This spring at public hearings, lawmakers on New Jersey’s budget committees listened to a long line of advocates from across the state with a long list of underfunded priorities. The needs, the concerns, and the spending asks of most were not too different from last year. Or the year before. Or the year before that.
It’s time to break this pattern. Instead of the annual ritual of scores of groups with important needs fighting for tiny scraps of an ever-shrinking pie of funding, New Jersey needs to take a serious look at making that pie larger.
And make no mistake: the pie has indeed been shrinking. Tax cuts for businesses and the state’s wealthiest families enacted toward the start of this decade have cost New Jersey between $7 billion and $10 billion in revenue since. And the ill-advised tax cuts passed last year will only serve to shrink the pie even more, to the tune of over $1 billion a year by the time 2019 rolls around. It’s no wonder the state faces chronic revenue shortfalls like the $436 million hole the Office of Legislative Services is estimating for the next 15 months.
And the pie will likely get even smaller this year, thanks to the slash-and-burn budget policies of the Trump administration. The president’s extreme proposal effectively ends the federal-state partnership. The pressure on the state to pick up the tab will be enormous, but covering even a sliver of the lost funds will be impossible without new revenue. The state already can’t meet its current obligations, let alone fill in the holes dug by a radical Trump budget.
Now is the time for action — not next year when New Jersey will be in an even deeper hole. Now is the time for lawmakers to raise new revenue.
When doing so, it’s important to focus on equity: Does the state ensure wealthy individuals and corporations don’t get disproportionate breaks and advantages compared with low-income and middle-class households? The four practical policy solutions below surely pass that test, and could raise well over $2 billion a year in new revenue for New Jersey:
Beyond these four policy proposals, there are plenty of other solutions that ought to be on lawmakers’ lists. Here are a few: applying the sales tax to services used most heavily by families with greater means (like interior designers, accountants, or bookkeepers); legalizing, regulating, and taxing marijuana; and working with other states to close the “carried interest” loophole at the state level — or, when the time comes, to “repatriate” big federal tax cuts for wealthy New Jerseyans.
New Jersey’s lawmakers have two paths from which to choose.
Inaction means that next year’s budget hearings will be a reprise, with many of the same advocates fighting for even fewer and smaller scraps from an ever-shrinking pie of resources.
The smarter path — one of tax fairness and budget adequacy — means that New Jersey can finally start to collect the revenues it needs to provide essential services, help those who are struggling, and invest in the building blocks of a strong economy. The results might not be automatic, or immediate — but make no mistake, there will be results: a stronger, fairer, and better state.