Category: Blog

2016 Ballot Questions: Vote ‘No’ on 1, ‘Yes’ on 2

Posted on by Gordon MacInnes

vote_with_check_for_v-svgIn the midst of the closely-watched presidential election, it is important to remember that New Jersey’s two ballot measures deserve close attention. Question 1 would authorize casino expansion to North Jersey, while Question 2 would constitutionally dedicate all fuel taxes to capital improvements to transportation networks. The first should be defeated; the second approved.

The proponents of casino expansion claim that two North Jersey casinos will save Atlantic City from failing as a tourist destination; the construction and operation of the two casinos will spark a boom in jobs and economic activity; struggling seniors and disabled New Jerseyans will be assisted with more generously funded benefits; and the shrinking equine industry will receive a subsidy to preserve jobs and economic activity.

These are hefty promises, but right now they are empty promises.

In fact, the referendum fails to answer basic questions about the proposed expansion of casinos. Everything from what the specific tax rate on new casinos would be (and, therefore, how much revenue might actually be generated to fulfill all these big promises) to how visitors and workers will get to the new casino sites remains unaddressed by the pro-expansion campaign (which, incidentally, suspended its efforts weeks ago in the face of polling that overwhelmingly shows voters lining up against this idea). For more on the case against Ballot Question 1, read our October report, Big Promises, Few Answers on Casino Expansion. 

Question 2 would constitutionally dedicate all fuel taxes to capital improvements of New Jersey’s essential networks of highways, bridges and public transit. Despite much confusion in recent weeks, one thing is clear: Approval or rejection of this question would not increase or reduce the recent increase in fuel taxes. Instead, it would make more certain that all fuel tax revenues are used for their intended purpose.

Here’s the principal reason for voting “yes” on Question 2: New Jersey’s most important asset, which no other state can match, is its location in the middle of the world’s largest market with convenient access to the world’s most important city. That advantage disappears if the state’s transportation networks are not maintained, improved and expanded. Public transit in particular has suffered from substantial disinvestment in the last seven years. The recent fuel tax increases, combined with the certainty that they will not be diverted to other programs and services, give the state a better opportunity to preserve its most important economic advantage.

Income Growth Doesn’t Stop Tired ‘Outmigration’ Claims

Posted on by Sheila Reynertson

outmigration-slice-01New Jersey’s overall reported income grew by $19 billion last year, adding up to an impressive $320 billion for 2015 as a whole, according to the latest statistics released this month by the Internal Revenue Service.

But that fact didn’t stop business lobbyists pointing to another, much less significant number – the supposed “loss” of $2.4 billion to “outmigration,” which accounts for less than 1 percent of total household income – and insisting that it is an economic crisis that must be addressed by cutting taxes, almost exclusively for the state’s most well-off and for successful corporations.

But updating numbers to inflate a bogus storyline of a massive “exodus” of wealth and people from New Jersey doesn’t make it a more accurate portrayal. When these numbers are put into context, the story becomes highly questionable.

First, as noted above, the amount supposedly lost to “outmigration” is barely a rounding error. Same holds true for the past 11 years. The supposed “loss” of $20.7 billion in income loses its wow factor when compared to the $3.1 trillion in total household income that was generated in New Jersey between 2004 and 2015.

Even more importantly, just because a person moves from one state to another doesn’t mean the state they leave loses all their income; this interpretation has been called out by tax experts as a gross misreading of income data.

That’s because the income reported by filers that have moved out of state has no connection to the departure state. It actually refers to how much money they earned after they moved to another state. Further, when someone relocates to another state for a new job, it is likely the position they left behind will still exist – just as the job they take existed before their arrival. Thus the income in the departure state is likely to remain.

And on a macroeconomic level, “migration of money” refers to what economists call capital mobility, which is not to be confused with labor mobility. They are distinct phenomenons but because capital mobility figures are harder to come by, commentators commonly site labor or population migration figures instead. Misinformation of this kind only creates confusion and does nothing to address New Jersey’s real challenges or help the state’s economic future.

As noted in our June report, very few Americans leave their home state every year and when they do the most common reasons for relocating have more to do with job opportunities and family obligations than fleeing high taxes. Study after study has debunked the tax migration myth, and the latest IRS migration data verifies what we already know to be true here in New Jersey.

If high tax rates explain New Jersey’s “outmigration” then the “tax flight” fear-mongers should explain why so many New Jerseyans select states with similar tax levels like New York, California and Maryland. In fact, much like the past decade more filers from New York moved into New Jersey (23,156) in 2015 than left New Jersey for New York (19,562). And every time we hear about residents fleeing for Pennsylvania (11,846 in 2015) there is always radio silence about the thousands of Pennsylvania households moving into New Jersey (9,395 in 2015). That means about 8 in 10 of New Jerseyans were replaced by Pennsylvania households moving to New Jersey last year – a pattern has been consistent for at least 12 years.

There is, quite simply, much more to the story. New Jersey’s population is actually growing – in large part thanks to births and immigrants – and with that growth comes increasing overall household income. It may be growing slower than our neighboring states (after all, we are already the most densely populated state in the nation) but the assertion that our economy is circling the drain because people are fleeing the Garden State and producing a net loss in state income has no place in any serious economic policy discussion.

New Jersey’s Lackluster Jobs Recovery Continues in September

Posted on by Jon Whiten

job-growth-map-01

With New Jersey employers adding a barely noticeable 2,700 jobs in September, the Garden State’s lackluster economic recovery continues. While the state has now – finally – recovered all the jobs it lost in the Great Recession, more than 7 years after the recession’s official end, New Jersey’s economy remains fragile.

  • New Jersey has now recovered 101 percent of the jobs it lost since December 2007, when the recession began. The U.S. has now recovered 174 percent.
  • The Garden State now has the 8th slowest job growth (essentially flat) of all the states since December 2007. The nation as a whole has grown jobs by 4.6 percent during that same time, while the Northeast region has posted growth of 3.8 percent.
  • Taking a broader look, while New Jersey now has net 1,400 more jobs than when the recession began, that remains far less than what the state needed to just keep up with population growth. In fact, New Jersey should have 268,700 more jobs in September 2016 than in December 2007 just to keep employment levels stable as the population grew during that time.
  • This means the state still has a current jobs deficit of 267,300, and needs to add 117,158 jobs each year for the next 3 years just to get back to pre-recession employment levels and keep up with continued population growth by September 2019. For contrast, the state has gained less than half that over the past year, with nonfarm employment growing by just 53,400 from September 2015 to September 2016.
  • Many of the jobs that have been growing in New Jersey have been lower-paid jobs. The two employment sectors that have seen the largest increase since December 2007 are the ones where New Jerseyans earn the least: education and health jobs (including many low-paid jobs like home health aide), which have grown by 15.1 percent, and leisure and hospitality jobs (including retail and food service), which have grown by 5.1 percent. The only other New Jersey sectors that have grown since December 2007 are professional and business services (5.9 percent) and trade, transportation and utilities (0.5 percent). Highly paid sectors like financial services (-6.2 percent) have been declining, as have sectors that formerly made up the strong working and middle class: construction (down 10.4 percent); manufacturing (down 19.4 percent) and public-sector state and local government jobs (down 4.5 percent).

The Tax Cut Package, By the Numbers

Posted on by Jon Whiten

This afternoon New Jersey’s political leaders will host a “roundtable” to tout the recently enacted tax-cut package’s supposed positive impact on the economy and “value for retirees.”

What they won’t likely tout is the package’s reckless nature, or the fact that it will certainly make it all that much harder for New Jersey to provide adequate services to all its residents; create a strong safety net for the record numbers of New Jerseyans in poverty; prevent additional and dramatic increases in the cost of college tuitions or transit fares; or help tame property taxes.

They also won’t likely tout that the tax cut’s dollars will disproportionately go to the most well-off in the state (and out of the state, since many heirs to New Jersey estates do not reside here), and will hardly be noticeable to many middle class or working poor families.

Since they will likely fail to raise the critical issues, we will:

$1.4 billion: The total amount of lost revenue from the five tax cuts and credits

Sales Tax Cut

45%: The share of the overall tax cut from the sales tax reduction, which will be split between the approximately 9 million residents of New Jersey, as well as plenty of out-of-state residents who spend money here. (About 20% of the sales tax cut will go to non-New Jerseyans.) For New Jersey residents = an average tax cut of about $99 a year

Of this:

  • About 64% will go to the top 40% of all New Jersey households (those with annual incomes over $79,000)
  • About 17% will go to households in the middle (with incomes between $49,000 and $79,000)
  • Just 18% will go to the bottom 40% of all New Jersey households (those with incomes below $49,000)

Estate Tax Elimination

39%: The share of the overall tax cut that will be split between about 4,000 heirs of New Jersey’s largest estates, via the total elimination of the estate tax ($562 million) = an average tax cut of about $140,000

Of this:

      • Approximately 72% will go to a few hundred (about 22%) of the heirs who currently pay the tax; those who are inheriting the largest multi-million-dollar estates
      • The rest (just 28%) will go to 78% of the heirs who currently pay the tax; those who are inheriting smaller – but still sizable – estates valued between $675,000 and $2 million
      • The 96% of estates left by deceased New Jerseyans that are worth less than $675,000 will continue to be untaxed

Retirement Income Exemption

9%: The share of the overall tax cut that will be split between about 200,000 New Jersey households with annual retirement income between $10,000 and $100,000, via a 400 percent expansion of an existing tax exemption on retirement income = an average tax cut of approximately $670

Of this:

      • About 84% will go to the top 40% of all New Jersey households (those with annual incomes over $79,000)
      • About 16% will go to households in the middle (with incomes between $49,000 and $79,000)
      • Just 1% will go to the bottom 40% of all New Jersey households (those with incomes below $49,000), because these taxpayers are already largely covered under the current exemption

Earned Income Tax Credit Expansion

5%: The share of the overall tax cut that will be split between nearly 600,000 working families who are struggling to get by in high-cost New Jersey, via the increase in the state Earned Income Tax Credit to 35% of the federal level = an average tax cut of $118

Veterans Exemption

2%: The share of the overall tax cut that will be split between an estimated 220,000 veterans that have income tax liability in New Jersey (the Office of Legislative Services estimates that half of all veterans in the state pay no income tax and thus would receive no benefit) = an average tax cut of $105

 

Wealthy New Jerseyans to Gov. Christie: Preserve the Estate Tax

Posted on by Jon Whiten

When the state legislature started debating a transportation-funding package that included a complete elimination of the estate tax last week, NJPP teamed up with the national organization Responsible Wealth to bring together wealthy New Jerseyans to speak up for common good instead of a tax break for them and their peers.

In just a few days, over 40 wealthy New Jerseyans signed on to an open letter urging New Jersey not to eliminate the estate tax, which would benefit top 5% of New Jersey heirs while blowing a hole of more than $500 million in the state budget.

“It would be a travesty to give a tax break to a small cohort of wealthy families (including ourselves) at the expense of adequately funding schools, health care, public infrastructure and other pressing needs in the state,” the letter reads. “Eliminating New Jersey’s estate tax after 100 years would be a short-sighted mistake.”

Want to sign on to the letter? Email me at whiten (at) njpp.org

Five Reasons to Vote No on the TTF Tax Package

Posted on by Jon Whiten

 

  1. It’s Nonsensical

Swapping a long-overdue tax increase that will be used for a dedicated investment with a wide-ranging package of tax cuts that will drain money from other state funds makes zero sense, as Vice President Joe Biden’s former chief economist explains.

  1. It’s Regressive

The entire package would bestow the greatest economic benefits on well-off New Jersey families – particularly on the heirs to the state’s largest estates. Families earning between $25,000 and $79,000 a year – the working- and middle-class – would be the biggest losers with the gas tax increase – even with the tax cuts included – according to the Institute for Taxation and Economic Policy, a national research organization.

  1. It’s Reckless

The package would cost New Jersey significantly more than $10 billion over the next 10 years. At a time when the state already cannot meet its past, current and future obligations; invest in the assets that grow a strong state economy; or provide an adequate safety net for its neediest residents, blowing a hole of this magnitude in the state’s budget is financially irresponsible.

  1. It’s Not the Best Transportation Funding Fix & Could Harm Public Transit

On the Transportation Trust Fund side of the equation, the deal merely “continue[s] the trend of stagnant funding for another eight years,” according to analysts at the Tri-State Transportation Campaign. At the same time, the package “could spell disaster for NJ Transit’s operating budget,” Tri-State warns, since NJ Transit operations are paid for through the budget. (The NJ Transit operating-budget issue is also of concern to NJ Future.)

  1. It Does Zilch to Address Property Taxes

Yes, the package to be voted on Friday includes many tax cuts. But it includes nothing that will tame – much less reduce – the one tax that all New Jersey families care greatly about: the property tax. In fact, with its income tax cuts and breaks, this deal actually makes property tax relief for seniors, working families and others more difficult, as it will shrink the amount of dollars in the Property Tax Relief Fund by about $300 million a year.

NJ’s Low-Wage Workers Need More Than a Six-Cent Boost

Posted on by Jon Whiten

New Jersey’s working men and women will get a very modest but helpful boost on January 1, when the state minimum wage will rise to $8.44 an hour from $8.38 due to annual inflation. But we all know that $8.44 an hour – or about $17,500 a year for a full-time worker – does not provide a sustainable paycheck for these workers to secure even the basics, like food on their plates, a roof over their heads and clothes on their backs.

That’s why the proposal to gradually increase the state minimum wage to $15 an hour over five years is so critical. It will give nearly 1 million working New Jerseyans a pay bump, giving them a better shot at success while boosting the state’s economy. While the governor’s veto pen provided a big setback for these workers, our fight for more livable wages for all New Jerseyans is far from over.

Inadequate TANF Assistance is Contributing to Poverty Crises

Posted on by Jon Whiten

These prepared remarks were delivered to the Senate Legislative Oversight Committee on September 29, 2016.

Chairman Gordon and members of the committee, thank you for inviting me to speak about the adequacy – or inadequacy – of New Jersey’s Temporary Assistance for Needy Families program, which is supposed to be the safety net of last resort for some of the state’s poorest families with kids.

There are some essential facts about TANF – and New Jersey’s support of the families this assistance is designed to serve – that are crystal clear, and quite distressing. In short, this safety net of last resort is failing thousands of the state’s poorest children and families. And that failure is a major contributor to a stubborn crisis in New Jersey, with child poverty in 2015 34 percent higher than it was in 2007, before the Great Recession.

But let’s all start by going even further back in time, to 1987. What was going on in your life? How much have things changed since then? I’m pretty sure we’d all say quite a lot has changed. What hasn’t changed, sadly, is New Jersey’s cash assistance for TANF families. It’s been completely stagnant since 1987. No adjustments for inflation, no accounting for the state’s high cost of living. Nothing.

So what does 29 years of inaction do to the program’s adequacy? It absolutely decimates it. The maximum TANF assistance for a family of three is $424 a month, the same level it was in 1987. But its real value has been cut in half due to inflation, and today it only gets a struggling family to 25 percent of the federal poverty level, which itself is an inadequate measure of what it truly takes to get by in this state.

At this level, New Jersey’s TANF assistance is the lowest in the Northeast by far. New York’s assistance, for example, is nearly double ours. And when you factor in the high cost of housing in New Jersey, 40 states – including places like West Virginia and Kentucky – offer stronger support to families receiving TANF.

But when it comes to the inadequacy of TANF, don’t just take our word for it. The state itself acknowledges that this assistance comes nowhere near what it takes to support a struggling family. Since 2003, the Department of Human Services has established a standard for decency that takes into account real needs of a family including the cost of housing. That standard is now $2,700 per month for a family of three, seven times higher then current TANF assistance.

While dwindling state support of TANF has a clear effect on the families that receive this crucial assistance – they are getting the same amount even as everything costs more – it has a more profound, but less visible, effect on the countless families and kids who do not receive TANF. And, sadly, more and more of the state’s poorest families are falling into this category.

That’s because a family’s eligibility for TANF is based on the benefit level. Families earning more than 150 percent of the benefit level are not eligible for assistance. For a family of three, that means that if you earn more than $636 a month – or about $7,600 a year – you are cut off from assistance. It’s beyond debate that a family earning $10,000 is still in deep, deep poverty in New Jersey. Yet this family currently receives no TANF assistance.

As a result, the number of New Jerseyans enrolled in TANF has plunged since the last time the assistance level was increased. In 1988, over 300,000 residents were enrolled in TANF. By 2015, that number dropped to under 60,000 – an 81 percent decrease.

And because TANF serves families with kids, children are the ones that are ultimately harmed. In fact, 82% of New Jersey’s poor children don’t receive any assistance. That’s more than a quarter-million New Jersey kids we’re talking about.

The low level of assistance and other restrictions have also made TANF unresponsive to real needs in our state. While there have been major increases in unemployment and the child poverty rate, the TANF enrollment rate has gone down substantially – exactly the opposite of what you would expect. In fact, over the same time that TANF enrollment has dropped by 81 percent, New Jersey’s unemployment rate has risen by 78 percent.

And it’s not just temporary cash assistance these poor families are missing out on. The state offers a broad array of important other services in TANF designed to promote economic independence, like education and training programs, and support services like child care and transportation. But for families struggling to find a foothold, these services are only worthwhile if they can be accessed. And today in New Jersey, most parents below the poverty level are not eligible for any of these supports because, like most poor kids, they are not eligible for TANF.

In fact, in the last two years alone, the number of families receiving education and training services through TANF has dropped by 46 percent, while the number receiving emergency assistance has declined by a stunning 58 percent (to 2,766 from 6,625 families).

To reverse course and begin shoring up this safety net of last resort, New Jersey needs to start by increasing assistance levels. The proposal we supported this spring, which passed the Senate and Assembly with bipartisan support, thanks to the efforts of co-sponsors like Senator Ruiz on this panel, would have increased the assistance level by 30 percent over three years, rising to $551 for a family of three. After that modest but crucial bump, the assistance level would’ve been tied to inflation to help ensure that these families don’t continue to fall even further behind in the future. While the bill was vetoed by the governor, we urge all of you not to forget about these families and these children, and to continue to make improving TANF’s adequacy a priority.

August Jobs Numbers: New Jersey Continues to Lag

Posted on by Jon Whiten

job-growth-map-01New Jersey employers added a very modest 2,200 jobs in August as a full recovery from the recession remains elusive. More than 7 years after the recession’s official end, New Jersey still has 2,800 fewer jobs than it did before the recession began. Regardless of the monthly ups and downs, New Jersey’s economy remains fragile and its recovery continues to lag behind that of our neighbors and the nation as a whole.

  • New Jersey has now recovered 99 percent of the jobs it lost since December 2007, when the recession began. It’s one of only eight states that hasn’t yet recovered all the jobs lost since that time. The U.S. has now recovered 172 percent.
  • The Garden State now has the 8th slowest job growth (-0.1 percent) of all the states since December 2007. The nation as a whole has grown jobs by 4.5 percent during that same time, while the Northeast region has posted growth of 3.8 percent.
  • But the news gets even worse. Not only has New Jersey not gotten back to December 2007 employment levels, it has also failed to keep up with the population growth that’s happened since. In fact, New Jersey should have 265,900 more jobs in August 2016 than in December 2007 just to keep employment levels stable as the population grew during that time.
  • This means the state still has a current jobs deficit of 268,700, and needs to add about 118,000 jobs each year for the next 3 years just to get back to pre-recession employment levels and keep up with continued population growth by August 2019. For contrast, the state has gained less than half that over the past year, with nonfarm employment growing by just 52,200 from August 2015 to August 2016.
  • Many of the jobs that have been growing in New Jersey have been lower-paid jobs. The two employment sectors that have seen the largest increase since December 2007 are the ones where New Jerseyans earn the least: education and health jobs (including home health aides), which have grown by 14.2 percent, and leisure and hospitality jobs (including retail and food service), which have grown by 7.8 percent. The only other New Jersey sectors that have grown since December 2007 are professional and business services (4.3 percent) and trade, transportation and utilities (0.4 percent). Highly paid sectors like financial services (-6.2 percent) have been declining, as have sectors that formerly made up the strong working and middle class: construction (down 10.3 percent); manufacturing (down 20.1 percent) and public-sector state and local government jobs (down 4.4 percent).

Gov. Florio & Clifford Goldman Help NJPP Release New Report

Posted on by NJPP Staff

New Jersey Policy Perspective was proud last week to be joined by Governor James J. Florio and former state Treasurer Clifford Goldman for the media release of NJPP’s searing new report, “The Notorious Nine: How Key Decisions Sent New Jersey’s Financial Health Spiraling Down Over Two Decades.”

In unsparing terms, this report by NJPP President Gordon MacInnes and Senior Policy Analyst Sheila Reynertson details the nine decisions that led to New Jersey’s financial downfall, shattered its sterling record of economic success and jeopardized the security of hardworking New Jersey families who work hard for low or modest pay.

In an email to NJPP supporters, Gov. Florio wrote: “We can’t fix a problem we don’t understand. Thanks to NJPP, the reasons for New Jersey’s dire fiscal situation are now crystal clear. This thorough and understandable report of the details of that history should be distributed as widely as possible, not only for an accurate historical record, but as future guidance for policymakers as to what not to do.”

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