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Tuesday, March 16, 2010
Unintended Consequences of Christie's Jersey Buck-Passing
Earlier today, New Jersey Governor Chris Christie announced his proposed state budget for the upcoming fiscal year. The get-tough, clean-the-barn attitude has already met with fierce rhetoric. This portends some serious negotiating between a Democratic-controlled Legislature and the new Republican governor, as a new budget must be in place by July 1st. Plenty of time.
The proposed budget features an approximate cut of state funding to schools of about $800 million, with a cap on cuts to individual districts not to exceed five percent of their total budget. The plan seems to be to starve municipalities into fiscal austerity. The problem is that they have an alternative; they can raise property taxes on their own residents and businesses. Even worse, Christie has now given them plenty of political cover, including refusing to renew the Jon Corzine one-year income tax surcharge on income over $400,000. Jersey's own Treasury Department estimates the surcharge (which expired December 31st) generated about $1 billion; thus, its renewal would cover all of the proposed school cuts. This equates to, "we're cutting school aid by five percent so the rich can get a tax cut." This creates a political "perfect storm" for potentially crushing tax hikes.
Here's the explanation. Municipalities have two sources of funds: state aid, and their own tax base. Cutting state aid still allows towns to jack up their property taxes on residents and businesses. And there is appeal in doing this, if Christie's other proposal (among many proposals) to cap allowed annual property tax increases at 2.5 percent per year is added to the state constitution. The appeal for some towns will be to raise property taxes as soon as possible. And in the current environment, being able to blame Christie is like manna from heaven.
Christie still has the choice of making the difficult cuts directly, in and across state government, His rhetoric about making cuts in school aid in order to "share the pain" sounds equitable, but behind the sophistry lies a degree of cowardice, of weakness and an unwillingness to really make the tough choices and engage in the toughest fight. Cutting school aid just allows -- if not encourages -- towns to raise taxes and pass the blame to the Governor. Christie could not be more mistaken in trying to induce school district spending cuts. To do this, he needs to be able to change the people in each town who decide its budget. It is one thing to reduce state aid; it is another to change who decides how the money (from whatever source) gets spent. The latter is where the problem lies.
Christie's budget does absolutely nothing to change who decides on a district-by-district level where money is spent, so if you accept the notion that "waste" was a problem before, it will remain a problem since the "deciders" remain in place. The spendthrifts in government remain, untouched, under the Christie budget, and surely they will not be cutting salaries, benefits and other perks for themselves, their friends or families. They will, however, cut real services; they will reduce the number of teachers, aides and support personnel wherever possible before cutting the "fat," simply because they will retain the power to do so and will have been allowed by Christie to retain that power.
If you objected to the status quo in voting in November, Christie's reward to you is to give you more of the same. Christie's budget will help entrench these very same deciders and give them plenty of potent political ammunition to curry favor with voters, from all corners of the state, with kids in public school. If this is a strategy, someone ought to get fired real quick.
Perhaps the Christie plan may be to stoke such popular outrage as to cause local activists to overthrow their local fiefdoms, thus promising the possibility of "reform." But this assumes that activists, and thousands of parents, will blame their local officials for service cuts. These officials are already blaming Christie for a nearly one billion-dollar cut to schools. The "air war" on this issue has already been lost.
If Christie's commitment is really to fiscal austerity, then it is fair to ask why he is not pushing for it across state government instead of trying to pass the buck -- and the burden -- to municipalities. On purely strategic grounds -- never mind how this affects kids -- this is an absolute disaster.
From this vantage point, Christie's going after the path of least resistance -- the schools -- seems like bad policy and bad strategy. There may be plenty of lipstick on this pig, but at day's end we still have a pulled pork roll. New Jersey residents are in for large, real tax hikes combined with even more real service cuts.