Hit & Run

What New Jersey Makes, the Government Takes

|

New Jersey's six-day government shutdown has ended with the expected whimper: Legislators and Gov. Jon Corzine have reached a budget compromise designed to soften the blow of Corzine's proposed tax increase.

From his rogue fiefdom of Trenton, Corzine has been proposing to hike the state sales tax from 6 percent to 7 percent, arguing that the increase will help eliminate a $4.5 billion budget deficit. His fellow democrats in the state legislature, however, still bear the scars from Gov. Jim Florio's much more radical sales-and-income tax hikes in the early 1990s, which propelled Florio straight to Palookaville and set the stage for the rise of Christine Todd Whitman. Tax fans have rushed in to say toldja so, arguing that Whitman's rollback of the Florio tax is what got the Garden State into this jam. You'd have to be a real precious-metals believer to think that a tax cut enacted more than a decade ago, at a time when scientists claimed the Dow Jones Industrial Average would never top 3,000, explains a $4.5 billion shortfall in a $31 billion budget today. There are few people like that in the New Jersey assembly or state senate, and the impasse over the budget resulted in a shutdown of the state government late last week.

As Bill Clinton and Newt Gingrich discovered, the real danger in a government shutdown isn't the Hobbesian nightmare but the Emperor's New Clothes. Once the citizens get a sense of how little they miss the services Uncle Sam and Uncle Jon are providing, we may have a real revolution on our hands. But clever Jersey lawmakers built in a safeguard by not allowing casinos to operate without the state-employed inspectors who surely do a bang-up job of something or other. The $20 million hit to Atlantic City's casinos put pressure on Trenton to resolve the issue. According to reports, the compromise will allow the sales tax increase to go forward, but devote half of the revenue to offsetting property taxes for the next ten years—at which time somebody will be no doubt be arguing that if only Corzine had gotten to use all that tax money, New Jersey wouldn't be having so much trouble with its 2016 budget.