Why New Jersey’s Government Shut Down
In Another Childish Political Battle
Piecing together the real story of why New Jersey’s government shut down for a few days over the 2006-2007 budget impasse was developed from various articles from media outlets and knowledge of the infantile games played by the political class.
The upstart, Governor Jon Corzine, conjured up a massive $30.8 billion budget without consulting the Democratic power brokers in the Senate and Assembly. The cornerstone of his budget was a 1 percent (NOT a penny) increase in the sales tax (from 6 to 7 percent), a 16.7 percent increase, which theoretically should realize an additional $1.1 billion in revenue costing the average New Jersey family $260 per year. Counting all other tax increases, tuition increases at state colleges, etc., the average family of four will be hammered with new taxes to the tune of about $3,500 a year, an enormous sum for a middle-class family.
The state constitution requires that a balanced budget be in place by June 30th at midnight.
Democrats in the Assembly, who are up for re-election every two years, worried about how this bombshell would be received by their constituents. New Jersey is divided into two classes of Democrats: southern Democrats and northern Democrats. The northern Democrats, which control heavily minority areas like Newark and Orange, are repeatedly elected by citizens even if they decide to put Saddam Hussein, Joseph Stalin and Adolph Hitler on the ballot; they would win in a landslide. They could have as well told the same acquiescent citizens the sales tax was being increased from 6 to 16 percent. It would make little difference. They would simply tell their constituents that the money was going to fund “vital” programs. It was the southern Democrats, headed by Assembly Speaker Joseph Roberts, who were shaking in their boots. For they well remember when former governor Jim Floria raised taxes by $2.8 billion in 1990. The Democrats were massacred in the subsequent election.
In mid-June, Roberts and other Democratic leaders met with Corzine and announced that a sales tax increase was dead in the Assembly. But Corzine, for good or for bad, held firm. He told them if the sales tax was not passed, “draconian cuts” would be necessary everywhere. Let us not forget that this battle pitted Democrats against Democrats. The Republicans, a distinct minority, were never considered in the equation, as they would be opposed to the sales tax increase to the man.
Corzine then told the Democratic leaders that it would be necessary to shut down the state if his sales tax was not made law, for he intended to challenge the status quo that has run the state since eternity. Democratic leaders, disbelieving he would take that drastic action, held firm in their position as well.
On July 1, Corzine signed an executive order shutting down all but “essential” government services. With the shutdown, 45,000 state workers were furloughed plus an additional 55,000 private workers were put out of work. State workers who work at the racetracks, lottery and casinos (generally in the southern part of the state) were considered non-essential. Now that makes little economic sense as these people are involved in direct revenue raising activities until you examine the underlying game playing. Corzine wanted the southern Democrats to feel the pain of their constituents. It was a deliberate action to bring the recalcitrant lawmakers into line.
Will Furloughed State Workers Be Paid?
There was NEVER a question state workers would not be paid. More importantly, if the state workers would not be paid, why did New Jersey residents not witness 50,000 state workers campaigning for a balanced budget at the state house in Trenton when those same people protested potential cuts in their health care and pension benefits. That’s because they quietly knew they would get their paychecks perhaps a few days later than usual. In the meantime, they had a lovely extended but paid July 4th holiday. Not only that, but now we can expect thousands of hours of overtime to make up for the lost time.
The irony of the decision to close most government offices was that the public was lead to believe that these people would not be paid. Of course they will be paid (that decision has already been made), so why the political treachery? The politicians can’t alienate the largest voting block in the state. Let us not forget that the governor will be coming up for re-election in 2009, and he may have aspirations involving the White House in 2012. So the governor needed to show he was “doing something” about the budget impasse.
Corzine and the disgruntled Democrats finally came to agreement, the budget was passed, and all state workers are back at their posts. But the only way the budget was passed was to load it with $350 million dollars in pork, with $204 million going to Democratically controlled municipalities, $3 million to Republican controlled districts and the balance to split or uncertain districts within the state. Somehow the words “worthy” and “vital” seem to always sneak into the equation.
$71 million of the grants were awarded to Newark, which is almost totally supported by the citizens of the state. Newark citizens only pay 5 percent of the cost of their infrastructure and education bills.
Next Year’s Budget
Even as the budget prediction for next year predicts more chaos, ten minutes after the budget was balanced, Corzine laid out plans to borrow $7 billion on the empty premise of saving money by consolidating services throughout the hundreds of independent districts and municipalities throughout the state. Herein we have the classic misleading dialog about the enormous sums of money that will be saved by consolidating duplicate administrators and consolidating fire and police. The $7 billion will be used as an enticement to overwhelm the objections of the people who want to continue their independence from the machine.
The proverb, “Those who ignore history are doomed to repeat it,” immediately comes to mind. How many times have the people been sold a bill of goods about cost savings when after a few years their taxes continue to rise to support the new infrastructure and personnel that seemingly pop up in larger administrations? One of the dire consequences of consolidation is that volunteer fire departments, which are able to purchase excellent equipment (since they don’t have any labor costs), will be replaced with paid professional firefighters with the inherent cost increases, plus the major impetus is that local communities will lose oversight and control over their individual budgets – the precise desire of the power hungry state politicians. If you want to lower costs, why not take a hard look at cities like Newark and Trenton wherein the citizens pay hardly a farthing of their own cost? But a much larger cost savings can be realized by giving every school district the same amount of money. Abbott school districts are an enormous waste of money and do not benefit their intended populations.
Conclusions That Can be Drawn
The public was outraged that the children who run government behaved well, like children. But what will it take before the citizens of New Jersey rise up and throw the political machines out of office? It will never happen in northern New Jersey but there is hope that the Democrats in the south will suffer at the polls come November.
If the government can furlough 45,000 state employees because they are non-essential, it should tell the citizens that those same 45,000 can be fired without any detrimental effect on government “services,” thereby saving billions in future state budgets.