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BY ALAN J. STEINBERG
NEWJERSEYNEWSROOM.COM
COMMENTARY
On Election Night 2009, the newly elected governor, Chris Christie, promised to turn Trenton upside-down. Both supporters and critics of the Governor agree that he has done that with the introduction of his Fiscal Year 2011 budget.
No Governor's proposed budget ever is enacted without some modification by the legislature. Governor Christie, however, has done a superb job in educating the electorate as to the severity of the state's fiscal crisis and the necessity for budget reductions that will be painful.
Because of the Governor's groundwork and preparation, he is highly likely to achieve three historic fiscal objectives:- The passage of the Fiscal Year 2011 budget without the reenactment of the Corzine surcharge on incomes in excess of $400,000;
- Public acceptance of what I labelled in my February 16, 2010 column as" the New Christie Paradigm," in which cost control by local school district and municipal governing bodies, rather than state financial aid, is viewed as the means of keeping property taxes low;
- Legislative placement on the ballot and passage by the electorate this November of the Governor's proposed 2.5 percent "hard cap" on property tax increases.
All three of these objectives are essential to the revival of New Jersey's economy and the end of runaway property tax increases in the Garden State.
The first Christie objective, his refusal to reenact the Corzine income tax surcharge is a sine qua non in his efforts to attract new businesses and expand existing ones in the Garden State. The Corzine tax surcharge was toxic to small successful unincorporated businesses. Corporations considering moving into the Garden State were deterred by the additional tax burden the surcharge would place on top-level executives. The surcharge was intended to redistribute wealth, but instead it redistributed taxpayers by hastening the exodus of wealthy New Jerseyans to other lower tax states.
Business executives and entrepreneurs inside and outside New Jersey are looking to see if Christie can become the first New Jersey Governor to balance a budget by unprecedented draconian cuts without an income or sales tax increase. This is truly a test of the Governor's credibility. Like anybody else, Christie has had highs and lows in his political career. He has never, however failed a credibility test, and he will not fail this one either.
The Democratic Assembly and Senate will almost certainly pass a budget that includes reenactment of the Corzine tax surcharge. The message of the Democrat legislative leadership is one of class warfare, claiming that Chris Christie is favoring the rich in his budget at the expense of poor and middle class New Jerseyans.
This class warfare strategy will not work. It failed to stop President Ronald Reagan in 1981 from obtaining Congressional passage of his historic tax cut legislation which reduced the top income tax bracket from 70 to 50 percent. The Reagan tax cuts were the prime factor in his generating the longest period of sustained non-inflationary economic growth during the Cold War era.
Governor Christie knows this history, and he will use his veto powers to thwart the reenactment of the Corzine tax surcharge and any appropriations in excess of those in his proposed budget. The Democratic legislative leadership will not be able to enlist any Republican Senators or Assembly members to vote for an override of any gubernatorial vetoes.
Christie's victory on both the Corzine tax surcharge issue and appropriations will enhance his credibility in gaining acceptance by the electorate of the New Christie Paradigm. No longer will there be a continuous escalation of state aid to school districts and municipalities in a vain effort to contain runaway local property tax increases. The message of Governor Christie to property taxpayers is clear: It is the responsibility of your local municipal and school district officials to stop runaway property tax increases by keeping costs low. His victory on the tax surcharge issue will impress upon the electorate in general and school district and municipal officials in particular that this is a Governor one must take most seriously.
Governor Christie has pledged to provide tools to assist municipalities and school districts in their cost control efforts. His proposed constitutional amendment limiting property tax increases to 2.5 percent is the best such possible tool. It will provide enormous leverage to municipal and school district governing bodies in negotiating with local unions. Public opinion will overwhelmingly support passage of this amendment, and I have no doubt that Democratic and Republican legislators will provide the necessary 24 votes in the Senate and 48 votes in the Assembly to place the amendment on the November, 2010 ballot.
There is a compelling populist message in the Christie constitutional amendment proposal that must not be overlooked by the Trenton political community. The amendment takes away from Trenton bureaucrats the power to grant cap waivers. The authority to authorize taxation by school districts and municipalities in excess of the cap is vested exclusively with the voters in a local referendum. This Christie message of citizen empowerment is one that resonates strongly in this era of public anger and disillusionment with government.
In presenting his Fiscal Year 2011 budget, the Governor has been bold and willing to disregard the conventional political wisdom that has prevailed in Trenton throughout the past three decades. When he announced his candidacy for Governor at the New Jersey Performing Arts Center in Newark in early 2009, Chris Christie promised to govern as if he were a one term Governor. He certainly is doing that.
The good news for both Chris Christie and New Jersey, however, is that his success in attaining the three fiscal objectives described above will lay the foundation for both an economic revival and a more affordable New Jersey. This could well result in Chris Christie becoming a two term Governor as well.
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