In his State of the State address, Governor Christie asserted New Jersey “is improving–getting better every day.” Let’s look at the record.
The cost of government is still a burden. That’s why homeowners complain about property taxes. State aid to the suburban school districts has been cut dramatically, and in some cases to zero. Public schools, especially in our cities, are doing a poor job of educating youngsters, even though the cost is more than $25,000 per student in some of the Abbott districts. The roads and bridges are in terrible shape. The state pension funds are underfunded by tens of billions of dollars. In addition, the regulatory environment is still unattractive to many businesses, denying our residents the opportunity to be employed in some of America’s best public and private companies.
In short, New Jersey needs a makeover, an “extreme” overhaul of taxes, government spending, and regulations to make it the most attractive state for businesses to relocate.
Below are highlights from Governor Christie’s State of the State address and my comments.
I want to thank them both (Senate President Sweeny and Assembly Speaker Oliver) for using this last year of action to help begin to restore the public’s faith in Bi-partisan government.
What is so great about “bipartisan” government? Bipartisan government is usually code for growing the size of government. Whenever Democrats use this term that is what they mean. When Republicans use this term, we should be wary, unless the governor means he will propose a substantial downsizing of state government, not tinkering around the edges of a bloated budget.
Governor Christie identified three key areas that must be addressed this year:
One: we must stick to the course of fiscal discipline.
Two: we must fix our pension and health benefit systems in order to save them.
And three: we must reform our schools to make them the best in the nation.
How? The governor should lay out a plan for the nonprofitization of social services and education. Instead, he apparently wants to tinker with the current system. In short, he wants to replace the Democrats’ vision of a welfare state with a Republican welfare state. Moreover, the governor should replace the defined benefit plan of state workers with 401(k) retirement plans.
…we need to better control our Medicaid and health care costs.
How? The governor should have outlined a plan over the next several years to create community funded healthcare centers based on the Volunteers in Medicine model. Voluntary contributions of the people, foundations, etc., around the state would fund these centers. We can begin to end government meddling in healthcare, and Governor Christie could be the nation’s leader in this movement.
And we need every department of state government to start from the bottom up and plan not what they want to cut from last year— but only what they absolutely must fund this year.
This was one of the governor’s best lines in his speech. He should have added, “We need to eliminate unnecessary regulations, protect property rights, which would be the best guarantor of a clean environment, and allow the spirit of enterprise to flourish in the state so more people can become financially independent.”
I also last week outlined needed plans for continuing to invest in New Jersey’s transportation infrastructure— which we need to be world-class for both jobs and competitiveness.
The governor should have said, “Transportation socialism has failed. We need to unleash the creative skills of entrepreneurs to provide quality and affordable transportation in the region.”
But let’s be clear: we will not put in place tax cuts that we can’t pay for.
Why did Governor Christie use the Democrats’ rhetoric regarding tax cuts? Tax cuts are not “paid for by government” but are made so individuals, families and businesses can use their own income to achieve their goals. Because the state cannot engage in deficit spending, the governor cannot propose tax cuts unless there are spending cuts to offset the loss of revenue. However, there are some “supply side” effects of tax cuts. More economic activity increases tax revenue. However, the goal of fiscal policy should not be to increase tax revenue, but to raise a little revenue to provide a few government services. The governor should have made the case for free enterprise and limited government here instead of sounding like a Democrat.
Nearly 75%— 3 out of every 4 dollars— of our State’s municipal and county budgets are driven by personnel and labor costs.
Cutting the size of the public sector labor force is critical to bring spending under control. The governor should cut the state workforce substantially to show he means to reduce the cost of state government. Local and county government must follow the governor’s lead.
In multiple categories, and at multiple grade levels, the gap between at-risk students and those not at risk has not changed little in years— and it is way too high.
OK. That is the reality of educational outcomes in our state. Now what? The governor then delivered the best line of his speech.
We must end the myth that more money equals better achievement.
Does this mean he will cut state aid to the Abbott districts?
It is a failed legal theory— and we can no longer waste our children’s time or the public’s money waiting for it to finally work.
Did the governor imply that if the state Supreme Court does not leave state aid decisions to the Legislature, he would defy the Court’s orders to maintain the level of funding that has failed to close the achievement gap?
Governor Christie is first a politician. However, he said he does not care about his reelection. The governor wants to make the “hard decisions” to put the state’s fiscal house in order and make New Jersey a beacon for families and businesses, the engine of the economy.
If Governor Christie is not concerned about his reelection, as he has said quite often, then he should follow Confucius’ advice: “To know what is right and not to do it is the worst cowardice.”
The choice is clear: The governor can continue to fund failed policies that has brought the state to brink of fiscal insolvency, or he can begin to revitalize the state’s economy with what works—free enterprise and limited government.
ay Sabrin is professor of finance at Ramapo College of New Jersey and blogs at www.MurraySabrin.com