Joshua Zeitz, one of the architects of former New Jersey Gov. Jon Corzine’s policy strategy, takes the Christie administration to task for:
(1) raising absolute spending relative to Jon Corzine’s last budget, without making reference to population growth and the burden on state social programs caused by persistent high unemployment;
(3) underfunding the state’s actuarially required contribution to the pension fund by $8.2 billion over three years in contrast to Corzine’s underfunding of $6.4 billion over 4 years — a very, very fair point, but one that elides the presumably relevant fact that that state revenues suffered somewhat in the wake of the 2008 financial crisis.
Zeitz maintains that consolidating local governments is the key to creating a sustainable fiscal future for New Jersey. While there may well be some benefits that would flow from consolidation, it seems just as plausible that collective bargaining reform and spending discipline and local fiscal autonomy (e.g., cutting the state’s direct rebate program) would have a salutary impact on managerial practices.
The problem is that Christie is playing the same game of whack-a-mole as every New Jersey governor in recent history. The state devotes about 40 percent of its total budget to offsetting local property taxes, either directly (through rebates to homeowners) or indirectly (through cash transfers to school districts, counties and municipalities). Christie’s plan would do nothing to reduce the aggregate property tax levy, but it would diminish the state’s income tax collections.
What Zeitz misses in this passage is that an essential part of Christie’s plan is to give local governments the tools to reduce their own expenditures and to increase the efficiency of service provision.
Less money in the state’s coffers means less money to transfer to towns and school districts, and less money for property tax rebates. Your income tax bill just went down, but your property taxes went up to compensate for the loss of state aid. Corzine and Christie each placed caps on the rate that local governments can raise property taxes each year. But certain costs are exempt from the cap, blunting its effectiveness.
This only makes sense if we assume that it is impossible for towns and school districts to improve their cost-effectiveness. The experience of Massachusetts suggests otherwise.
It is also true, however, that Zeitz excoriates the state’s public sector unions. By framing the article as an attack on Gov. Christie, Zeitz buries the lede: his article is in fact an indictment of the state’s Democratic Party:
Our state has, in effect, become two states. The first is comprised of public employees and contractors who derive their income and retirement security from the state. The second consists of students who pay sky-high tuition at public universities; mass transit riders who shoulder fare increases but receive second-rate service in return; commuters who drive every day on decaying — and often dangerous — roads and bridges; and first-time homebuyers who sometimes pay more in property taxes than on their mortgage.
Democrats are strongly disincentivized from challenging the status quo. They count on public employee unions and contractors for a large part of their county and state party funding. In a recent op-ed, a prominent Democratic state senator and gubernatorial aspirant argued that property taxes have increased under Christie because the governor cut rebates and municipal aid. This position misses the point entirely but says much about the New Jersey Democratic party’s self-imposed intellectual checkmate. In no small way, the status quo is undermining the progressive project. Democratic politicians are loath to admit this.
Zeitz concludes that “a strong Republican governor” could have changed this dynamic by engaging Democrats in a debate over whether they are living up to their values. Zeitz might play a more constructive role by helping Gov. Christie become stronger by making a forceful case against his erstwhile union-aligned Democratic allies. Gov. Christie is “weak” precisely because the state’s public sector unions and its legislative Democrats are so strong.