MALONE LEADS GOP’S RESPONSE TO BUDGET STAND-OFF

by David P. Rebovich The big story on West State Street these days is, of course, the budget stand-off between Governor Jon Corzine and the Assembly Democrats led by Speaker Joe Roberts. The main sticking point is the Governor’s proposed one-cent increase in the state sales tax. Democrats in the lower chamber, along with a few in the Senate, are worried that voting for that tax hike will create big problems for them in next year’s midterm elections. Corzine is concerned that without the increased revenue that a higher sales tax would provide the state budget cannot be balanced honestly and in a way that makes progress toward achieving real fiscal integrity. The Governor and his staff also claim that New Jerseyans are not especially upset about the proposed sales tax increase. However, polls do indicate that a majority of residents prefer spending cuts to tax hikes in order to balance next year’s budget. That most folks would choose unspecified spending cuts to a tax increase should not be a surprise. In any case, Democratic legislators claim that their constituents are very worried about the double-whammy that Corzine’s budget proposal would deliver next year if enacted. That double whammy is higher state taxes and higher local property taxes due to flat levels of state aid to school districts and municipalities, as well as smaller than promised rebate checks to lessen the blow of the latter. And, Democratic legislators cannot see the political sense of increasing a broad-based tax to simply balance the state budget. They believe that such an increase should be used as part of a property tax relief or reform plan. As such, the Assembly Democrats have presented the Governor with a list of budget cuts and revenue enhancers to prevent the need to raise the sales tax. Those revenue enhancers take the form of higher projections of the amount of money the state will garner next year from existing sources. Governor Corzine, however, isn’t biting. His staff is already preparing for a state government shutdown in the event that the legislature does not present him with what he regards as a fiscally sound budget. This is not simply a battle of wills or a disagreement about fiscal policy. It is a difference in calculations about the political impact of that policy. The Governor believes that Democratic legislators who are bucking him are a little paranoid. Those legislators think that Corzine, this newcomer to state government, does not appreciate New Jersey political history and what can happen to those who increase a broad-based tax even with some good reasons. For a preview of how supporting a sales tax hike can be used against his fellow Democrats, the Governor can listen to the ads run by the Americans for Prosperity. He can also look at the proposal of the Assembly Republicans to cut $2.2 billion in spending from his budget plan and pay attention to their argument. The anti-tax group is telling residents in several swing districts to contact their Democratic state senators and insist that they reject the sales tax hike. For their part, the GOP members of the Assembly Budget Committee responded to the Governor’s call for alternatives to his budget proposal. In a Friday press conference, Assemblyman Joseph Malone III (30th district) announced $2.2 billion in budget cuts that would enable the state to avoid any new taxes or fees, increases in existing ones, or some undesirable spending cuts and freezes. The budget cuts recommended by the Assembly Republicans include the following: a $420 million dollar reduction in state aid to 13 Abbott school districts that state officials think no longer should be eligible for special funding; keeping over $100 million in urban enterprise zone revenue; salary freezes for higher paid state employees; layoffs of 800 patronage employees; eliminating the Personnel, State and Public Advocate departments; cuts in the Governor’s proposed funding for child services, affordable housing, and teacher mentoring program, NJPAC, NJN and the State Historical Commission. At Friday’s press conference, Minority Leader Alex DeCroce said that state government has “…to learn to stop spending money we don’t have and cut expenses.” While the Governor’s Office responded politely to the Republicans’ suggested cuts, some Democratic legislators were anything but cordial to their GOP colleagues. Lawmakers representing urban areas complained that many of the Republicans’ recommended cuts focused on urban programs and residents. Were the Republicans promoting unproductive class warfare or racial politics? GOP lawmakers objected strenuously to any such suggestion. Malone noted that the since the state spends heavily, and sometimes imprudently, on urban areas, any effort to cut excessive or wasteful spending will necessarily require attention to programs and aid for cities and their schools. Malone made this case again on Saturday at a town meeting sponsored by 14th district Republican Assemblyman Bill Baroni in West Windsor. Despite heavy rain, some 100 constituents came out to hear the charismatic Baroni and the candid, feisty, and likeable Malone. The veteran Assemblyman from Bordentown spoke passionately about the need to confront state spending rather than raise taxes, how suburban and rural residents need to join together to fight waste, fraud and high taxes, and the need for major tax reform. Malone agrees with former Governor Richard Codey and the current Governor that New Jersey is in a fiscal mess and that we all need “an honest understanding” of the state’s plight. But Malone disagrees with his Democratic colleagues who assert that Corzine’s budget is too lean. While he believes that the state can spend its money more productively and equitably, Malone claims that the majority party has “no willingness to confront how much we spend and waste.” He said he respects Governor Corzine and Treasurer Barry Abelow but does not believe that they understand the needs and concerns of “common people” living in suburban and rural areas of the state. Indeed, the Governor has frequently mentioned that in his several town meetings throughout the state, there haven’t been many complaints about his proposed sales tax hike. Malone’s experiences have been different. Citing appearances at many town meetings in and outside his south-central Jersey district, the Assemblyman claimed that people he met are “angry and frustrated.” Their main gripes? They are fed up with subsidizing urban areas whose public officials squander money on sports arenas, patronage jobs and bloated government contracts. And, they resent sending so much education aid, paid for by the state income tax, to Abbott school districts where educational outcomes are still bad. To make matters worse, 13 Abbott districts can, according to the Education Commissioner, pay for more of their own education costs because of their improved tax bases. In the meantime, state aid for schools in suburban and rural areas has been flat for years, which has resulted in huge increases in property taxes in these areas. When he and other Republicans approached their Democratic legislative colleagues about Abbott funding – especially the issue of the 13 better-off districts -, Malone said “we got stone silence.” He claims that lots of legislators, including many Democrats, are sick that people in middle class school districts have to pay so much for the Abbotts. But, he lamented, Democratic legislators are intimidated and afraid to speak out because “lawmakers from urban areas control the agenda.” A long-time educator himself, Malone recognizes that the state does have to spend more money in certain areas to make things better. But he wants the needs of suburban and rural school districts to be taken into consideration as well and believes that will only happen if residents in these areas contact the Governor and their legislators. Yes, Malone does recommend that New Jerseyans check to see if their Democratic legislators representing suburban districts vote for a budget that would, as he puts it, “feed the urban beast.” When asked if he is optimistic that some meaningful recommendations for reform can be agreed on during the legislature’s planned special session this summer, Malone admitted that he is out of necessity focused on deliberations about the current budget. He did say, however, that New Jersey “…needs to fund schools based on kids’ needs, not on greed,” meaning that the school funding formula must be looked at carefully. Earlier this year he supported the effort to encourage school districts and municipalities to regionalize and consolidate services, a favorite idea of Speaker Roberts. When it comes to property tax reform, Malone told the West WIndsor audience that he is aiming for a plan that gives homeowners a cut on the order of $3,000 to $5,000. That’s would be a big reduction indeed, but one that folks in communities like Bordentown, a modest working and middle class municipality south of Trenton, would really appreciate. Malone and his neighbors pay a whopping $12,000 a year in property taxes. As he said, those ever increasing property taxes in suburban and rural areas are a fact that legislators and the Governor need to pay attention to when they decide on taxes and state aid in the new budget. If not, those midterm elections next year could be interesting indeed. David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (www.rider.edu/institute). His also writes a regular column, “On Politics,” for NEW JERSEY LAWYER and monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine. He is a member of CQPolitics.com’s Board of Advisors that provides weekly commentary on national political developments.

MALONE LEADS GOP’S RESPONSE TO BUDGET STAND-OFF