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Reason Foundation

New Jersey's Wrong Path

Increased taxes, tolls and regulations aren't the answer to state's budget woes

Amanda K. Hydro
June 30, 2008

Another fiscal crisis took center stage in New Jersey earlier this year with Governor Jon S. Corzine's "Monetization Plan," which would have essentially spent more money than the state has. He attempted to justify this plan with a 21-county tour across the state.

In Toms River, Gov. Corzine said, "What I have done when I put together this program was to try to find the least burdensome way to deal with the issues that we have on the table. You can yell at me. You can jump up and down. But something has to be done."

In Middle Township the governor added, "We're only doing this because we don't see better alternatives, we want to hear about them… I'm flexible as long as we achieve the objectives."

Well, I hope Gov. Corzine is listening because while he was on his speaking circuit, the Republicans were already preparing to fight back.

The Assembly Republican Task Force for Fiscal Responsibility held concurrent town hall meetings with New Jersey taxpayers as the Governor toured the state and they actually listened to citizens. I attended the forum held in Hunterdon County and was impressed with the open forum and discussion regarding the state's financial problems and how to develop solutions to the government's runaway spending. Utilizing the forum's dialogue, legislators developed a plan they says will hold public officials accountable and strengthen the economic viability of the state without stooping to Corzine's attempted highway robbery to raise tolls by 800 percent, among other fiscally irresponsible actions.

As my Reason Foundation colleague Bob Poole pointed out in his February Surface Transportation Newsletter, there are two major problems with Governor Corzine's plan. The first is that this plan would force motorists and truckers who use New Jersey's toll roads to bare the brunt of the state's long-running fiscal mismanagement. It is important to note here that 51 percent of those who use the New Jersey Turnpike are out-of-state drivers. Additionally, this plan combines a toll and a tax.

As Poole pointed out, "The portion that ends up actually spent on maintaining, expanding, and modernizing the toll roads is a toll…the portion that goes for general state purposes is a tax, plain and simple."

When the difference between the two is not clear, there is negative effect on the public's perception of alternative methods of highway financing.

Senate and Assembly Republicans have a five-fold plan which aims to: reduce the budget, rebuild the state economy, restore property tax relief, replenish the transportation trust fund and respond to the will of the people. In an effort to reduce Corzine's proposed budget of $33.3 billion, the Republican lawmakers identified $1.32 billion in potential cuts. At the town hall meeting that I attended I heard the story of such wasteful operational spending. When the state shut-down in 2006 the Department of State issued a statement requiring all non-essential staff to remain at home. The Department has 140 people on staff and 119 remained at home which means only 21 people were essential to run the whole Department. Imagine what the numbers were for every department within state government!

New Jersey has not been very welcoming to the business community for some time - with massive taxes and a highly regulated atmosphere. The Common Sense Plan calls for regulatory reforms, new economic incentives and expansion of a tax credit program. Although, New Jersey homeowners pay the highest property taxes in the country, Corzine's proposed budget would have raised them even higher. This plan strives to create a new property tax credit program and help alleviate the pressure at the local level as well.

As the Republicans' new brochure states, "people want real change but too often the Governor and the Legislature stand in the way of progress." In that spirit, the Assembly Republican Office wants to require that any new state borrowing be submitted to, and approved by voters; a 2/3 vote by the legislature to impose any new taxes; and significant reforms to the state pension and health benefits systems.

The Republican Common Sense Plan is a true reflection of the sentiments of many New Jersey residents. I hope that its finer points continue to be discussed in public forums and honed to produce the best outcome for the state. It provides a serious, well thought-out plan, without raising taxes or tolls. Gov. Corzine should look at these options, or come up with others that don't include tax increases.


Amanda K. Hydro is Director of Policy Development


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