newjerseynewsroom.com

BY CARL GOLDEN

NEWJERSEYNEWSROOM.COM

COMMENTARY

Like ill-behaved children in the classroom, municipal and board of education officers throughout New Jersey have been sent to the principal's office by Gov. Chris Christie, accused of failing to pay attention to their duties to control spending and allowing property taxes to rise to the highest in the nation.

While the Governor politely described his 33-point plan as a "tool kit" for local governments, the underlying message was blunt:

"The responsibility for property tax rates is a singularly local one and for decades you have failed to live up to it. Consequently, the time has come for the school principal (the state) to step in, show you how to do it, and see to it that you do. No more five percent salary increases or non-contributory health coverage or six figure severance packages."

If enacted by the Legislature, the Governor's recommendations will bring about the most fundamental change in the state-local government relationship in modern history.

It will give meaning to the consistently ignored reality that state government does not establish the property tax rate, or levy it, collect it, or spend it. Where, then, is the logic in the belief that state government can control it?

Much of the blame rests with both the Governor's office and the Legislature whose members historically have campaigned on promises to tame property taxes despite their awareness that — aside from state aid — funds allocated in the state budget have a negligible impact on property taxes.

There are nearly 1,200 separate and distinct local taxing entities — counties, municipalities and boards of education — with the power to levy property taxes and spend the funds they produce. They carry out the taxing and the spending with no significant state oversight or control. They are the sole deciders of where and on what the money is spent.

Property taxes are the only source of revenue for local governments and, despite periodic suggestions that other broad-based taxes be authorized, there is no appetite for doing so. The emphasis is on curbing spending and taxes, not extending them.

Despite a handful of governing bodies who've succeeded in keeping property taxes level or even cutting them, the average has reached $7,500, suggesting that fiscal discipline has been spotty. Christie's "tool kit" imposes that discipline from above.

By recommending caps of 2.5 percent on property tax increases and on negotiated salary and benefits increases for public employees, the Governor has made it clear that the days of local governments caving in to excessive salary demands and then turning to the state for increased aid to cover the cost — as has been the case for many years — are over.

He reinforced that message with his proposal to permit local governments to exceed the caps via a referendum. In other words, if greater spending is desired, permission must be granted by the voters.

The reaction of public employee unions was swift and predictable, vowing to fight a ceiling on wages and benefits and challenging it as an unconstitutional intrusion on their collective bargaining rights.

While Christie's proposals place responsibility for taxing and spending squarely on local officials, they also place in their hands a substantial advantage in the form of the caps which cannot be breached without a vote of their constituents.

The odds are there will be little stomach for a municipality or school district to seek approval for spending or taxing above and beyond the percentages established by Constitutional amendment.

There are nearly three dozen components in Christie's plan, including a process through which local governments will be permitted to opt out of the civil service system and to reform the binding arbitration procedure used by police and fire personnel to settle contracts, both of which will be fought just as ferociously as the caps proposal.

With the submission of his agenda, the Governor has again demonstrated he is not interested in piecemeal responses to problems; rather, he views issues in their broadest possible context and develops solutions equally as broad.

The Democratic leadership in the Legislature whose help Christie will need to secure approval of his program was cautious in its response, avoiding outright or across the board opposition while promising to cooperate with Christie in refining or amending his suggestions and reaching compromises on others.

Their reaction was another sign they are sensitive to taxpayer discontent as well as demands that decisive steps be taken to implement immediate and long term controls on spending and taxes. If left unchecked, the current system cannot be supported and the issue can be neither finessed nor overlooked any longer.

Whether Christie's agenda is too massive to be digested legislatively remains to be seen. However, if force feeding is the only other option, Christie has shown he's ready to undertake it.

Carl Golden is a senior contributing analyst with the William J. Hughes Center for Public Policy at Stockton College and formerly served as press secretary to Govs. Kean and Whitman.

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