This op-ed appeared in the July 16, 2016 edition of the Star-Ledger.
New Jersey’s leaders must resist so-called “tax fairness” proposals that would bring more pain than fairness to the overwhelming majority of the state’s residents. But the longer New Jersey goes without securing a new deal injecting some financial life into its nearly-bankrupt Transportation Trust Fund, the louder the voices urging our leaders to cut a deal – any deal – will become.
The deals that Gov. Christie, Senate President Sweeney and Assembly Speaker Prieto have put forth simply aren’t deals worth making.
Instead of continuing to hold essential funding for transportation hostage to special interests seeking big tax cuts that will accelerate New Jersey’s steady decline, our leaders must lead. With weeks left to go, legislators must return to Trenton and ensure there will be money in the Transportation Trust Fund come Labor Day. But they should reject both deals on the table and fix our transportation-funding crisis without creating new crises.
A true compromise would shelve most of the tax cuts and hold their budget impact to under $400 million a year. And if that’s not good enough to satisfy Grover Norquist and the governor, then lawmakers have no choice but to patch together enough additional debt to make it to 2018. It’s not ideal, but the havoc that the current alternatives would wreak on our state’s future is too grave a threat.
The Christie/Assembly plan would save the average New Jersey family less than $6 a week but cost New Jersey $1.8 billion a year, depriving New Jersey of resources it needs to thrive, from helping to make college affordable to protecting our environment to ensuring that the least fortunate among us have adequate assistance to get by.
Meanwhile, the Senate plan would blow a nearly $900 million a year hole in the state budget while repealing a common-sense tax on inherited wealth – the estate tax – that helps fight inequality and boost the common good. This would give a big tax break to people who hardly need a break – those inheriting estates with over $675,000 in taxable assets. Fewer than 5,000 of the 70,000 people who die each year in New Jersey are wealthy enough to be passing estates this large onto their heirs.
Tax-cut tradeoffs might make for good politics but they make for bad policy. If our leaders feel they must include these tradeoffs, they should limit the impact on the budget as much as possible.
Take, for example, the proposal to raise the gas tax, increase the state EITC, expand the tax break on retirement income and raise the estate tax threshold to $2 million. It would address some tax issues without breaking New Jersey’s piggy bank or needlessly delivering extravagant rewards to New Jersey’s fortunate few. The total price tag would be less than $400 million.
But therein lies a key problem: less than $400 million in tax cuts is unlikely to satiate the appetite of a governor increasingly concerned with burnishing his credentials for a national political audience. So then what? Should lawmakers let the governor feed the state a bottle of poison, even when they’ve read the warning label?
No. And the good news is they don’t have to.
They could instead follow the lead of Assemblyman Wisniewski and put forward a proposal to finance new debt at a cost of $150 million to $300 million to maintain two years of transportation projects, which will permit current and a few future projects to be funded, keep people working and pass the task of enacting stable, long-term funding to a new governor and legislature in 2018.
While that’s certainly not the long-term transportation-funding fix that we and other advocates had hoped for, it is much better for New Jersey’s long-term health and growth than cutting a very bad deal.