Category: Blog

TANF in New Jersey is a Rapidly Disappearing Safety Net

Posted on by Raymond Castro

Earlier this summer, Gov. Christie dashed the hopes of thousands of New Jersey’s poorest children by refusing to at least partially restore lost TANF assistance, which has not been increased in 29 years. As a result, eligibility and amounts of assistance in New Jersey will continue to erode due to inflation. Currently over 80 percent of all children living in poverty are not receiving any assistance, and those that do, receive TANF assistance that is only 25 percent of the federal poverty level, all but assuring that they will continue to live in deep poverty.

Today we are releasing new data that shows in the last two years alone, TANF enrollment of intact families with children has decreased by an incredible 37 percent. At this rate, we estimate that the only basic safety net for families in New Jersey could cease to exist within a decade.

TANF enrollment 2014 to 2016-01

New Jersey’s TANF assistance is the lowest in the northeast and, when you consider the cost of housing, it is the 40th lowest in the country, below states like Kentucky and Oklahoma. According to the state’s own standard, it takes $2800 a month for a three-person household to live in a decent and healthy environment in New Jersey compared to the $424 a month they get in TANF.

The biggest problem facing these families is their inability to pay for their housing costs, which have doubled since 1987 and are now averaging about $1400 a month. That is the same amount as New York, which has a TANF benefit that is almost double New Jersey’s. As a result, these families need more emergency assistance – but even that has decreased by over half (55 percent) in the last two years.

This is not only about the kids in very poor families, but their parents too. Most New Jersey parents living in poverty are also not eligible for TANF, which can provide essential education, training, and other work experiences that they need to get out of poverty permanently. In the last two years the number of parents receiving education and training dropped by a stunning 41 percent.

TANF EA & Training 2014 to 2016-01

In other words, everyone loses – even the taxpayers because we know that child poverty costs the state $13 billion a year in higher health and criminal costs as well as lost productivity when these kids become adults.

The governor’s vetoes are not only about denying equal opportunities for children, they represent an assault on struggling families that is both immoral and economically foolish.

Kansas & Missouri Work Towards Tax Subsidy Ceasefire

Posted on by Jon Whiten

Last month New Jersey approved over $100 million in new tax breaks to lure New York City companies across the Hudson River to Hoboken and Jersey City – the latest in decades worth of border-war subsidy offers that have saved corporations plenty of cash but done little to boost the region’s overall economy.

While New Jersey’s border war has intensified in recent years and even spread to a second front (luring jobs across the Delaware River into Camden County), business and political leaders in the Midwest are showing that there’s a better way to grow a region’s economy.

Hallmark and 16 other employers in the Kansas City area have been pushing for five years for a “ceasefire” on intrastate subsidies luring companies between Kansas and Missouri. Now, thanks in large part to the leadership of these companies, the two states are closer than ever to entering a legally binding agreement to cut back on this short-sighted and damaging economic development practice.

The 17 companies issued a powerful statement in April 2011 calling upon the two states to stop allowing companies to jump the state line and be declared creators of “new jobs” for purposes of subsidy awards.

“At a time of severe fiscal constraint the effect to the states is that one state loses tax revenue, while the other forgives it,” the letter read. “The states are being pitted against each other and the only real winner is the business who is ‘incentive shopping’ to reduce costs. The losers are the taxpayers who must provide services to those who are not paying for them.”

In July 2014, Missouri officials offered a binding two-state deal to Kansas officials, who have had 24 months to review the proposal – a window that ends this month. Kansas officials submitted a somewhat feeble counteroffer in April, and the clock is ticking for Missouri to act.

While the Kansas version is certainly less stringent than the original ceasefire proposal – including a huge loophole that would allow Kansas to still offer its most generous subsidy for cross-border moves if the company commits to spending at least $10 million for the construction of a new building – it would still be unprecedented and a step in the right direction, as nine counties in the two states would no longer see active job-piracy recruitment and most state-hopping relocations would not qualify for tax-break subsidy deals.

Regardless of what happens in the Midwest this month, business and political leaders in New Jersey, New York and Pennsylvania should consider following suit and begin actively exploring similar arrangements for the good of the region’s overall economy.

NJPP Adds Two New Board Members

Posted on by Carly Rothman Siditsky

New Jersey Policy Perspective is proud to announce the election of two distinguished new Board members: Heather Howard, the former state Commissioner of Health and Human Services, and Rory Riggs, a leading entrepreneur in biotech, pharmaceuticals and information technology.

“New Jersey Policy Perspective is proud to welcome Rory and Heather, whose leadership on the board will help propel NJPP’s bold, innovative efforts to secure New Jersey’s just and prosperous future,” said NJPP Board Chair Jun Choi.

“Heather and Rory bring a wealth of expertise and experience to NJPP’s fight for economic justice. NJPP’s staff, board and allies proudly welcome their leadership in helping to secure widespread prosperity for all New Jerseyans through smart investment in the things that matter most,” said President Gordon MacInnes.

heather howard headshot 2Howard is currently a faculty affiliate of the Center for Health & Wellbeing at Princeton University’s Woodrow Wilson School, where she serves as director of two Robert Wood Johnson Foundation-funded programs: the State Health Reform Assistance Network and the State Health and Value Strategies program.

Prior to serving as state health commissioner, Howard was Gov. Jon Corzine’s Chief Policy Counsel, and Corzine’s Chief of Staff while he served in the U.S. Senate. Heather also served as Associate Director of the White House Domestic Policy Council, and as Senior Policy Advisor for First Lady Hillary Clinton. She received her J.D., cum laude, from the New York University School of Law, and her B.A. cum laude, from Duke University.

“I’m thrilled to be joining the Board of NJPP. During my time in government and in academia, I’ve always known I could rely on NJPP for rigorous analysis and thoughtful policy prescriptions. No other group in New Jersey has NJPP’s credibility and depth of policy expertise. I look forward to helping NJPP advance progressive state policies and make government work for New Jerseyans,” Howard said.

Rory Riggs HeadshotRiggs is the Founder and CEO of Locus Analytics, LLC and Syntax, LLC. He has spent over 15 years developing the underlying theory and applications for the Locus Model, a new approach to organizing business and economic data.

In addition, Riggs is the Chairman and Co-Founder of Royalty Pharma, the largest investor in revenue-producing intellectual property, and Chairman and Co-Founder of Cibus, the leader in non-transgenic plant breeding. Riggs has also been involved in the creation and management of many successful technology-related companies. He served as the President of Biomatrix Corp, where he oversaw the global launch of Biomatrix’s lead product, Synvisc. Riggs received a B.A. from Middlebury College and an M.B.A. from Columbia University.

“I am excited to be part of the team and the vision at NJPP. NJPP provides an important progressive voice in New Jersey,” Riggs said.

New Jersey’s Jobs Picture Remains a Mixed Bag

Posted on by Jon Whiten

With New Jersey employers adding 20,300 jobs in June in a strong monthly showing, the Garden State has finally recovered all of the jobs it lost in the Great Recession – a full 7 years after the recession’s official end. But a close look at the latest data clearly shows that New Jersey’s economy remains fragile and its recovery continues to lag behind the nation’s.

  • New Jersey has now recovered 103 percent of the jobs it lost since December 2007, when the recession began. The U.S. has now recovered 167 percent.
  • The Garden State now has the 11th slowest job growth (0.2 percent) of all the states since December 2007. The nation as a whole has grown jobs by 4.2 percent during that same time, while the Northeast region has posted growth of 3.6 percent.
  • Taking a broader look, while New Jersey now has net 7,000 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 260,700 more jobs in June 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 253,700, and needs to add 115,049 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 June 2019. For contrast, the state has barely gained that many jobs in the past three years total, having added only 152,000 since June 2013 (an average of 50,667 jobs gained per year).

jobs deficit june 2016-01

Latest Transportation Funding Plan: Still Reckless & Still Unfair

Posted on by Gordon MacInnes

There is no doubt that there is an urgent need to address New Jersey’s transportation-funding crisis, put money into the Transportation Trust Fund and get people back to work across the state.

But tying any plan to do so to an outright elimination of the state’s estate tax is financially reckless and endangers the state’s future while delivering big financial rewards to the fortunate few who will no longer have to pay New Jersey taxes on multi-million-dollar estates they inherit.

If lawmakers must address New Jersey’s estate tax, they’d be better off taking a thoughtful approach and making adjustments, rather than taking a hammer to the tax and eliminating it altogether. Raising the threshold to $1 million or even $2 million would help a large chunk of the heirs who currently pay the tax while preserving most of the revenue the state so urgently needs to provide essential services, meet obligations and invest in the future we all want to see.

With the plan announced today, New Jersey’s leaders are once again severely diminishing the state’s ability to invest in more affordable higher education, cleaner air or a stronger safety net for those who have fallen on hard times. At a time when New Jersey can’t even meet its constitutional and moral obligations, let alone make investments critical to our future, our legislative leaders are choosing to dig our financial hole hundreds of millions of dollars deeper.

And they are doing so only to bail out around 4,000 of New Jersey’s wealthiest heirs each year. Eliminating the estate tax will help the largest estates the most, with those inheriting assets of more than $5.34 million who will see an average tax break of $1.3 million – at a cost to New Jersey of over half a billion dollars a year.

Like the plans that came before it, this latest proposal has absolutely nothing to do with tax fairness.

New Jersey’s Subsidy Surge Tops the $7 Billion Mark

Posted on by Jon Whiten

subsidies annual amounts july 2016-01

Today New Jersey’s surge in subsidies topped $7 billion as the state approved $174 million in new tax breaks for corporations.

New Jersey has now OK’ed over $7.1 billion in these special tax breaks since January 2010, and more than $4.5 billion since December 2013 alone under the misleadingly-named “Economic Opportunity Act.”

The financial largesse that continues to greet very few large corporations is creating a ticking time bomb for New Jersey. For a state already so deep in a hole, it’s astonishing how eager policymakers are to keep digging the hole even deeper.

This surge in subsidies is creating a long-term and growing economic drag that policymakers will have to grapple with for at least the next 15 years as the backlog of tax credits is paid out. In fact, these tax breaks will cost New Jersey an estimated $2.8 billion through fiscal year 2020, or an average of $550 million a year. That’s a substantial amount of revenue that could be put to much better use by investing in the assets that, unlike tax breaks, are proven to grow New Jersey’s economy, like higher education or transportation, or providing a stronger safety net for the growing numbers of working New Jersey families and children who are living in poverty.

And the negative impact on New Jersey’s finances is only going to grow after 2020, as more of the corporations who’ve been approved for tax breaks in recent years cash in. Of the $4.1 billion in tax credits approved between December 2013 and April 2016, for example, only $12.9 million – or 0.3% – has been redeemed to date, according to the Economic Development Authority.

What’s more, this over-reliance on tax breaks to try to boost the state’s economy has done little to move the economic needle or grow good jobs. As of May 2016, New Jersey, with among the most lucrative corporate subsidy offerings in the country, is one of just 9 states that hasn’t yet recovered all the jobs it has lost since the Great Recession’s official start in December 2007.

UP TO DATE DATA ON NEW JERSEY & CORPORATE TAX SUBSIDIES:

The 2010s Have Seen a Subsidy Surge

  • $7.1 billion: The dollar amount of total business tax breaks approved by New Jersey since January 2010. This is up from $1.2 billion the entire previous decade.
  • $90 million: The monthly rate of business tax breaks awarded since January 2010. This is up from $10.1 million in the 2000s.
  • $59,900: The cost per job of these subsidies since January 2010. This is up from $16,400 in the 2000s.

2013 Legislative Overhaul Opened the Floodgates Even Wider

  • $4.5 billion: The dollar amount of total business tax breaks approved by New Jersey since December 2013, when the 2013 legislative changes went into effect.
  • $141 million: The monthly rate of business tax breaks awarded since December 2013.
  • $80,400: The cost per job of these subsidies since December 2013.

Sales Tax Cut Would Decimate Essential Services and Investments

Posted on by Gordon MacInnes

On the night of June 27, the New Jersey Assembly – at the urging of Gov. Christie – approved a bill sight unseen to cut the sales tax by 14 percent.

With New Jersey in such dire financial condition that it cannot meet past, current or future obligations, it is simply reckless to forego up to $1.7 billion in sales tax collections as a trade-off for replenishing the Transportation Trust Fund. If enacted, New Jersey’s credit rating – already the second lowest in the nation – would very likely be downgraded, significantly driving up borrowing costs.

The sales tax is the largest funding source for the general budget so a cut of this magnitude would blow a lethal hole in an already sinking ship.

The numbers are straightforward and the consequences are frightening:

tax cut math-01

About 46 percent of general fund expenditures rely on the $9 billion in sales tax collections. However, there are certain obligations that cannot be reduced, eliminated or put off to future years. For example, New Jersey cannot become the first state since the Great Depression to not pay the interest and principal due on its $43 billion in debt, and it is also legally required to pay the employer share of employees health benefits and pension payments to public employees. There are other areas – like public safety and the legislature – that are likely off limits for significant spending reductions.

This leaves a target list of just $8 billion in spending that would be vulnerable to the $1.7 billion sales tax cut. In other words, we’re looking at a potential 21 percent cut.

So which remaining budget items would be expected to make do with less? The same ones that have endured flat funding, relentless cuts or budget raids to make up for insufficient revenue over the years. Here’s a sampling:

  • Public colleges and universities (which have seen a 23 percent cut in inflation-adjusted state support since 2008)
  • Safety net programs like WorkFirst New Jersey (where the level of cash assistance hasn’t been increased since 1987, thereby losing half of its value to New Jersey’s poorest families with kids)
  • Pre-K expansion (which needs $550 million in funding a year to fully implement the 2008 expansion)
  • Charity care payments to hospitals (which were reduced by $200 million from 2016 to 2017)
  • Clean energy programs (which have been raided by more than $1.3 billion this decade)
  • Women’s health funding (which has been shortchanged by nearly $50 million since 2011)

New Jersey can only honor its obligation to families who are struggling to get by in high-cost New Jersey if these programs are properly funded. Without long-term public investments in these building blocks of a strong state economy New Jersey has little chance to restore prosperity. In fact, its economy would only worsen.

Christie Vetoes Needlessly Punish New Jersey’s Poorest Children

Posted on by Raymond Castro

Last night Gov. Christie dashed the hopes of about 40,000 of New Jersey’s poorest children by keeping WorkFirst New Jersey assistance stagnant for yet another year, and kept in place an outdated policy that punishes poor children for being born.

By vetoing legislation, as well as budget language, that increased assistance and repealed the “family cap,” Gov. Christie is looking the crisis of deep child poverty right in the eye, and turning away without action.

This assistance hasn’t been increased in 29 years at the same time that rents have doubled. Leaving it where it is will only further increase income and racial inequality in our state. And the family cap has prevented over 20,000 poor kids from receiving assistance for no reason other than that they were born to poor parents.

By taking these punitive actions, Gov. Christie is putting New Jersey further out of step with other states, many of which have increased benefits and repealed the family cap in recent years, and with New Jersey’s Republican governors like Gov. Kean and Gov. Whitman, who have in the past supported and expanded WorkFirst New Jersey.

Shorter-Term TTF Plan + Much Larger Tax Cut = Bad News for New Jersey’s Future

Posted on by Gordon MacInnes

The outlook for New Jersey’s economic future went from bad to worse last night in Trenton, as legislators hastily pushed forward a tax cut plan that would cost the state about $1.7 billion a year as the price for finally enacting a gas tax increase for essential transportation funding. At a time when the state already can’t meet its current and future obligations, invest in the assets that grow a strong state economy or provide a strong safety net for its neediest residents, blowing a hole of this size in the state’s budget is reckless, short-sighted and – indeed – unfair.

Late last night the Assembly approved a revised omnibus tax bill that raises fuel taxes and cuts New Jersey’s sales tax rate to 6 percent, from 7 percent. The bill no longer includes the elimination of the estate tax, a new charitable deduction exemption, or the increase in the Earned Income Tax Credit. But it does still include an increase in the retirement income tax exemption.

The bottom line: While we are pleased that the estate tax is preserved under this new legislation, that doesn’t disguise the fact that the bill will have larger and far-reaching negative effects on the state’s ability to pay for essential services, contractual obligations and key investments.

In fact, the hole it blows in the budget (approximately $1.7 billion) is twice as large as the hole the previous plan would have created (approximately $870 million).

At the same time, the plan put forward last night is a shorter-term transportation-funding fix (8 years) than the original proposal (10 years).

This proposal, on the surface, is a fairer plan, in that it’s not a tax shift primarily from the wealthy to the working- and middle-class. But that advantage evaporates as soon as the gaping budget hole causes New Jersey to cut vital services, lay off employees or shrink the social safety net.

Crucial Cash Assistance Improvements for Struggling Families Move Forward

Posted on by NJPP Staff

Today, the Assembly and Senate Budget Committees took big steps toward improving the lives of some of New Jersey’s poorest families with children by pushing forward key improvements to WorkFirst New Jersey, or TANF. The committees advanced two separate bills, and also approved 2017 budgets that incorporate these improvements.

The Anti-Poverty Network of New Jersey and New Jersey Policy Perspective have been urging elected officials to act on these issues, and will continue to do so until they are signed by the governor. We’ve been joined by 36 other organizations and 26 individuals; 32 faith leaders from a widerange of denominations; and the entire delegation of New Jersey’s Catholic bishops.

“Never in the last three decades have we gotten this close to actually doing something about the alarming problem of deep child poverty in New Jersey,” said New Jersey Policy Perspective Senior Policy Analyst Raymond Castro. “It’s beyond high time for the legislature and the governor to step up and address the needs of our most vulnerable New Jerseyans.”

“Our poorest families who received TANF benefits through WorkFirst New Jersey are facing the kind of intense deprivation that should be unknown in a high resource state like New Jersey,” said Renee Koubiadis, Executive Director of the Anti-Poverty Network of New Jersey. “The TANF benefit level is the same as when my family stopped receiving cash assistance 30 years ago and it was not enough to survive on then. The WFNJ benefit level must be raised by 30% to help our poorest families who struggle every day.”

The two pieces of legislation in question are:

A-30/S-1829: Increases the cash assistance available to New Jerseyans in WorkFirst New Jersey (also known as TANF, or Temporary Assistance for Needy Families) by 30 percent over three years. As NJPP revealed in a groundbreaking February report, the level of assistance has not been increased in 29 years, which has cut the true value of the assistance by more than half, making the poorest New Jersey families’ prospects of getting by even more dire – even with assistance. This lack of attention to WorkFirst New Jersey has been a major cause of the Garden State’s deep child poverty problem. New Jersey’s assistance is now the lowest in the Northeast, and is lower than very poor states like Kentucky when housing costs are factored in. This bill was cleared today by the Senate Budget Committee; it has already been passed by the Assembly. It now only needs to be passed by the full Senate and would then go to Gov. Christie’s desk.

S-1854/A-3410: Repeals the so-called “family cap” in WorkFirst New Jersey, a punitive measure that denies cash assistance to any children born to mothers on assistance. For example, a mother who has her second child while on TANF currently receives $322 a month (the benefit for a two-person family), not $424 a month (the benefit for a three-person family) – a cut of $102, or 24%. Since it was enacted in 1992, the family cap has punished over 20,000 very poor New Jersey children by denying them assistance. States are increasingly moving away from this policy as they realize it only punishes children for being born; 7 states have repealed their family cap laws since 2002, with the latest – California – doing so this month. New Jersey should follow suit. This bill was cleared today by the Assembly and Senate Budget Committees; it now needs to be passed on the floor of each house.

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