite part of the speech? Try to keep this to a topic we haven’t covered yet. 

Nicole: Can I tell you what wasn’t my favorite part? All of the clapping!!! 

Brandon: I was waiting for that to come out.

Nicole: I kid, I kid! As you know, I hail from good ole Boston, Massachusetts and attendees of MA’s State of the State don’t typically clap for five minutes straight when the governor walks in. Don’t get me wrong, I was happy to clap, but I did have to take breaks to keep up with the excited crowd!

Sheila: This was my favorite moment: hearing the governor announce that New Jersey will be the next state to codify the right to abortion care!

Right now, the right to abortion is protected by New Jersey’s Supreme Court decisions, but not protected in state statute. With Roe v. Wade under threat nationally, it’s more important than ever that New Jersey enshrines the right to abortion access and reproductive health care in our state law.

Nicole: I appreciated when the governor elevated common sense solutions for people who are currently in the justice system, specifically when he called for eliminating mandatory minimum sentences for nonviolent offenders. While this policy will not address all racial disparities in our criminal justice system, it is a good step forward. Hopefully, we will see a transition that emphasizes restorative justice over retribution. 

Brandon: I really liked this line towards the end: “Where others have focused only on the next election, we’re focused on the next generation.” There’s often a sense, working in state policy in New Jersey, that there’s no real long-term plan to tackle the challenges we deal with on a day-to-day basis, let alone the ones we’ve yet to come across. 

Too much of the state’s politics and policies focus on just getting through the next budget or the next election and those sorts of decisions have led us astray. Prioritizing the long-term future, and thinking about what the next generation will need to succeed, should take greater precedence over our decision-making in general. It was really nice to see that sentiment highlighted in the State of the State.

Sheila: Oh, can I do another one? I was impressed with the Governor’s call to revitalize the Amistad and Holocaust education programs as a tool against rising hate crimes in the age of dangerous polarization. Such a welcome and straightforward strategy to instill values of inclusion, equity, and empathy. Bravo! 

Lou: And what was missing? 

Brandon: While there was a lot of focus on economic inequality, the word “poverty” wasn’t mentioned once. We can’t truly tackle rising inequality without explicitly naming and highlighting the damaging effects of poverty on our society. The poverty rate in New Jersey remains significantly higher than it should be and, looking at the ALICE report from the United Way of Northern New Jersey, we know that 4 in 10 households struggle to make ends meet. Poverty is truly a national security issue and if we don’t attack it while centering racial and gender equity, New Jerseyans across the spectrum will continue to suffer. So, going forward, I would like to see poverty mentioned explicitly and more frequently.

Ray: I have to agree with Brandon. It is also unfortunate that the poorest families in the state weren’t explicitly included in the governor’s speech. Major progress was made this year because the state increased basic assistance to these families in Temporary Assistance to Needy Families (TANF). This assistance, however, is still only at about 30 percent of the federal poverty level. The entire TANF program really needs to be reformed to help lift families out of poverty and achieve economic independence.  

Lou: Anything else, Ray? 

Ray: There was also no mention of increasing health coverage for the uninsured. Without help to reduce premiums and cost sharing in the new state exchange that starts this year, it is likely we will see another drop in enrollment for health coverage. The state can start to move toward universal health care by assuring that all uninsured kids in New Jersey are eligible for NJ FamilyCare. This can be done with little cost because the state has already made great progress under the Affordable Care Act at reducing the number of uninsured children. 

Sheila: No mention of rising state college tuition fees or how to help New Jersey families getting crushed by child care costs. Child care is still largely unaffordable for many working parents — the state really needs to expand eligibility for child care subsidies and make tax credits for child care fully refundable.

Lou: You know what this rapid reaction is missing? 

Brandon: Gritty? 

Lou: Gritty!

Sheila: So predictable… not that I’m complaining.

Lou: Thanks, team! Looking forward to doing this again for the budget address in a few week.