Putting New Jersey’s fiscal house in order

New Jersey’s spending and borrowing spree over the past three decades is coming home to roost. State debt has increased 700% under both Republican and Democratic administrations, and spending has skyrocketed as well even under so-called fiscal administrations.

In other words, New Jersey epitomizes a classic example of government failure in all its manifestations-a bloated bureaucracy, lavish and unfunded pension plans, decrepit roads and bridges, massive redistribution of income from suburban families to urban centers to fund failed public schools, onerous business taxes and regulations, and trickle- down economics known as “state aid.”

The following major policy changes will put New Jersey back on track to fiscal solvency and prosperity. Governor-elect Christie has the opportunity to begin the necessary task of ending the failed policies of the past–tax, spend, and borrow–that has put the State of New Jersey into a financial black hole.

Strategic Initiatives:

  • Restructure state government: “Local institutions, local resources.” Downsize state government so that mayors and councils will have the authority to address local needs using whatever means they choose to fund local programs. Local taxpayers will hold them accountable for making their communities affordable and livable.
  • Promote financial independence: individuals, families, local government, higher education, K-12 education, nonprofits, and businesses, would no longer be dependent on taxpayer funds.
  • Use his bully pulpit to reduce markedly the out-of-wedlock births among teenagers and low-income single adult women. Christie must assist in creating a culture in this state so that parents bring children into this world that they can afford to support
  • Phase out the state income tax and corporate business tax during his first term
  • Eliminate state mandates like the Council on Affordable Housing
  • Increase the gas tax only for roads, highways and bridges. Mass transit should have its own funding source.

Implementation:

  • Phasing out of the state income tax, Corporate Business Tax and reducing the sales tax over the next four years, freeing up the resources to meet the strategic objectives outlined above and discussed below.
  • Newly hired workers from the ranks of the unemployed during 2010 would be exempt from the state income tax. Workers entering the workforce for the first time, high school and college graduates would also be exempt from the income tax. There would be an immediate 20% reduction in the state income tax for current workers so they would get some tax relief. Phasing out the income tax should be the highest priority for the incoming administration.
  • Turning control of local schools to local school boards. Ending state education mandates. Education guidelines promulgated by pedagogical experts would be posted on the Internet so local school boards would charge principals and administrators with the goals and objectives for their districts. School based management would prevail. School superintendents would be abolished, but that decision would be up to each district.
  • Education in low income urban districts would have to be reconsidered. Are large brick and mortar schools necessary to educate underachieving children? Let the debate begin on how to best educate youngsters in the Abbott Districts.
  • Phasing out of state support for all nonprofits, including hospitals. Support for these institutions must come from local, regional and statewide and possible national private sources, i.e., individuals, families, businesses, foundations, etc.
  • Phasing out of support for the state’s community and four year colleges and universities. State support for these institutions has declined markedly over the past 25 years, putting them on a path to financial independence without a strategic plan. A 5-10 year plan to make Rutgers, Montclair, Ramapo, etc., financially independent would be in the best interests of taxpayers, students and faculty.
  • 10 cents a gallon increase in the gasoline tax beginning in 2010 would cost each motorist about $60 per year, or about a $1 per week so roads and highways will be as smooth as glass instead of teeth jarring events.

Under the above plan taxes would decline substantially over the next four years while the gasoline user fee would rise marginally to improve the state’s roads that are in dismal condition. The state would get out of the business of funding local schools. The state income tax has been used to redistribute income, and it is poor public policy to raise one tax to lower another. In the final analysis, as the experience in New Jersey has shown, both the income and property taxes have increased for more than three decades making taxpayers worse off.

In short, the bait and switch tax policy has been a colossal failure. A tax is a tax is a tax, whether it is an income tax, sales tax or property tax. The “gasoline tax” is the only “rational” tax, because it is paid by the consumers of the service, motorists. All other taxes either redistribute income or force people to pay for ‘public” services they do not want or consume.

Chris Christie can make New Jersey a prosperous state once again, but only if he ends trickle down economics and phases out the bloated state budget. Otherwise, crisis management will continue in Trenton for as far as the eye can see.

Putting New Jersey’s fiscal house in order