From the President
For more than 20 years, New Jersey has been on a downward economic and financial slide. Our middle class is shrinking. Poverty is rising. The state government is effectively bankrupt. We’re dangerously close to hitting rock bottom.
The next governor is New Jersey’s last, best chance to slow the state’s collapse, restore its stable financial foundation and rebuild its enterprising, job-creating, wealth-producing economy.
How did we get here?
The Jersey Slide began with a familiar false premise: cut taxes, and the savings will stimulate economic activity and increase state revenues. Hence a 30 percent cut in income tax rates in 1994, which produced immediate declines in state support for property tax relief and set off a two-decade chain reaction of gimmicks to hide the damage.
Gimmicks like slashing the state’s payments for public employees’ pensions and retiree health benefits enough to make up for revenues sacrificed to the tax cuts. Like granting local governments a pension payment “holiday” to keep property taxes from spiking.
And, in a damning blow, borrowing almost $3 billion to cover the state’s share of pension costs for two or three years – sticking unknowing future taxpayers with the very large repayment bill.
Along the way, a bipartisan cast of governors, legislators and justices ignored the urgent warnings of financial experts, and violated state constitutional protections intended to safeguard against precisely these types of abuses. Because the constitution is clear: you can’t spend money in the annual budget that isn’t raised in the same year, and you can’t borrow money long term without voter approval.
Now the chickens are coming home to roost. The games and gimmicks must stop. It’s time for truth telling, and courageous action.
I understand the challenge. I’ve run for office five times and participated in numerous campaigns. Not once has someone come up and asked: “Gee, my taxes are pretty low, can you do something to raise them?”
But people’s concerns about the taxes they pay often mask concerns about how their taxes are spent:
• “Potholes cost me $800 for new tires.”
• “I thought public colleges were supposed to be affordable.”
• “The high school cut my kid’s band class.”
• “The district said it’s not safe for my kid to drink water from the tap.”
These complaints lay bare a fact that’s been too-long neglected by our political leadership: Residents want New Jersey’s enviable assets to be properly maintained. People understand that investments in the assets we all share are paid for by the taxes we all pay – taxes that should be levied in a fair and equitable way.
The idea that the state needs to protect and invest in its assets is what drove New Jersey’s thriving economy from the 1960s into the early ‘90s. Those were the years when the state invested strategically in public transportation; in public colleges and universities; in preserving open space; in protecting the environment; and beyond. The state’s robust opportunities and vibrant communities attracted striving immigrants from around the world, who in turn fostered further economic growth. The result: New Jersey transformed itself from a fading industrial state into an enterprising, prosperous and stable state with a robust middle class and a plentiful opportunity.
That was then. The picture is starkly different now. After ten credit downgrades in seven years, New Jersey ranks 49th among the 50 states for creditworthiness. Our once robust biotech and pharmaceutical industry is being lured to states that are accelerating – not slashing – public investments in innovation centers like university hubs. Inequality is at historic highs. In this high-cost state, which never bounced back from the Great Recession, New Jersey’s working families are finding it harder than ever to make ends meet and give their children opportunities to advance.
Here’s the good news: New Jersey still has enviable assets. And it’s not too late for new leadership to stop the state’s downward spiral. No candidate should promise that it’ll be easy or painless to restore New Jersey as an engine of enterprise and opportunity. Nor should anyone suggest that one term as governor or as a legislator will be sufficient.
But big ideas, carefully planned and plainly explained, are the starting point.
That is the work of New Jersey Policy Perspective, and specifically, this Blueprint.
– Gordon MacInnes, President