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New York Post

 

Gov's Gimmicks Won't Fix Jersey

January 12, 2007

By Steven Malanga

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New Jersey Gov. Jon Corzine's State of the State Address Tuesday was deja vu all over again. He repeated his promise, made during his elec tion campaign and again in his first State of the State speech a year ago, to provide beleaguered Garden Staters with relief from their sky-high property taxes.

The promise is wearing a little thin.

The new governor spent his first year in office doing little to restrain taxes, to put it mildly: Instead, he enacted a billion-dollar tax hike. At the same time, he rejected proposals even from within his own party to whack away at state spending—the underlying cause of high taxes—by trimming public-employee health and pension benefits.

While Corzine fiddles trying to figure out how to make good on his tax promises while avoiding the hard work of cutting state spending, Jersey's economy fizzles.

The causes of Jersey's woes are painfully obvious. For decades, New York City residents and firms, seeking a haven from high taxes and over-regulation, fled to New Jersey, boosting the state's population and its economy. But a steady diet of New York-like tax increases and business-toxic legislation has now sent Jersey residents and jobs heading for the exits.

The state's economy was anemic again last year, adding private-sector jobs at less than half the national rate. Even worse, much of Jersey's recent job growth has been in low-wage service employment—not industries with higher-paying jobs, like telecom and finance.

The dispirited business community doesn't see the harsh times ending any time soon. A recent New Jersey Business & Industry Association survey found that more than half the state's businesses believe that Jersey's economy will be worse in 2007; only 17 percent now say that their state is a good place to locate or expand.

Most surveys of the best places to do business in America now rank Jersey near the bottom, often right next to New York.

Just as disenchanted is the general public, weighed down by the nation's highest local property taxes and a bevy of steep state levies. The number of Jerseyans moving out has tripled in four years, to about 72,000 last year, notes the Census Bureau. That left the Garden State with an essentially flat 0.2 percent population growth rate. As a result, Jersey has ceded its place as one of the country's 10 most populous states for the first time since 1920.

Corzine has accomplished little in his first year in office that might staunch the outflow. After his $1.2 billion sales-tax hike last summer, he rejected proposals to offer property-tax relief funded by cutting sky-high public sector pension and health benefits, which are projected to consume a shocking 20 percent of the state budget by 2010.

Instead, the governor is looking to raise cash by selling off state assets, including a possible $10 billion spin-off of the Jersey Turnpike. Such moves would indeed free up state tax revenues to fulfill his promise to cut property taxes - but without simultaneously cutting the pace of state spending. As a result, the sell-off would leave Jersey in an even bigger hole once the one-time revenues run out.

In other words, it's fiscal gimmick, not real reform.

All this represents a startling turn for the Garden State. Forty years ago, it was a low-tax haven, 40th among states in its overall tax burden. As its neighbor New York raised taxes relentlessly, Jersey went on an unparalleled economic run, growing at twice New York's rate.

But that run is now over; Jersey politicians have transformed the state into one of the most business-unfriendly places in the nation, with among the country's highest taxes. The Garden State now seems stuck in the same kind of managed decline that has plagued the Empire State for the past 40 years.

And, if he offers only gimmicks in lieu of real reform, Jon Corzine will keep it that way.

From city-journal.org, Web site of the Manhattan Institute's City Journal, where Steven Malanga is a contributing editor.

Original Source: http://www.nypost.com/seven/01122007/postopinion/opedcolumnists/govs_gimmicks_wont_fix_jersey_opedcolumnists_steven_malanga.htm?page=0

 

 
 
 

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