What criteria should governments use to cut budget deficits and balance budgets? If they act like most American families, decisions would be based on what is best for children. In these very difficult economic times, millions of families have been forced to choose between food, shelter, clothing, education and health care when deciding how to spend what they have. Frequently the driving force behind the family’s budgetary decisions is what is best for the kids. Parents throughout the nation forego much for the sake of their children’s future.
When it comes to government budget cutting, children and the vulnerable are generally not the highest priority. Kids and those who are vulnerable get short shrift because they don’t vote. If budget cutting was done in a manner suggested by Amy Guttmann, President of the University of Pennsylvania, it would be on the basis of equity. “Don’t just balance the budget, balance the burden,” indicates Dr. Gutmann.
From my perspective, balancing the burden means everyone sharing fairly in the sacrifice based on their means. This is exactly the opposite of what occurred in New Jersey when Governor Christie de-funded various programs beyond the original budget he proposed in February. Governor Christie put a disproportionate share of the burden on our state’s children and our state’s most vulnerable residents.
There is no question that New Jersey needed to dramatically trim its long-term deficit, but it should have been done in a manner consistent with the historic values of New Jersey that ran through both Republican and Democratic administrations.
There is no doubt that we needed to reduce New Jersey’s overly generously state worker pension and health benefit packages. However, the health care benefit package that was embraced by the bill that passed the legislature should have been ironed out at the bargaining table by our tough-talking governor, not through a back-door deal with selected Democratic legislators.
The final deal should have included the increases in the retirement ages that were enacted by the legislature, but these changes should have been linked to the passage of the millionaire tax with the proceeds going towards reducing property taxes for New Jersey’s declining middle class and preserving key programs for children and the vulnerable.
To truly balance the burden in our state, we must once and for all reduce New Jersey’s over- reliance on property taxes as the primary means of funding government services. Property taxes are horribly regressive. They flunk every test of fairness as they bear no relation to the taxpayer’s ability to pay. On this most crucial of all fairness issue, Governor Christie has made very little progress and will, no doubt, increase the property taxes in our state’s urban areas because of his dramatic cuts to transitional aid to our cities.
I’m appalled that the governor reduced the Earned Income Tax Credit (EITC) for working families. The governor’s 5 percent cut of the EITC translates into a $300-a-year tax increase for working families. The $45 million savings that resulted from cutting the EITC was comparable to the $41.2 million urban transit hub tax credit given this year to the Campbell Soup Company to renovate its headquarters and create 50 new jobs over 10 years.
I’m stunned that the governor reduced by $139 million aid to New Jersey’s financially troubled cities like Trenton. Where is Trenton going to come up the additional $27 million they will lose? Without this additional cut, they are grappling with a projected $9.3 million deficit in the next fiscal year.
I can’t believe the governor was okay with cutting $55 million in college tuition grants (mostly for low-income students), $7.5 million in funding for clinics that provide health care to poor women (cuts mean higher cost to treat uninsured patients), $9 million in health care insurance for the working poor earning more than $115 per week, and $3 million from the NJ After 3 Program which provides high-quality after-school programming for 5,000 urban students.
Finally, I’m flabbergasted by the governor’s continued refusal to reinstate a ten percent millionaire tax on those who earn more than a million dollars annually (the top .6 percent of earners). Note the proposed Democratic increase would boost the percentage of income the State’s wealthiest would pay by an average of 1.1 percent (from about $231,368 to $262,863). After falling for two years in the wake of the financial crisis, executive salaries at America’s largest companies are soaring again. In 2010 they are up by 20 percent while average worker pay rose by 2.1 percent.
I’m equally disappointed by Senate President Sweeney’s tirade about the governor. Something doesn’t smell right. If you play with fire you get burned. If you play with snakes you often get bit. Neville Chamberlain should have taught him that appeasement doesn’t work with dictators. The more you give them, the more they want – their appetite is insatiable. Senate President Sweeney protests too much. I think he feels that if he yells loud enough we’ll somehow forgive him for being taken in by Governor Christie. It’s not going to happen.
New Jersey needed to balance its budget, but to remain “the shining city on the hill” we should not have done it on the backs of those least able to bear the burden. We are better than that.
Irwin Stoolmacher is President of Stoolmacher Consultant Group, which consults to the nonprofit sector.