Opinion: New Jersey Needs to Do the Right Thing — Raise Taxes

Mark Weber | February 17, 2015 | Opinion
The state is facing a well-documented array of fiscal problems -- and there’s only one way out

Mark Weber
New Jersey needs to raise taxes.

It’s pointless to deny this. Our state simply doesn’t have enough money to meet its obligations, and there’s almost no extra spending left to cut. We need more revenue, and the only way we’re going to get it is by raising taxes.

I know there is a cottage industry in Trenton that exists primarily to tell us that the state is way overtaxed and spends money faster than Chris Christie can rack up a travel bill. But the truth is that New Jersey is already way behind on paying for critical services and infrastructure:

According to the governor’s pension commission, the state underfunded pensions and benefits by $3 billion last year. The pensions alone have a $37 billion unfunded liability, making them one of the worst-funded public employee pension systems in the nation.

New Jersey Policy Perspective recently released a study that shows our pensions are stingy compared with the rest of the nation. These modest benefits, however, are a legal obligation the state has to employees who have already done the work for which pension payments are compensation.

The state can’t simply walk away from this. Lawmakers have already jacked up employee contributions and attempted to cut cost-of-living increases on current retirees. Now it’s time for them to demand that the state do its part; the only way that can happen, however, is if New Jersey raises more revenue.

The Education Law Center recently reminded us that the state has now underfunded school districts by $6 billion since the passage of the School Funding Reform Act in 2008. Meanwhile, important school programs have been cut, preschool expansion languishes, and many of our school facilities are crumbling.

In the past few years, the state has imposed what are essentially unfunded mandates on local districts by greatly expanding teacher evaluation systems and changing the statewide tests to a computerized format. The state can, of course, make its case that these are necessary changes (even if many of us who work in education think they are not). But it should at least provide some funding as a way of reducing the fiscal burden on local school districts.

NJ Spotlight’s former editor Mark Magyar notes that Christie has increased transportation debt by a billion dollars, yet our infrastructure remains woefully inadequate. Christie’s raids of the ARC tunnel and turnpike funds were one-shot “fixes,” but the result has actually left us deeper in debt.

Fully 35 percent of the state’s bridges are structurally deficient or functionally obsolete. Our Hudson River crossings are in need of serious repair. Yet Facing Our Future finds we’re spending $1 billion to $2 billion less per year than needed to develop a modern transportation system. There’s no way New Jersey can compete in a 21st century economy without upgrading its roads and railways.

These are three of the largest budget items New Jersey continues to underfund; there are, however, many others. We need to shore up our electrical grid and invest in clean energy. Open space preservation and shore rebuilding continue to lag. Tuition at the state’s colleges and universities continues to rise for our cash-strapped students. Ongoing public health and safety needs have to be met.

And as our economy continues to limp along, we must remember that we have a moral obligation to help the neediest among us. One in eight New Jersey households are experiencing food insecurity. Only Florida has worse problems with chronic unemployment. It is callous and cruel for the state to refuse to give more help to our neediest citizens.

But this is were we are — and only because we refuse to have an honest conversation about our need to raise taxes.

Of course, New Jersey’s middle class and working poor are already taxed at substantial rates. However, according to a recent study by the Institute on Taxation and Economic Policy, the top one percent of families in earnings pay a state and local tax rate that is 3.6 percentage points lower than families in the bottom 20 percent.

Keep in mind that the vast majority (81 percent) of the income growth in New Jersey since the Great Recession has gone to this same top 1 percent of households. It is reasonable and fair to ask the wealthiest of us to pay a tax rate that is at least as high as the rate paid by the state’s working poor.

Will that be enough? Almost certainly not. Which is why the conversation needs to begin today about how we can further raise state taxes in a way that minimizes the sacrifice for the citizens who are hurting the most. Generating more revenue and tax reform must go hand in hand.

Of course, it’s impossible to imagine Gov. Chris Christie supporting any increase in taxes so long as he harbors national ambitions. Moderate, fiscally responsible Republicans have long been purged from his party.

But to be fair, Democrats have often avoided speaking forthrightly about our need for more revenue. Which is why, with a gubernatorial election on the horizon, it is incumbent on all of us to demand that politicians on both sides of the aisle explain their plans to get New Jersey’s fiscal house in order — without gimmicks, one-time revenue shots, or deeper debt.

New Jersey can’t put the inevitable off any longer: we have to raise taxes. The only real question is how we’re going to do it.

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