More Taxes Won't Cure New Jersey's Poor Fiscal Health, New Analysis Shows

(Alexandria, VA) -- Governor Jon Corzine's massive tax hike will do little to alleviate New Jersey's budget woes and attract new residents, according to a new study from the non-partisan National Taxpayers Union Foundation (NTUF). After reviewing years of data, NTUF found that despite over $3 billion in tax increases since Fiscal Year (FY) 2002, New Jersey is still sliding further into debt.

Study author Sam Batkins noted, "From FY 2000 to 2002, spending in New Jersey increased 21 percent. Meanwhile, as an economic slump set in and unemployment rose, revenues actually declined 23 percent!" This spending splurge gave lawmakers in Trenton an excuse to pass the overdue bill onto taxpayers.

The study also found that if New Jersey had restrained spending to population growth plus inflation over the last ten years, the state's budget would be approximately $42 billion, or about $8 billion less than the budget Governor Corzine submitted. Taxpayers could have saved approximately $900 per capita if Trenton had enacted spending limits.

New Jersey has eclipsed most of the nation in nominal tax hikes in the past few years and it is still one of only ten states that have a structural deficit. "Regrettably, incoming Governor Jon Corzine has not learned from New Jersey's profligate past, and has proposed a 9.2 percent budget increase, along with $1.8 billion in additional revenue. It seems Mr. Corzine's focus on winning elections kept him from reading the history books," Batkins added.

The Governor's budget includes a myriad of tax and spending increases even though Corzine himself stressed that overspending is a major concern for taxpayers. The foundation of his new scheme is a $1.4 billion sales tax hike (including a 16 percent rate increase). If enacted, New Jersey would have the second highest state-level sales tax in the nation.

Spending is also set to increase by record amounts. Though some low-level programs will be slashed in the budget, the state's retirement system and health care spending will continue to fuel budget growth. The issue brief recommends a transition from a defined-benefit retirement plan to a defined-contribution arrangement to lessen the state's future burden. In addition, Batkins recommends that New Jersey emulate some of the health care reforms currently taking place in South Carolina and Tennessee, where private health care accounts and a consumer-driven market are favored over blanket state coverage.

"If Governor Corzine thinks simply adding to New Jersey's already high tax burden will drive economic growth and fill the coffers, why is the state still mired in deficits after soaking residents for $3 billion in additional taxes?" Batkins concluded. "New Jersey government has played the role of tax-hiker well over the past few years. After billions of dollars in higher taxes and increased debt, perhaps it is time to audition for a different part, one in which elected officials will learn the lines of fiscal discipline."

NTUF is the research and educational arm of the 350,000-member National Taxpayers Union. Note: NTUF Issue Brief 154, New Jersey's Tax Hikes: Sowing Disaster in the Garden State, is available online at