Tax and Budget Archives - Page 29 of 37 - New Jersey Policy Perspective

Congress Can Help More Workers Escape Poverty

Posted on January 10, 2017October 10, 2020 by Jon Whiten

This op-ed, which was jointly written with Pennsylvania Budget and Policy Center Director Marc Stier, appeared in Newsworks on January 6, 2017.

Those of us focused on the well-being of Americans with low incomes have many concerns about the incoming Trump administration. If President Trump and Republicans in Congress repeal the Affordable Care Act (and especially the law’s expansion of Medicaid), millions of people will lose health insurance. If the Republicans move to turn the original Medicaid and Food Stamp programs into block grants that don’t give states enough funds to provide the current level of benefits and meet rising needs in a future recession, millions more will suffer. As advocates, we will be fighting those proposals, and we hope to see Democrats in Congress and even some Republicans do the same.

But we see one ray of hope for progress — and for bi-partisan cooperation. The Earned Income Tax Credit has had a major impact in promoting work and reducing poverty in America, and it has a long history of bi-partisan support. Democrats and Republicans might be able to come together to fix one flaw in the program: It does little to nothing for millions of struggling workers who are not raising children.

Because of that limitation, many of these workers are pushed into, or deeper into, poverty by federal taxes each year. Expanding the EITC to include these workers and ensure that they are no longer taxed into poverty should be a top priority for both parties next year.

The EITC has helped low-wage workers and their families since it was enacted in 1975 by a Democratic Congress and signed by Republican President Gerald Ford. It has been expanded by bi-partisan efforts since.

The EITC offsets federal payroll and income taxes and allows low-income workers to keep more of their hard-earned money at tax time. When you’re making $7, $8, or even $10 an hour, every penny counts. Workers use the money they get back from the EITC to stay afloat and pay for basic needs such as groceries and a decent place to live.

The impact of the EITC is greater in the long term. It creates a powerful incentive for people to work more and develop their skills because the EITC increases with each additional dollar of earnings until reaching the maximum level. This lifts even more families out of poverty.

Between the years 2011 and 2013, an average of over six million people, including three million children, were lifted out of poverty by the EITC. Twenty million more benefitted from the program, although the EITC by itself was not enough to raise their incomes above the poverty line. An average of 152,000 people in Pennsylvania, including 73,000 children, and 156,000 people in New Jersey, including 79,000 children, escaped poverty each year due to the EITC. And note, these figures only include the direct impact of EITC benefits. If we include an estimate of the wages received by people who are encouraged to work by the EITC, the number of people who escape poverty is roughly doubled.

The benefits of the EITC don’t just flow to individual families. Encouraging work and putting more money in the hands of those with low incomes helps generate increased economic activity in our communities. In 2014, the EITC put $2.1 billion of purchasing power in the hands of Pennsylvania residents and $1.4 billion in the hands of New Jersey residents.

A central goal of the EITC has always been to ensure that federal taxes do not push workers into poverty or deeper into poverty. But that’s not the case for low-wage workers not raising children, who are either largely or entirely excluded from the EITC.

These workers also miss out on the EITC’s work incentive, and their communities miss out on the boost to economic activity that comes from more workers having enough money to spend on food and other essential goods and services.

Republican House Speaker Paul Ryan joined President Obama in proposing an expansion to the EITC to include workers not raising children. In explaining his proposal, he said, “We should make sure that in this country, it always pays to work.” Senator Sherrod Brown (D-Ohio) and Representative Richard Neal (D-Massachusetts), and Senators Cory Booker (D-New Jersey) and Tammy Baldwin (D-Wisconsin), have put forward even bolder plans.

These proposals would have a dramatic impact in our states. The Ryan proposal would help 544,000 individuals in Pennsylvania and 343,000 in New Jersey become newly eligible for the EITC or eligible for a larger credit. The Brown-Neal proposal would help 659,000 workers in Pennsylvania and 425,000 in New Jersey. Among them would be tens of thousands of former members of the military, young workers aged 21-24, workers in rural areas, and Latino and African American workers.

Advocates for low-income Americans may be spending much time fighting againt proposals we cannot accept. But, at the same time, we can’t afford to miss opportunities to make lives better for working people, as long as it doesn’t come at the cost of supporting deep reductions to existing programs. An effort to help and empower low-income workers by enacting a much-needed expansion of the EITC would be a good step forward, and we hope Senators Casey, Toomey, Menendez, and Booker and our other members of Congress will actively support it while resisting reductions to health care and food stamp benefits. Thousands of working people struggling to get out of poverty in New Jersey and Pennsylvania are counting on them.

60 Groups to U.S. Senators: EITC Expansion is a Priority

Posted on January 6, 2017October 10, 2020 by Jon Whiten

Yesterday, as part of a campaign launched this fall by New Jersey Policy Perspective, New Jersey Citizen Action and the Anti-Poverty Network of New Jersey, 60 New Jersey-based organizations representing hundreds of thousands of residents sent a letter to Senators Booker and Menendez, urging them to continue their efforts to expand the federal Earned Income Tax Credit for working adults without children. This expansion would help between 343,000 and 504,000 New Jersey workers.

The letters (view them here and here) identify several key political windows in which the EITC expansion could become a reality, even in an admittedly tough political climate to advance progressive policies. The fact that the EITC has a long history of bipartisan support helps increase the likelihood that it could be part of ongoing discussions about tax reform or infrastructure spending in 2017.

NJPP is glad to join 59 other leading New Jersey organizations today in reminding our U.S. Senators that expanding the Earned Income Tax Credit for low-wage workers not raising children remains a priority, even as we face incredibly daunting political headwinds in D.C.

Our Senators will have their hands full fighting some serious threats to low-income and middle-class Americans, but they should also be prepared to advance a proactive and bipartisan agenda that can boost working people – and this EITC expansion falls squarely into that category.

LETTER SIGNERS (listed in alphabetical order):

1199 SEIU
ACCSES New Jersey
The Affordable Homes Group
Amalgamated Transit Union – New Jersey State Council
American Federation of State, County and Municipal Employees District 1
Anti-Poverty Network of New Jersey
Bethel AME Church (Woodbury) – Rev. Charles Boyer, Pastor
BlueWave New Jersey
Catholic Charities – Diocese of Trenton
Communications Workers of America – New Jersey
Communications Workers of America – Local 1039
Communications Workers of America – Local 1081
CUMAC
Elizabeth Coalition to House the Homeless
Family Voices New Jersey
The FoodBank of Monmouth and Ocean Counties
Garden State Equality
Greater New Jersey United Methodist Church – Palisades District
Hackensack Environmental Justice Green Drinks
Health Professionals and Allied Employees
Holy Trinity Lutheran Church, Hasbrouck Heights
HomeFront
Housing and Community Development Network of New Jersey
Hyacinth AIDS Foundation
Ironbound Community Corporation
Jewish Family Service of Atlantic & Cape May Counties
League of Women Voters of New Jersey
Lutheran Episcopal Advocacy Ministry of New Jersey
The Mercer Alliance to End Homelessness
Monarch Housing Associates
National Association for the Advancement of Colored People New Jersey State Conference
National Organization for Women of New Jersey
National Organization for Women – Northern New Jersey Chapter
Newark Environmental Justice Green Drinks
Newark Teachers Union
New Jersey Alliance for Immigrant Justice
New Jersey Anti-Hunger Coalition
New Jersey Citizen Action
New Jersey Coalition to End Domestic Violence
New Jersey Coalition to End Homelessness
New Jersey Education Association
New Jersey Main Street Alliance
New Jersey Policy Perspective
New Jersey State Association of Jewish Federations
New Jersey Tenant Organization
New Jersey Work Environment Council
New Jersey Working Families Alliance
Parent Education Organizing Council
Paterson Environmental Justice Green Drinks
Philabundance
Region 9 Housing
RESULTS Bernardsville
Service Employees International Union, New Jersey State Council
Statewide Parent Advocacy Network (SPAN)
Supportive Housing Association
Tierra Madres
Trenton Area Soup Kitchen (TASK)
Unitarian Universalist Legislative Ministry of New Jersey
United Way of Northern New Jersey
The Wei

New Jersey’s Tax Revenues Continue to Lag

Posted on December 20, 2016October 10, 2020 by Sheila Reynertson

New Jersey’s recovery from the Great Recession continues to be rocky one, according to a the latest analysis of tax revenue data by Pew Charitable Trusts. While tax revenues in the majority of states have returned to pre-recession levels, New Jersey’s remain well below collections made just before the recession.

Nationally, states took in 6.5 percent more tax revenue in the first quarter of 2016 than they did in the third quarter of 2008. That is the equivalent of 6.5 cents more in purchasing power for every dollar collected at their 2008 peak. Sounds good, right?

But the national trend hides how varied the recovery has been among states with their own set of economic conditions, population changes and tax policy choices since the recession. New Jersey has consistently lagged behind national tax revenue rates and, in the first quarter of 2016, pulled in tax revenues 7.7 percent less than it did when its tax revenue last peaked in late 2007.

Some states that have fully recovered their tax revenue raised taxes after the recession including California and Minnesota. These states have rebounded by 17 percent and 21.5 percent, respectfully. Some states that chose to cut taxes continue to struggle toward previous tax collection peaks since the recession – including New Jersey.

The Garden State’s tax revenue collections recovery have taken a “two steps forward, one step back” approach since its last major dip in 2001. Meantime, significant tax cuts that were passed in October as part of the gas tax increase deal will go into full effect next year – taking as much as $675 million in revenue out of next year’s budget, according to Office of Legislative Services estimates. Although national analysts predict that total state tax revenues will likely grow at a slow rate in 2017, it remains to be seen if New Jersey’s revenue will do the same.

A Step Forward on Corporate Tax Subsidy Accountability

Posted on December 13, 2016October 10, 2020 by Jon Whiten

This morning the New Jersey Economic Development Authority (EDA) took an important step toward reining in some of the excesses of the state’s corporate tax subsidy programs, heeding calls for reform that we and other advocates have made over the past few years. But the EDA’s capacity to truly reform the state’s tax breaks is limited – the real onus is on the legislature, and as the EDA’s actions today make clear, it’s high time for the legislature to act.

Specifically, today the EDA opened a public comment period for a change to the “net benefit model” that the Authority staff use to estimate the likely economic impact of a project that is applying for tax breaks. Due to 2013 legislative changes, the current model puts New Jersey taxpayers at serious and unnecessary risk because it calculates a project’s economic benefits to cover a time when there is no guarantee the project will still be in the state.

In other words, the test allows corporations to get tax breaks that assume that the approved project will still be producing economic benefits for up to 35 years even though New Jersey’s 2013 law allows the corporation to take its full tax breaks and flee the state after just 15 years. (For more background, see our May 2015 report, Risky Business: https://www.njpp.org/budget/risky-business-new-jersey-must-hold-corporations-more-accountable-in-subsidy-deals.)

The test is riskiest when it comes to the subsidies approved for corporations relocating to Camden. As a result, while the state touts a net economic benefit of $561 million from the 22 deals it has approved for Camden since December 2013 under the Grow New Jersey program, the reality is that New Jersey is at risk of losing $254 million on the deals because of this flawed formula.

Under the EDA’s proposed changes, the net benefits test would eliminate most – but not all – of the estimated economic benefits in the so-called “out years” (ie, the years when there is no guarantee a corporation will still be in New Jersey). There is a window in which a corporation can ink an agreement with the EDA promising to stay beyond the official commitment period and still receive the larger subsidy. While this is not ideal, we are glad to see the proposed changes also include a clawback provision, by which the state can recoup some of the subsidy it’s already awarded if the corporation breaks a promise to stay beyond the official commitment period.

The EDA is to be applauded for its actions, and NJPP appreciates the willingness of EDA leadership to continue what’s been a productive, ongoing dialogue about New Jersey’s economic development subsidies. But the real reform must come from the legislature and governor, as they write the law that governs these subsidies.

When it comes to this net benefits test, the legislature should follow the EDA’s lead and restore some fiscal responsibility and realism to the test. The easiest and most sensible way to do so would be to ensure that the net benefits test covers only the number of years the corporation is committed by statute to stay in the state, as legislation introduced by Assemblyman Troy Singleton would do.

But the legislature’s reform efforts must not stop with the net benefits test. There are many other fixes that are desperately needed. Among those at the top of the list: restoring spending caps, mandating better reporting on the outcomes of tax breaks, developing more stringent standards for subsidies given to corporations shifting jobs around the state, and restricting corporations’ ability to redeem more in tax credits than they owe in taxes.

Slow Economic Gains from Low-Octane Wages

Posted on December 9, 2016October 10, 2020 by Brandon McKoy

This op-ed appeared in the December 11, 2016 edition of the Bergen Record and other Gannett newspapers.

Ensuring that all workers in New Jersey can afford a decent living is vital to boosting the state’s economy to the benefit of all residents — and a simple way to do so is to increase the minimum wage. About 1 million New Jersey workers currently make poverty wages, forcing many of them to rely on private charity and the increasingly fragile public safety net just to make ends meet. When so many people can’t afford basic daily needs in a consumer-based economy, it creates a big drag on the economy: Everything and everyone suffers.

Apparently, not everyone understands this basic tenet of economics. Opponents of a livable wage continue to assert that the sky will fall and the economy will crumble if New Jersey phases in an increase to a $15 minimum wage over five years. Gov. Chris Christie took this line of attack when he vetoed a bill during the summer that would have boosted wages for one in four New Jersey workers. And the latest wolf-crier is the lieutenant governor, who recently warned that increasing the minimum wage would — horror of horrors — require New Jerseyans to pump their own gas, as if that’s somehow an unacceptable trade-off for ensuring that all of our neighbors are able to live and thrive.

Over the years, opponents of livable wages have stoked fears that increasing the minimum wage would slow the economy and lead to job losses. Never mind that other cities and states that have increased the wage are seeing stronger economies and increased spending; never mind that study after study shows that increasing the minimum wage has far more positive effects than negative ones; never mind that one in four New Jersey workers is living in poverty because he or she isn’t paid enough to afford the most basic daily needs.

After the governor rejected a raise for nearly 1 million workers, legislative leaders promised they would take the issue directly to voters again, as they did in 2013. With a key deadline rapidly approaching, the likelihood of that promise being fulfilled seems less and less likely. Given this stalemate, New Jersey workers who aren’t paid enough to afford the most basic daily needs may have to wait even longer —until an administration more interested in boosting working families arrives in Trenton — for a substantial boost to their wages.

Who are these workers? Despite the longstanding myth, they turn out not to be affluent teens working for extra spending money. In fact, 91 percent of these workers are adults. What’s more, 61 percent of them are working full time, about half have graduated from or attended college, and nearly one in three is a parent. Altogether, 21 percent of New Jersey’s children have at least one low-paid working parent.

The simple reality is that poverty and inequality harm all of us. When fewer and fewer people own more and more of the wealth, all of us suffer. If you’re a child whose parents don’t earn enough to reliably provide for your needs, you can’t focus at school. If you’re a parent whose recent college grad can’t afford to move out and build a life, you worry about your child’s future. If you’re a business owner whose customer base has suffered from stagnant wages for decades, it doesn’t matter how good your product is, how good your marketing is, or how nice your store is; there won’t be enough people with enough disposable income to buy your goods or services.

Every time we try to increase the minimum wage, opponents wail and moan that doing so will destroy our economy and bring about a thousand years of darkness. Yet every time we muster the courage to actually increase the wage, jobs are created, the economy grows stronger and the sun continues to shine.

The last time we increased the wage, opponents said with absolute certainty that we would lose 30,000 jobs — instead, we gained 90,000 as low-wage workers were better able to afford their day-to-day needs and infuse the state’s economy with spending that creates jobs and spurs growth. Imagine the effect we’ll see when we actually increase the wage to a level where people can earn a decent living. It’s time to stop accepting the naysayers’ fictional threats.

This past Election Day, voters in Colorado, Maine, Arizona and Washington approved increases in their minimum wages, helping millions of workers. All of these states have a lower cost of living than New Jersey’s and they were still able to understand and appreciate the vital importance that raising the minimum wage would mean for them. So, New Jersey, what are we waiting for?

The coming year will see state Republicans and Democrats argue this very point as they jockey for position in the gubernatorial race. Christie’s political stature is not what it was, but it is unlikely he would sign off on a $15 minimum wage statewide or even for workers at the Port Authority of New York and New Jersey-controlled Newark Liberty International Airport. The latter means a two-tiered wage system between the Port Authority airports in New York and New Jersey. The minimum wage at the two New York major airports is set to rise to $15 an hour.

Meanwhile, our state has been stuck in neutral for far too long as lawmakers have poured money in the pockets of the well-off through lavish tax breaks and sweetheart deals. The only way to get New Jersey going again is to make sure that every worker is able to afford a decent living — it will benefit them, their families and their communities. In other words, it will benefit all of us. Let’s stop listening to those who cry wolf and start using the experiences of other cities and states to do what is sensible and right.

Let’s raise the minimum wage.

Six Reasons the Governor’s ‘Fairness Formula’ Must be Rejected

Posted on December 8, 2016October 10, 2020 by Gordon MacInnes

To read a PDF version of this report, click here.

Gov. Christie has proposed a radical change to New Jersey’s school aid formula that would dismantle four decades of efforts to target school aid to districts that serve concentrations of children from poor families. Labeled the “Fairness Formula,” his proposal is rooted in the argument that lower-income districts have failed so completely after decades of generous state funding that it’s time to reallocate their funds to more successful districts. In brief, he seeks to use school aid to lower property taxes in middle-income and wealthy districts at the expense of districts serving kids from poor families.

In September, the governor petitioned the New Jersey Supreme Court to reverse the court’s 40 years of strong decisions establishing that the state constitution mandates that the state provide funding to address the consequences of concentrated poverty in selected districts. He requests, moreover, that the court nullify statutes dealing with teacher tenure and to overturn collective bargaining contracts. Elsewhere, he described the continuation of funding for urban districts as “criminal.”

Of course, there is no way to predict how the Court will respond to the governor’s petition. One cannot guarantee a quick dismissal, and even if there is one, this issue won’t necessarily go away. The governor could go so far as to incorporate his formula in his 2018 budget proposal, which would be followed two days later with official notices to districts of their expected aid. But assuming that the Governor’s preferred formula would not be adopted via the legislative budget process, districts would be in a precarious position since school budgets have to be adopted in early April before the June 30 deadline for state budget adoption. Districts losing significant state aid would have to send layoff notices not later than May 15 before the budget is resolved, leading to chaos.

In the end, the governor’s proposal would reduce – even eliminate – educational opportunities for children from New Jersey’s poor and working-class families.

1. The proposal ignores indisputable evidence about the connection between poverty and educational achievement.

Beginning with the 1967 Coleman Report, there are now billions of data points that consistently point to the two factors that most heavily determine student achievement: the socioeconomic status of one’s parents and the socioeconomic status of one’s classmates. Know these two facts and one can predict with near-certainty how most students will perform on standardized tests.

The gold standard for tracking the academic achievement of large numbers of randomly selected students is the National Assessment for Educational Progress. A review of the reading and math tests in 2015 confirms that not one state’s students from poor families (its free and reduced lunch recipients) outperformed the students from middle-class and affluent families (those not eligible for subsidized lunches) in their own or any other state.^[1]

New Jersey has operated since 1975 with a classification scheme to take these economic and demographic certainties into account to gauge how students in similar districts perform. Districts in the lowest grouping (“A”) have lower family incomes, parental educational and occupational levels, higher poverty and unemployment rates. Districts in the highest grouping (“J”) have low poverty rates with higher parental income and educational levels.^[2] Given that there are eight groupings for reporting test results, that tests are required in seven grade levels and that there is both a math and language arts test in each grade (plus a science test in two grades), there are a total of 102 opportunities each year for districts in a lower-rated socioeconomic group to outperform a higher group. Over the two-year period of 2013 and 2014 (when there were 204 opportunities), this happened once, and by a tiny margin (by .1 of 1 percent on the scale score for high school math).^[3]

A 204-to-1 bet is not a good one to place. And the notion advanced by the governor that “no child in this state is worth more state aid than another” ignores decades of evidence that schools with concentrations of children from poor families in fact face more daunting educational challenges.^[4]

2. Children in urban districts are the innocent victims since the districts are unprepared to contend with devastating cuts in state aid.

By far, the biggest losers under Gov. Christie’s plan would be the 31 school districts formerly called the “Abbott” districts (based on 21 New Jersey Supreme Court decisions between 1985 and 2011). These districts educate about 20 percent of New Jersey’s students and receive about 55 percent of all state aid. Between them the districts would lose $2.5 billion in aid – a reduction of 43.6 percent.

Students in these districts are disproportionately poor, representing 41.6 percent of all students who are eligible for the free lunch program, and these districts enroll about half (47.9 percent) of the state’s English-language learner students. A majority of students in these districts (85 percent) are black and Latino, accounting for about two of every five black and Latino students in New Jersey.

And the poorer the district, the greater the loss. Gentrified Hoboken would actually see its aid increase by 20 percent; Camden – the poorest of the former Abbott districts – would lose 78.1 percent of its scheduled aid.

How a formula that would dismantle the work of districts charged with the education of the state’s most vulnerable children can be described as “fair” requires a Kafkaesque or Orwellian dictionary.

The governor’s claim of widespread failure in these districts ignores not only the indisputable difficulties of educating concentrations of poor children, but the fact that they are not uniformly poor-performing districts. In fact, more than one-third of them have a four-year average graduation rate that exceeds the national rate of 82 percent, and four of the 31 districts have a higher graduation rate than the state average (which is one of the nation’s highest).

Let’s take a look at Union City, which, as the governor has noted, comes very close to the state average for graduation rates – even with almost one-quarter of its students still learning English and one of the highest counts of children from very poor families in the state. The governor was right to spotlight Union City since it is one of the best-performing deeply poor school districts in the nation. As a reward, he proposes to slash aid to Union City by 56 percent – and offers no explanation for how the district would maintain its exceptional performance after losing more than half of its funding.

3. Children in over 100 working-class districts would also be harmed.

The governor builds his case on the court-ordered Abbott case that resulted in 31 districts receiving 55 percent of the state’s school aid. However, in his town hall tour he neglects to mention that an additional 110 school districts would also suffer a loss in state aid with the result that one-third of New Jersey’s students – not the mistaken 23 percent he cites – would go to school in districts with reduced state aid. Not surprisingly, these 110 districts also have larger shares of students from poor families and more students from non-English-speaking homes.

Take Dover in Morris County as an example. Eighty-six percent of its students are Latinos and 62 percent are free-lunch-eligible.^[5] Even though it is one of the highest-performing “A” districts, it would lose one-sixth of its state aid ($6.2 million). Lindenwold in Camden County has an even higher count of very poor students (75 percent are free-lunch-eligible) and 83 percent are black and Latino.^[6] Lindenwold would suffer a 19 percent reduction of $7.2 million in state aid under the governor’s proposal. Neither district could make up the loss from higher property taxes, with the result being a severe reduction in staffing and the consequences that flow from bigger class sizes and less individualized attention.

4. The proposal would spell the end of high-quality preschool for poor New Jersey families, removing an essential building block to help close the achievement gap.

The evidence is overwhelming that investing in high-quality preschool pays off better than just about any public investment. Kids from very poor families that attend good preschools are much more likely than their neighbors who do not to graduate from high school, stay out of jail and work full time.

New Jersey’s expansion of preschool opportunity is a direct result of the Abbott decisions, but the School Finance and Reform Act of 2008 extended preschool aid to another 81 districts with high counts of very poor kids. Unfortunately, the state has never paid for this preschool expansion. (The legislature in 2016 authorized a modest $25 million increase but the governor vetoed it out of the budget.)

The oft-cited excellence of the Union City schools begins with its emphasis on preschool (nine of ten Union City 3- and 4 year-olds attend) and its almost organic connection to the K-3 years. The result is that Union City’s 3^rd graders outperform those in every other former Abbott district.^[7] It is ironic and inconsistent that the governor would single out Union City for its excellent performance and then dismiss the foundation for that excellence – preschool – as “babysitting” and propose to effectively demolish that foundation by slashing the district’s state aid.

The governor’s blanket claim of city school failure ignores not just Union City’s progress, but that of other districts like Elizabeth, Long Branch and West New York that all educate many students from deeply poor families. All of them give special emphasis to connecting their preschool “grads” to intensive early literacy efforts in the K-3 grades.

5. The governor glosses over the root causes of New Jersey’s property tax problem.

Gov. Christie begins by arguing that the intervention of the state Supreme Court in school finance “has caused us to have the highest property taxes in the nation.” This is true: New Jersey does have the highest property taxes.

But this is also true, and unmentioned by the governor: New Jersey had the highest property taxes before the court’s orders on school finance kicked in in the 1997 fiscal year.^[8]

There are many explanations for New Jersey’s historically high property taxes such as its population density, the excessive number of municipalities and school districts and its traditions of local control. For the majority of school districts, the local property tax has always been the primary source of funding – and that did not change with the court’s Abbott decisions.

The governor claims his proposal would lead to substantial property tax reductions in the state’s middle-class and affluent towns, as it would distribute state aid on a $6,599 per student basis. Nine out of the ten districts that would receive at least a 1,530 percent increase in state aid under the “Fairness Formula” are in the wealthiest groupings of the Department of Education classification scheme. In other words, the districts with the least challenging educational issues would receive the most money. Districts receiving the increased aid would be limited to using a small part of it to cover the 2 percent ceiling on increased school spending, with the balance mandated to reduce residential property taxes. To make the case clearer, assume one of those wealthy districts spends $15,000 per student with only $800 coming from the state, the balance paid via the property tax. If the governor’s plan were adopted, the district’s spending could rise to $15,300 per student but the property tax bill would be reduced by $5,499 per student, a 687 percent decrease.

However, not all of this aid will be available if the governor follows through on his pledge to protect state assistance for special education and charter schools. One might safely assume that assistance for transportation, security and health services at private religious schools would also be maintained. So, right off the top, the $6,599 number declines to no more than around $4,500 per student.

6. The governor misleads on urban charter schools.

There is a common assumption that charter and district schools – since they are located in the same municipality – educate kids from a uniform pool. They don’t.

Across the state, there are two categories of students that are noticeably missing from the charter school rolls: students who are classified with special education disabilities and English-language learners.

For example, in Newark’s district schools, 17.1 percent of students are classified for special education, including one in six with multiple disabilities or autism. The count in Newark’s charter schools is 9.7 percent, all of whom fell into the three least severe disability categories.^[9]

When it comes to students who are English-language learners, the charter schools are close to AWOL. Just 0.9 of 1 percent of Newark’s charter students are English learners, while more than one in ten students (10.9 percent) in the Newark district schools are.^[10] The governor’s solitary reliance on charter schools to address the problems of 141 districts receiving state aid cuts fails to even mention the need to address the education of thousands of immigrant and disabled students who are found overwhelmingly in districts suffering reductions in state aid.

To provide these contrasts between charter and district school profiles is not a blanket criticism of charter schools, nor an automatic defense of district schools. Many charters do not enroll a large enough student body to employ the highly specialized teachers and specialists to contend with large numbers of classified students, especially the severely disabled. To a lesser extent, the same prevails when it comes to educating large numbers of students not proficient in English. However, given the numbers of foreign-born families in charter-rich cities such as Paterson, Jersey City and Newark the modest to non-existent outreach by charters to English learners is noteworthy.

While charters in some cities like Newark and Camden might enroll students with similar economic profiles as students in district schools, this is not true in all major cities. In Jersey City, for example, the contrast is quite marked. Free-lunch-eligible students make up 48.6 percent of the 4,392 students enrolled in ten charters there, compared to 71.7 percent for the district as a whole.^[11] The notion, therefore, that charter schools alone can make up for the slashing of district school budgets does not come close to addressing the consequences. In Jersey City’s case, the “Fairness Formula” would slash $216.7 million in aid, a cut of almost $7,800 per student or 51.8 percent.

Moreover, the core of the governor’s argument – that urban charter schools perform better than district schools for about half the money – is simply untrue. In fact, it turns out to be the reverse: charter schools receive significantly more funding than individual district schools.

The governor’s calculations fail to account for the fact that charter school funding comes directly out of their home district’s budget. They also fail to account for district payments to charter schools, out-of-district placements for special education, central office management and debt service when calculating the true cost of educating a child enrolled in an urban district.

Charter schools are protected by enabling legislation stating they will receive 90 percent of the district’s per-student operating budget. In Newark, for example, charter schools received $226 million in the 2015-6 school year to educate 13,752 students or $16,434 per student. This and other out-of-district payments, debt service and central office expenses left Newark’s public schools with $323 million to manage over 35,000 students at an average of $8,500 per K-8 students and $11,300 per high school student.^[12] These numbers aren’t even close to the governor’s citation that Newark spends $22,000 for students enrolled in its district schools.

Endnotes

[1] NJPP analysis of The Nation’s Report Card 2015; available at https://www.nationsreportcard.gov/reading_math_2015/#reading/state?grade=4

^[2] See New Jersey Department of Education for more detail (http://www.state.nj.us/education/finance/rda/dfg.shtml)

^[3] NJPP analysis of “NJ ASK” and “HSPA” results from 2013 and 2014

^[4] Gov. Chris Christie’s Office, Governor Christie: No Child Is Worth More Than Another, June 2016.

[5] NJPP analysis of New Jersey Department of Education enrollment data

[6] Ibid 4

[7] New Jersey Department of Education, Grade 3 New Jersey Assessment of Skills and Knowledge Spring 2014 – specifically the “NJASK 2014 State Summary” Excel file. Available at http://www.state.nj.us/education/schools/achievement/14/njask3/

^[8] The Public Policy Institute of New York State, Just the Facts: Key Economic and Social Indicators for New York State, (1999-2000) http://www.ppinys.org/jtf99/table23.htm

[9] New Jersey Department of Education, 2015 Special Education Data – specifically the “District Classification Rates, Ages 3-21” Excel file. Available at http://www.state.nj.us/education/specialed/data/2015.htm

[10] NJPP analysis of New Jersey Department of Education enrollment data

[11] NJPP analysis of New Jersey Department of Education enrollment data

^[12] Newark Public Schools, Budget Presentation, pp. 10-11.

NJPP’s Gordon MacInnes on Latest Credit Downgrade

Posted on November 21, 2016October 10, 2020 by NJPP Staff

Last week NJPP president Gordon MacInnes talked to Chasing News about the record 10th credit downgrade under the Christie administration, which came on the heels of the approval of a reckless package of tax cuts that accompanied a long-overdue gas tax increase this fall.

“It was certainly guessable that if the legislature and the governor agreed to blow yet another hole in New Jersey’s revenues, that the credit agencies would … issue their warnings and … another downgrade,” he said.

Following Other States’ Progress on Economic Justice

Posted on November 18, 2016October 10, 2020 by Jon Whiten

This op-ed appeared in the November 16, 2016 edition of the Star-Ledger.

The new federal agenda that will be brought on by Tuesday’s stunning presidential and Congressional election results promises many dark clouds and tough challenges in the fight for economic justice. The threats to working families are grave, and the will to fend off these threats must be strong and sustained.

But a number of important wins on Tuesday in states and cities across the country show the way forward for New Jerseyans seeking a more just and fair economy, with more opportunity and a broadly-shared prosperity. Voters made their state tax systems fairer while raising revenue to fund shared priorities like schools and health care. They voted to raise the wages of millions of low-paid working people. They raised new revenue to fund critical investments in mass transit. And they approved efforts to make drug policy more rational while raising money to reinvest in communities by legalizing, regulating and taxing marijuana.

Tax Fairness

Californians voted overwhelmingly to extend the state’s 2012 income tax increases on the state’s wealthiest taxpayers for 12 years. The tax increase extension, on incomes over $250,000, will raise between $4 billion and $9 billion in revenue a year to pay for schools, health care, rebuilding the state’s reserves and paying down debt.

And closer to home, Mainers appear to have narrowly approved an increase in the state’s income tax rate on the state’s wealthiest households. The measure raises Maine’s top marginal tax rate (on income over $200,000) to 10.15 percent from 7.15 percent, and is projected to raise $157 million to pay for K-12 public education.

These changes mean that California will retain the nation’s highest top marginal state income tax rate, at 13.3 percent, and Maine will take over the second-highest spot. New Jersey’s top rate of 8.97 percent will now be the sixth highest, after those two states plus Oregon, Minnesota and Iowa. Meanwhile, our state policymakers allowed the Garden State’s 2009 surcharge on the wealthiest taxpayers to expire, costing the state between $4 billion and $7 billion in lost revenue in the past seven years.

But merely rehashing the income tax surcharge of past years is not the best path forward for New Jersey. Instead, lawmakers and gubernatorial candidates ought to look closely at California’s 2012 tax changes, which added new income tax brackets and raised rates progressively as incomes increased. Loosely emulating the Golden State’s model could raise well over $1 billion a year to invest in schools and property tax relief, while only raising taxes for the wealthiest 5 percent of households.

Lifting Wages for Low-Paid Workers

Voters in Arizona, Colorado and Maine approved gradually raising their state minimum wages to $12, and voters in Washington State approved an eventual $13.50 minimum wage. What’s more, voters in Flagstaff, Arizona, approved a phased-in $15 minimum wage. Even better, the ballot questions in Arizona and Washington also expanded earned sick days for those states’ workers – and the Maine and Flagstaff measures will also eventually eliminate the subminimum wage for tipped workers. Taken together, these increases will deliver raises for 2.3 million low-paid workers and inject more than $3.5 billion into local economies, according to the National Employment Law Center.

Meanwhile, low-paid workers in New Jersey – who face one of the highest costs of living in the nation – face a minimum wage that is about half of what it takes just to survive and are forced to rely on private charity and public safety net programs just to put food on the table, a roof over their heads and clothes on their back. Our governor spurned a commonsense attempt to raise the minimum wage to $15 by 2021, which would have boosted the pay of one in four New Jersey workers. But the leaders who stand up for working men and women must not give up their fight for fairer pay. This includes not only fighting for a more livable wage, but eliminating the two-tier system for workers who rely on tips and allowing all New Jersey workers to take time off when they are ill, without losing a day’s pay or – worse – their job.

Turning from the 2016 Elections to the 2017 Elections

As we emerge from the 2016 elections, we have to fight vigorously to protect the progress we’ve all made at the federal level, but we also must turn our attention to the most fertile ground for the progressive future we all want to see for New Jersey: the State House.

Next year New Jersey will elect a new governor, and every legislative seat is up for grabs. The Garden State has an opportunity to build a bulwark against short-sighted and punitive federal policies and to demonstrate the economic power of a more sensible, inclusive vision for the future. Let’s not waste it.

A Roadmap for True ‘Tax Fairness’ in New Jersey

Posted on November 14, 2016October 10, 2020 by Jon Whiten

This is a prepared version of remarks delivered at the New Jersey Working Families Summit on Saturday, November 12, 2016.

“Tax fairness.”

It has such a nice, simple ring to it. But as we learned this year, it can be twisted, turned and perverted by those who will tell us that it’s “fair” to reduce taxes for those who already have the most, and to just wait for the prosperity to trickle down to the rest of us.

We know that doesn’t work, and it’s certainly not “tax fairness.”

So what is “tax fairness” to us, as progressives? And why does it matter?

It matters because we can’t have a just and equal and prosperous state without true tax fairness. On the flip side, tax unfairness perpetuates inequalities and makes all types of social progress – whether we’re talking about the environment or the schools or civil rights or anything else we hold near and dear to our hearts – much, much harder to realize.

True, progressive tax fairness is defined by two key pieces:

It has an equity component – ensuring that low-income and middle-class taxpayers are on a level playing field with the wealthy and the corporations;
And it has an overall revenue component – ensuring that the government has enough money to pay for essential services, help those in need, make targeted investments that help build a strong economy for all, and foster a vibrant and inclusive state.

So where does the fight for tax fairness stand? Nationally, we are going to be facing harmful proposals to cut taxes for the wealthy and for large corporations – the Trump campaign’s tax cut plan, for example, would deliver about half of its financial benefits to the top 1 percent of households, while the bottom 80 percent of us would get just 17 percent.

That’s bad enough right there, and surely not “tax fairness.” But it gets even worse, because that stat disguises the reality, which is that if these cuts were “paid for” so they don’t increase the deficit, the resulting budget cuts would likely mean that low-income and middle-class Americans would get no financial benefit from the tax cuts, and instead face net losses due to federal benefit cuts. And proposals to turn programs like Medicaid into block grants to the states, or convert to a per-capita cap system, would not only harm low-income people but also represent a massive cost shift from the feds to the states.

That is all very bad news, and we must vigorously fight against these types of plans at the national level. But while we’re doing that we must also lay the groundwork for proactive, progressive change at the state level.

As it stands now, New Jersey has lost a lot of ground in the fight for tax fairness over the past decade. Our political leaders have reduced taxes for the most well-off, cut taxes for businesses and promised extravagant tax breaks to corporations for shifting jobs around the state, all while property tax bills have continued to rise, transit fares have dramatically increased and the cost of college continues to climb into an unaffordable realm.

Perhaps it’s no surprise, then, that the poorest families in the state – those earning $22,000 a year or less – on average pay the largest share of their incomes to state and local taxes, while the top 1 percent, with incomes over $758,000 a year, pay the least.

We need to reverse this trend.

There are many ways to do this. The roadmap, at the highest level, though, is simple:

First, do no more harm. Reject big tax cuts that deliver the bulk of their benefits to the well off while starving the state of resources.

Second, roll back some of the bad stuff. Let’s restore fair and responsible taxation of inherited wealth. Let’s roll back the sales tax cut. Let’s roll back some of the $3 billion in tax cuts that have gone to businesses since 2011.

Third, make corporations pay their fair share. We can close tax loopholes that allow multistate corporations to artificially shift their profits out of the state – a fancy accounting trick that small local business can’t take advantage of. We can start to tame the absolutely out-of-control corporate subsidy programs that are right now a ticking budget time bomb.

Fourth, and last but not least, make our income tax more progressive. Here, in particular, we must think big and bold and aim high.

There are plenty of reasons to have hope that we can win and advance a tax fairness agenda – despite the outcome of the federal elections this week.

Exit polling showed that an overwhelming majority of voters think the economy is rigged in favor of the wealthy; this tracks with what we’ve seen for years: tax fairness is a winning concept that enjoys broad support.

And so it’s not surprising that it won on the ballot this week in several key states as well. Californians voted to extend their trailblazing millionaires tax package for another 12 years, which will take $108 billion out of the trust funds and investment accounts of that state’s wealthiest families and invest it in education, health care and more. And in Maine – yes, Maine – voters approved a significant tax increase on that state’s most well-off families, all to fund K-12 public education.

As we emerge from the 2016 elections, we have to fight vigorously to protect the progress we’ve all made at the federal level, and to protect the most vulnerable and those who face the biggest threats from the next administration. No doubt about it.

But we also must turn our attention to the most fertile ground for progressive change in New Jersey: the State House.

This path has been blocked for us for nearly a decade, but that can change in 2018. If it does, we must be prepared to act to advance a sensible and bold progressive agenda.

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

Posted on November 7, 2016October 10, 2020 by Gordon MacInnes

In 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.

Topic Category: Tax and Budget