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Washington Examiner


Public-Sector Unions Run Amok Using New Jersey's State Budget

October 06, 2010

By Steven Malanga

Part three of a five-part series

When Cy Thannikary left India to come work at the United Nations in Manhattan, he settled in Flushing, Queens, and loved the excitement of living in the city. After starting a family, though, he traded New York’s hubbub for Freehold, New Jersey, a quiet suburb with lower taxes and affordable housing.

That was 25 years ago. More recently Thannikary felt like he was back in New York as he watched his taxes soar. “Politicians in New Jersey have treated their citizens as ATMs,” he complains.

For more than a century and a half, New Jersey, nestled between New York City and Philadelphia, offered commuters like Thannikary affordable living in pleasant communities. Eventually, New Jersey’s congenial living even attracted corporations escaping New York’s rising crime and taxes. The state flourished.

Today Jersey is a cautionary example of how to cripple a thriving state.

Increasingly muscular public-sector unions have won billions in outlandish benefits and wages from compliant officeholders. A powerful public education cartel has driven school spending skyward, making New Jersey among the nation’s biggest education spenders, even as student achievement lags.

To fund this extravagance, the state has relentlessly raised taxes on both residents and businesses. Jersey’s cost advantage over its free-spending neighbors has vanished: It is now among the nation’s most heavily taxed places. And despite the extra levies, the state has faced perpetual budget crises for most of this decade even during the best of times nationally.

With 62 percent of its state and local workers organized, New Jersey has the second-highest level of public-sector unionization in the country, behind only New York, according to

The unions have wielded their clout to win among the richest benefits and highest pay of government workers anywhere. Not only are health and pension benefits for state workers--including the possibility of retiring at 55 with cost-of-living pension adjustments for life--plusher than the private-sector norm; on average, they’re 10 to 15 percent above what other state governments grant workers.

Hefty tax hikes have led many private sector workers to reconsider their choice to live in Jersey. When Jerry Cantrell moved to Randolph, N.J., from a Pennsylvania suburb ten years ago so that his wife could take a New York corporate job, he knew that his property taxes would go up. But he didn’t expect them to keep rising--nearly 50 percent since he moved.

“Somehow you don’t believe they can keep going up so much,” complains Cantrell, who now leads a taxpayer group.

Faced with these burdens, Jersey voters nonetheless turned to U.S. Senator Jon Corzine, D, who, heavily backed by public-sector interests, won the state’s 2005 gubernatorial election.

He raised the state’s sales tax by $1 billion, promising the money would go to property tax relief. When the national recession hit, Corzine eventually suspended property tax rebates for most residents, leaving them with his big tax increase by little tax relief.

At that point, even New Jersey voters grew frustrated. Despite an enormous effort to reelect Corzine, heavily supported by the powerful New Jersey Education Association, Republican Chris Christie defeated Corzine in 2009.

Since then, Christie has earned a national reputation with his blunt talk about unions and has vowed to cut taxes and spending and especially to reform overly generous public-employee pensions. But he is facing a strong challenge from public unions.

Further, New Jersey is part of a cultural shift that is changing politics in many northeastern areas, as some high earners abandon traditional fiscally conservative values and vote liberal instead.

In short, New Jersey has caught a bad case of the blue-state blues. We will discover in the next few years how permanent that case may be.

Original Source:



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