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New Jersey needs the "toolkit" to keep good times rolling



November 30, 2010

New Jersey appears to be on a roll. This year, the Garden State improved its ranking - moving from dead last to 48th - on the Tax Foundation's Business Tax Climate Index, the Nets got a new owner with the desire - not to mention the financial resources - necessary to rebuild what is currently the NBA's worst franchise, and Mike "The Situation" Sorrentino lasted longer on "Dancing with the Stars" than David Hasselhoff, Michael Bolton, and Margaret Cho. So how does New Jersey keep the good times rolling?

While I don't think I have the expertise to assess the chances for success of the Nets or the "Dancing With the Stars" contestants, I can tell you that for New Jersey's tax climate to continue to improve, the state needs to enact the governor's proposed "tool kit" for local government. New Jersey has the highest property taxes in the nation. To combat this, in July the Democrat-controlled legislature passed and Governor Chris Christie signed into law an annual two percent cap on local property taxes increases. The cap is lower than any previous restriction (the previous cap had a four percent ceiling) and limits to four (previously there were 14) the number of exemptions to the cap local governments can claim. The idea behind the cap is to enforce fiscal discipline by government entities, of which New Jersey has about 1,600.

But even with the cap in place, the high and growing cost of government in New Jersey places tremendous pressure on local governments to increase taxes either through an exemption or by seeking approval of voters. Therefore, it is necessary to find ways to reduce the cost of government to relieve some of the pressure for higher taxes.

To reduce the pressure, Governor Christie has proposed a tool kit for local government, which is a package of 33 bills that would give local governments powers to lower the cost of government and remain within the cap. The tool kit contains reforms to employee benefits, pensions, collective bargaining, and civil service. Among the reforms are a requirement that public employees contribute more to their health costs, an increase in the retirement age, a cap on arbitrators' awards for union contracts, and a proposal to allow government to opt out of the civil service system to consolidate services. These reforms are important steps on the road to reforming New Jersey's tax climate.

Although all of these tool kit bills have been introduced in either the General Assembly or State Senate and some have been enacted into law, the majority of the tool kit and most of the essential reforms, have yet to be considered. But time is running out before costs of government increase again. It would be a shame if New Jersey's roll were to suddely stop. If you live in New Jersey, the only way to keep the good times rolling is to click here to find your legislators and call or write them, and urge them to pass the tool kit.


 

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