New Jersey Governor's Budget: Painful Cuts, Terrible Ideas, and Glaring Hypocrisy

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The budget proposal made by newly elected New Jersey Governor Chris Christie this past Tuesday is full of painful cuts, terrible ideas, and glaring hypocrisy.  Christie has promised to veto any attempted extension of New Jersey’s income tax increases on high-income earners, and has instead put forth a plan that would that would balance the state’s budget on the backs of lower- and middle-income families.

Painful Cuts

The New York Times reports that Governor Christie’s budget would lay off 1,300 state workers, cut public school aid by over $800 million, and reduce aid to towns and cities by nearly $500 million.  Christie’s plan would also close multiple state psychiatric facilities, eliminate cash welfare assistance for the able-bodied, increase the costs of participating in the state’s prescription-drug program for the elderly and disabled, and cut state-financed school breakfasts and rental assistance programs.  Absent any significant revenue-raisers, serious cuts of this type will be required.

Terrible Ideas

On top of the immediate cuts Christie is proposing for the short-term, the Governor is also seeking — in at least two ways — to permanently hinder New Jersey’s ability to finance vital public services.  First, the Governor this week expressed his support for enshrining a property tax cap in the state’s constitution.  While the details of the cap are still a mystery, it would reportedly be modeled after Massachusetts’ ill-advised Proposition 2 ½.  Christie’s preferred cap, like Massachusetts’, would limit increases in property tax growth to 2.5 percent per year.

Governor Christie is seeking to constitutionally limit the power of New Jerseyans’ elected representatives in another way, by capping increases in state spending on “direct state services” by more than 2.5% per year.  Again, while the precise details of this plan have yet to be revealed, the indication seems to be that Christie would like to move New Jersey closer to a Colorado-style TABOR regime (which has devastated that state’s public services).

Glaring Hypocrisy

In addition to the massive spending cuts and tax/spending caps that Governor Christie proudly champions, the Governor’s budget also includes a variety of less-publicized components that may surprise you given the rhetoric Christie has used in recent days.  Specifically, Governor Christie this week proudly declared that “I was not sent here to approve tax increases; I was sent here to veto them … And mark my words, if a tax increase is sent to my desk, I will veto it.”  Elaborating upon these remarks, Christie explained his belief that any tax increase would “kill a job market already on life support.”

But despite the unwavering nature of Christie’s rhetoric, his actual budget raises taxes in a number of ways.  Low-income families would be the first target of Christie’s tax hikes, as the Governor has proposed slashing the state’s EITC by $45 million.  This proposal is particularly surprising given the EITC’s reputation as one of the best work-incentives on the books.  President Ronald Reagan went so far as to refer to the federal EITC program as “the best job creation measure to come out of Congress.”  For a Governor who claims to be so concerned about the “job killing” aspects of tax increases, an EITC cut is a very strange proposal to make.

While Christie’s proposed cut to the EITC may represent the most glaring inconsistency between the Governor’s anti-tax rhetoric and his actual proposals, it is not the only example.  Christie has also proposed raising taxes on hospitals and ambulatory care facilities by some $45 million.  Moreover, property taxes would rise under Governor Christie’s plan as a result of his proposed suspension of the state’s property tax rebate program — a proposal the New York Times has described as being in violation of his own campaign promises.  And finally, the Governor’s decision to cut local aid by nearly a half billion dollars should be seen for what it is — a decision to shift the onus for raising taxes to the local level.  Local governments will, very predictably, be forced to compensate for at least part of these cuts by raising taxes on New Jersey residents.  Christie will undoubtedly try hard to distance himself from these hikes, but they will ultimately be an unsurprising, and necessary, consequence of Christie’s own proposals.

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