Limited government principles and fiscal conservatism are philosophically sound, because they preserve the people’s natural rights and they prevent government from overspending, over borrowing and overtaxing. For more than four decades I have been advocating limited government principles and fiscal conservatism, longer than any public figure in New Jersey. Voters have either loved these positions or hated them in the past. Voters who rejected my uncompromising positions on taxes, spending, and regulations, have no none to blame but themselves, both New Jersey and the federal government are financial basket cases.
In New Jersey big government polices have brought us economic stagnation and to the brink of fiscal insolvency. In Governor Christie’s budget address to the Legislature yesterday, he outlined the challenges facing the State of New Jersey, offered some conventional solutions to 2011 budget deficit, but fell short in proposing a comprehensive plan to diminish substantially the role of state government in the lives of New Jerseyans.
For his effort to address the financial imbalances in the state budget, the governor gets a B+. Christie got off to a good start by laying the groundwork for what could be an historic overhaul of state government in the years ahead.
The 2011 budget that Governor Christie presented to the legislature contains spending cuts and pension reforms to deal with both short-term and long-term budget deficits. He pointed out how past budgets were balanced with one-shot gimmicks. And he castigated both legislators of both parties for allowing the raid on the Unemployment Trust Fund. In addition, Christie correctly pointed out how out of touch local officials are, because they added more than 11,000 workers in 2009, while the recession caused the private sector to shed more than 120,000 jobs.
To deal with a project $10 billion shortfall in fiscal 2011, the governor has proposed cuts in virtually all departments and ending property tax rebates. Instead, eligible homeowners will get a credit on their income taxes to help defray their property tax bills. School and municipal aid will also be cut, which should force local governments and school districts to tighten their belts as well. Property taxes should not increase if fiscal discipline is exercised at the local level.
However, Christie did not address the Supreme Court’s school spending mandates for the Abbott districts. Even with Governor Corzine’s Abbott reform spending last year, Christie should take the lead and point out that the state constitution authorizes all school aid to be determined by the Legislature. Following the constitution would provide more relief to suburban school districts whose taxpayers pay the bulk of the income tax and receive very little state aid.
The governor gets high marks for identifying what may be the single most important issue of the budget: “…more than half of what the State spends every year is sent to local governments, in the form of aid for municipal government and school districts.” The state collects $30 billion in taxes and sends more than $15 back to local governments and local school districts. If every municipality and school district received one dollar for every dollar collected from their citizens, then the state would not be in the business of redistributing income money from taxpayers to tax consumers.
But state government is in the redistribution business, and that is wrong. The governor therefore did not address the philosophical issue that has driven the state budget and debt to unprecedented levels. If the State of New Jersey had not been taxing incomes and other taxes from its citizens and shuffling it around the Trenton bureaucracy, then the state budget would be less than half of it is today, and over the years there would not have been any borrowing to fund the redistributionist policies of past administrations and legislatures. Any services local governments and school districts wanted to provide their citizens would have to have been paid for by local taxes, or voluntarily by individuals funding their local nonprofit institutions and schools.
Governor Christie budget contains these proposals perpetuating the welfare state in New Jersey:
- Increasing funding in FY 2011 for New Jersey’s hospitals.
- Continuing funding the enrollment of all eligible children – up to 350% of the federal poverty level – in Medicaid and New Jersey family care.
- Preserving access to needed medications for our senior citizens.
The governor should have argued that it is not the state’s responsibility to pay for desirable social services. He should have made the case that the people of New Jersey are caring, compassionate and generous. He should have stated that neighbors helping neighbors is the best way to comfort the sick, provide aid for the poor and elderly and extend a helping hand to families that have fallen on hard times. He should have called for the growth of the nonprofit sector to deal with the sick, disabled, and others who are not financially independent.
Instead, the governor’s budget maintains New Jersey’s welfare state programs, rather than begin the transition to the nonprofitization of New Jersey.
Rather than begin a dialogue about the role of the state government in New Jersey, Governor Christie essentially called for creating a more efficient welfare state. He proposed a constitutional amendment that would cap property taxes by 2 1/2 percent per year. He also wants the amendment to cap state spending by the same amount. In short, the governor wants another way to rein in the growth of the welfare state instead of calling for the end of “legal plunder” and financial dependence on taxpayers in the Garden State, a development that would make us a leader in restoring limited government in the United States.
Governor Christie missed an opportunity to draw a picture of how a prosperous economy would be created by more free enterprise and how compassionate New Jerseyans would give their time and money to transform the welfare state, from financially unsustainable bureaucracies to the nonprofitization of New Jersey.
The governor gets a B+ for his budget address, because he criticized both Republicans and Democrats for their past profligacy, asserted that he will veto any tax increases, and his desire to lower government spending, but he would have received an A if he embraced more limited government principles, promoted nonprofitization, and called for the abolition of the income tax.
In short, Governor Christie, in his budget address, took us a step or two closer to the mountain–a free society in New Jersey. He still needs to embrace the principles that would take New Jersey to the top of the Liberty Mountain.