newjerseynewsroom.com

BY MURRAY SABRIN

COMMENTARY

Governor Christie's first budget was passed by the Legislature before the June 30th deadline, but not before three Republican holdouts, Michael Doherty in the Senate and Allison Littell McHose and Michael Patrick Carroll in the Assembly vowed not to vote for the $29.4 billion budget and the supplemental bills containing tax hikes.

After the last minute give-and-take, the three most fiscal conservative members of the Legislature "held their noses" and signed on. The Governor signed the budget bill at a ceremony in South River, reiterating that the state needs a constitutional amendment that would cap annual property tax hikes at 2.5%.

Governor Christie's property tax cap allows residents to override the 2.5% cap. What is the point of a cap then? Self government means that voters should be able to determine how much they want to spend on municipal services and schools. Local officials are supposed to be held accountable to voters who "hire" them at every election. If the officials are not good stewards of the public's money, they should be fired by the voters when they seek another term in office.

If homeowners and residents in upper income towns want to increase spending on municipal services by 5% or more, they should go for it. After all, it's their money. The governor should not object to self government. Besides, a 2.9% cap is an unwarranted interference in local governance.

To limit property tax increases, state government should give mayors and council as well as boards of education the tools to negotiate with police and teachers' unions so taxpayers are not raked over the coals. Municipalities should not be at a disadvantage in negotiating with unions over salaries and work rules. Eliminating police salary arbitration should be the first reform enacted.

However, the Governor and the Legislature are not addressing the real issues facing the state: the redistribution of income from the suburbs to the cities, the unfairness of school property taxes and the entitlement philosophy that undermines most state spending.

The solution to the redistribution of income and high property taxes is 1) phasing out the state income tax over the next three years so residents around the state will have more of their money to pay for local services; 2) municipalities should charge fees for services; 3) and phasing out the entitlement spending that is driving costs higher every year in the state.

For example, in towns with swimming pools, like the one I used to live in, the town charged a fee to use the facility. This principle could be extended to libraries and schools. In fact, schools are "outsourcing" summer school this year; parents have to pay tuition for classed their children will be taking. In the fall, schools are implementing athletic fees. In other words, fees for services are being introduced in towns to deal with the fiscal crisis.

The next fiscal reform should be phasing out school property taxes over the next three years. The angst over property taxes will end once-and-for-all as municipalities no longer tax to fund public education. Parents would be in charge of education spending as teachers and administrators would have to structure the nonprofit schools for optimal performance — high quality and reasonable costs. In short, the empowerment of parents in education decisions would be maximized.

Critics will object that the "dismantling of public education" will be intolerable for children, but what they really mean is that they don't want to eliminate the public school monopoly. Frederic Bastiat said it best more than 150 years ago:

"Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all."

And entitlement spending too must be phased out. Nonprofit institutions should be responsible for delivering health, counseling and other services the state, counties and local governments now provide. Phasing out of government welfare spending does not mean that people should suffer. On the contrary, it means the people of New Jersey would contribute directly to the best organizations that are assisting our fellow citizens in need. Charitable giving is humane; as Bastiat remarked, the welfare state is "phony philanthropy."

If Chris Christie embraces unabashedly and unapologetically the principles of limited government and free enterprise, his next three budgets will reduce spending by billions of dollars. At the end of his first term, state spending should be at least $15 billion lower than it is today. Fiscal conservatism would then be a reality in New Jersey.

Murray Sabrin is professor of finance at Ramapo College. He was the Libertarian Party nominee for governor in 1997 and a Republican candidate for the U.S. Senate in 2000 and 2008. Check www.MurraySabrin.com for more of his writings.

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