newjerseynewsroom.com

BY ALAN J. STEINBERG

NEWJERSEYNEWSROOM.COM

COMMENTARY

The late Alan Karcher was the most effective Speaker of the New Jersey Assembly over the past 50 years. He was a brilliant lawyer and an incisive scholar of public policy.

In my view, however, Karcher's major legacy was his book, New Jersey's Multiple Municipal Madness, published in 1998. In this landmark work, he described the major historical causes of New Jersey's excessive number of municipalities and school districts.

Karcher established consolidation of municipalities and school districts as the major challenge facing New Jersey government in this era, both from the standpoint of efficiency and cost reduction. He set forth some possible solutions in terms of compulsory consolidations or incentives for voluntary mergers.

Yet 12 years have passed since the publication of New Jersey's Multiple Municipal Madness, and there has been minimal activity in the Garden State in terms of municipal and/or school district mergers. Even such halfway measures as shared services among jurisdictions have been few and far between. There has been no significant activity towards enacting mandatory regional bargaining of teachers' contracts, which is also a key cost control measure.

Enter new Governor Chris Christie, 2010.

Christie's election in 2009 was largely due to continued escalation of property taxes. During the campaign, he emphasized the need for municipalities and school districts to reduce their own costs, rather than simply relying on state aid. Among the tools for achieving cost reductions would be shared services and/or voluntary mergers with neighboring municipalities and school districts.

In forecasting the need for municipalities and school districts to rely less on state aid, Christie displayed a great deal of budgetary perspicacity. He now is simultaneously faced with astronomic budget deficits of two billion dollars for Fiscal Year 2010 and nine billion dollars for Fiscal Year 2011. Raising state income, sales, or corporate taxes is not an option for the Governor, as such increases would result in further deterioration of New Jersey's economy.

Accordingly, in crafting a balanced budget for Fiscal Year 2011, Christie has no alternative but to make serious cuts in all areas of the budget, including municipal and school district aid. Conventional wisdom holds that in order to make up for reductions in state aid, municipalities and school districts will be forced to increase property taxes.

This is, however, where we will see whether Chris Christie's "new paradigm" works.

Christie himself has never used the phrase "new paradigm" to describe his administration's new and indeed revolutionary approach to municipal and school district expenditures. It is abundantly clear, however, that a paradigm shift is taking place with the advent of his administration.

Under his predecessors, Republican and Democrat, the conventional wisdom was that abundant state municipal and school aid was the key to keeping property taxes low. This approach never really worked in practice. The actual effect of increased state aid was to encourage municipalities and school districts to use their additional monies for new and expanded programs. Property taxes increased, rather than decreased, as municipal and school district spending continued to rise out of control.

Christie's approach is to tell school districts and municipalities that the gravy train of rising state aid which financed their ever increasing spending is over and that, in fact, decreases are now unavoidable in order to balance the state budget without ruinous state tax increases. The hope is that at long last, under Christie's new paradigm, school districts and municipalities will be forced to economize and consolidate or engage in shared services with their neighboring communities. This will eventually facilitate property tax decreases.

Ronald Reagan once said, "You cannot stop your profligate son's irresponsible spending unless you cut his allowance." While Christie himself may not be aware of this Reagan quote, it is clear that it embodies the approach of his administration to school district and municipal budgets and property taxes.

Will Christie's new paradigm work? Nobody can predict the outcome with certainty, but it is clear that the old paradigm has failed. Christie certainly is entitled to the opportunity to embark on a different course.

My feeling is that the Christie approach, over time, will work. At first, municipalities and school districts will increase their property taxes in order to compensate for reductions in state aid. This will hurt Christie politically in the short run, but it will also result in the defeat at the polls of incumbent municipal officials, school board members, and school budgets. Once that happens, municipalities and school districts will economize and finally seek consolidation and/or shared services with their neighboring communities. At that point property taxes will decrease and governing efficiency will increase.

The irony is that New Jersey's most conservative governor of the past 60 years, Chris Christie, may achieve breakthroughs in municipal and school district consolidations envisaged by Alan Karcher, one of New Jersey's foremost liberals. Some pundits have described Christie's approach as a gamble. If so, it is a gamble well worth taking.

Alan J. Steinberg served as Regional Administrator of Region 2 EPA during the administration of former President George W. Bush. Region 2 EPA consists of the states of New York and New Jersey, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, and seven federally recognized Indian nations. He currently serves as Public Servant in Residence at Monmouth University.