For New Jersey taxpayers, the choice in today’s gubernatorial election is easy: Bret Schundler.
Jersey City’s GOP ex-mayor has a record of letting Garden State residents keep more of their money. Schundler’s Democratic rival, Woodbridge mayor Jim McGreevey, supports high taxes and plans a spending spree that leaves the specter of tax hikes looming like storm clouds above the Delaware River.
Schundler used his Wall Street wits to part the thunderheads he found over the Hudson River when he became mayor. Facing a $40 million budget gap in 1993, he bundled and sold investors the city’s non-performing tax liens. This innovation generated revenues and boosted tax compliance from 78 percent to 99 percent today. It also gave average homeowners a $1,200 annual property-tax reduction. Schundler boasts an 18 percent decrease in inflation-adjusted property-tax rates.
Schundler proposes $3.3 billion in tax cuts through 2006. He would eliminate tolls on the Garden State Parkway. Seniors would see the education segment of their property taxes cut halved. Businesses could deduct capital losses against gains and invest in real property in urban areas free of capital-gains taxes. Parents would receive a $500 per-child tax credit to cover out-of-pocket educational expenses. Schundler also would index tax rates so cost-of-living adjustments would not bump New Jerseyans into higher tax brackets. His plan forecasts $5.5 billion in tax revenues, permitting a $2.2 billion surplus.
McGreevey’s record, in contrast, should make taxpayers sweat. As a freshman state assemblyman, he voted for then-Governor James Florio’s notorious $2.8 billion tax hike in 1990. As the Newark Star-Ledger explained Sunday, this measure passed with the minimum 41 votes required. Had McGreevey fought for taxpayers, this detested tax gouge would have failed.
Two years later, McGreevey was elected mayor. He filled a $25 million deficit in a $60 million budget, in part, by raising property taxes from 62 cents per $100 in assessed valuation to 77 cents, a 24 percent hike. McGreevey also floated $34 million in bonds after a delay in state assistance. While the deficit vanished, the township’s debt grew 70 percent, leading Moody’s Investor Service to lower Woodbridge’s credit rating.
McGreevey would exempt more seniors from property levies, reducing taxes a minuscule $21.3 million. He also would deliver Homestead Rebate and NJ Saver property-tax rebate checks more quickly. However, he would exclude from the NJ Saver program those making above $200,000, “disqualifying close to 7.5 percent of high-income earners who now are eligible,” a campaign news release concedes.
Unlike Schundler, McGreevey refuses to pledge not to raise taxes. This frees him to increase levies to finance 65 new spending programs. These include school construction (at a Schundler-estimated cost of $152 million), $115 million to hire reading coaches and $56 million to end privatization of subcontracted services. The Star-Ledger says McGreevey’s initiatives would cost almost $400 million while Schundler calculates the fiscal 2003 bill at $1.8 billion.
New Jersey needs prudence, not profligacy. As the regional economy slows thanks to the September 11 terrorist attacks, the Garden State’s public finances should concentrate on essential services rather than cascade into brand-new activities. Tax cuts, meanwhile, would help retain, attract and spawn job-creating enterprises. Schundler’s mix of frugal spending and aggressive tax reduction is the state’s best bet for surviving the coming economic downpour.
New Jersey taxpayers should heed the advice of former congressman Jack Kemp (R., New York). “McGreevey thinks taxes are too low, and Bret thinks they’re too high,” he said last week. “So, if you’re undertaxed, you vote for McGreevey. And if you’re overtaxed, Bret Schundler is your guy.”