The Economic State of New Jersey

Writing at RealClearMarkets, the Manhattan Institute's Josh Barro argues that New Jersey Gov. Chris Christie is starting to restore some fiscal sanity in the Garden State:

Here's some good news for New Jersey residents, who pay more in state and local taxes than people anywhere else in the United States: earlier this month, New Jersey Governor Chris Christie released a budget proposal that contains no tax increases. He would even sunset, on schedule, a one-year "temporary" increase in the state's income tax.

This is a refreshing shift for the Garden State, where thirty years of governance by Republicans and Democrats has pushed state and local taxes ever higher, from the 10th-most taxed state in 1980 to #1 today, according to the Tax Foundation. And it means Christie has made an impressively austere proposal, given that New Jersey's $10.7 billion budget gap is one of the country's largest, on a percentage basis.

The best thing about Christie's approach is its comprehensiveness. He's not just saying "cut spending"—though of course, he is saying that, in all areas of the state's budget. He also recognizes that state and local spending are interrelated issues, so he's proposed a property tax cap to make sure that state spending cuts don't just drive up local property taxes. And he's proposing institutional reforms that will enable localities to cope with aid cuts by reducing spending.

Read the whole thing here. Back in January, economist Eileen Norcross explained what it will take to end New Jersey's fiscal nightmare.

Comments

[Jeffersonian]

Is it too soon to ask if Christie is available in 2012?

[prolefeed]

Yes. He has to actually deliver on this proposal, which the unions and legislature will do their damndest to torpedo.

[Jeffersonian]

Agreed, though just saying this in NJ makes him a Horatio at the gates in my book.

[micsolana]

Josh Barro — also a good cook, apparently.

[prolefeed]

Proposing to not raise taxes, and preventing a thoroughly Democratic legislature from ignoring one’s budget proposals and ramming through their agenda, are two different things, as RINOs like the governors in California and Hawaii have shown.

But, Christie is off to a good start.

[prolefeed]

And, if this is an opening offer, and not a line drawn in the sand, then the outcome will be taxes going up.

A better opening offer would be to slash spending to the point of getting big tax increases, and then negotiate for a small tax increase.

[not joe]

God bless Christie, kicking union ass in some of the toughest neighborhoods in the country!

[Nick]

If the public responds well to this plan, the politicians will have to give a little or they’ll be out. Either way, good.

[Lost_In_Translation]

“Back in January, economist Eileen Norcross explained what it will take to end New Jersey’s fiscal nightmare.”

Not gonna go to the link, but if she said anything other than “Burn the mother down”, she’s being unserious.

[alan]

There is an easy way to solve this problem and it is the Krugman solution, though he hasn’t fully realized where his latest screeds have lead him.

He believes the US debt isn’t high enough to generate enough economic activity to fuel the next bubble, and there isn’t enough money being printed to get us out of a ‘liquidity trap.’

Well, why not print enough paper money to cover all public debts, and while you do that, to expand that good wholesome debt even further, stop taxing people altogether? I mean assuming the rationale behind Krugman’s brand of Keynes is sound in the first place.

Throw in enough paper from the Fed to cover the state budget crises and these chest beatings about the, in his words, ‘state level anti-stimulus’ that he believes counteracts the benefits of the stimulus would be entirely unnecessary from Krugman.

[Aresen]

This is also known as the “Zimbabwe solution.”

[alan]

Krugman’s ignorance is something out of a freakshow. You recall the analogy he used to justify inflation in one his latest books. The group of parents who exchanged an internal currency for babysitting purposes. When some parents hoarded their hours, it created an ‘inconvenience’ down the road for those who overused the system (and never mind the inconvenience to the parents had to go through to save up hours previously, Krugmanomics is all about NOW! NOW! NOW!), so his solution was to inflate the internal currency to deal with the rigid set of bucks in circulation?

Krugman forgot several thousand years of human history to come up with this answer. How has man dealt with these problems before? Denominations. Not inflating, denominating which allows price adjustments to go downwards when needed.

That simple and that tragically farcical when you think of the misspent effort to rewrite an old lesson to fit into a bent worldview.

[Hobo Chang Ba]

What Krugman is obviously too stupid to realize is that government initiated inflation is fucking regressive as shit. In fact, it might be THE most regressive tax on the poor – it’s at least as regressive as a hidden sales tax.

[TP]

You kid. I don’t. The rising monetary inflation is killing state budgets. The Fed will eventually have no choice but to bail out the states. In fact, that was a large part of Stimulus. State pension funds can’t keep up with inflation anymore than a personal savings account can.

[capitol l]

He could save the state some cash by pardoning the ms patient and the airport gun dude.

[TrickyVic]

The ariport gun dude’s charges were dropped. You can’t pardon someone not convicted.

[capitol l]

I guess I could have read the article a little closer.
Well anyway, free the ms guy and give airport gun dude back his gun.

[TrickyVic]

Didn’t California cap property taxes?

[wayne]

No. Californians enacted prop 13 about twenty years ago that fixed the growth of property taxes to a maximum of 1% per year. The tax on a home is set at 1% of its latest sale price, and then inflated at 1% per year.

[TP]

Christie’s going to need a State Constitutional Amendment. There’s something in NJ called Abbott School Districts. In NJ, education for 5 -18 year olds is a Right. the State Supreme Court ruled on a number of Abbott cases. Read for yourself.

http://en.wikipedia.org/wiki/Abbott_District

The problem in NJ is not sales or income taxes, it’s local property taxes. There are too many local school districts. Too many high paid administrators. There needs to be consolidation of many of these districts. Christie will be unsuccessful. I don’t care what the article says, Christie is simply cutting spending without addressing the underlying problems. Under Christie’s plans, only the people on the bottom will be hurt. Like my cousin, who is a teacher’s aide, and doesn’t make shit to begin with. NJ has one of the highest median incomes in the country, yet we have some of the poorest cities.

I hope I’m wrong, but I just don’t see it happening.

[cynical]

As the teachers’ unions remind us unintentionally, “entitled to an education” doesn’t “entitled to a good education”.

[Apostate Jew]

As a resident of New Jersey, I’d like to say, “We’re number one!”