Tag Archives: new jersey

Moving Trucks are Headed To …

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Sometimes the unscientific surveys provide the most interesting results. Why? Because you know not to fully accept what you find, but in more cases than not you also realize the conclusions are indicative of a bigger pattern or trend.

That’s one way to look at the annual migration results from United Van Lines. For 2010, it was based on more than 146,000 household moves between the 48 continental states.

A quick look at some of the findings:

  • Michigan was dethroned as the "outbound" (more than 55% of the moves being out of state) victim for the first time in five years by New Jersey. Not to worry, our northern neighbors were second in numbers fleeing for greener pastures.
  • Of the nine in the outbound category, Midwesterners Ohio, Illinois and Pennsylvania were also included.
  • The five "inbound" winners (at least 55% of the moves coming into the state) were, in order, the District of Columbia, Oregon (a top destination for 23 years of the 34-year report), North Carolina, Idaho and South Carolina.
  • Indiana, you ask? Among the 35 in the "balanced" category. But the 2,474 shipments out of the state compared to 2,076 inbound put it at the bottom of that category — 54.4% outbound.

But hey, we’ve got a lot of things going for us here in the Hoosier state. And we didn’t jack up our income taxes by 67% this week like our friends to the west. Just one of the many jokes is that action by the legislature after a contentious battle had to be "Ill nois(e)" to economic development officials and many others.

And it just might be enough to move to Illinois to the bottom of the moving list in 2011. 

State Budgets & the Next Financial Crisis

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"60 Minutes" recently aired a powerful segment illustrating how dire budget circumstances are for state governments in America. Read the entire synopsis here to learn about the plight of New Jersey from reform-minded Governor Chris Christie. But hitting closer to home, you might be surprised to learn what’s going on with our neighbor to the West:

And nowhere has the reckoning been as bad as it is in Illinois, a state that spends twice much as it collects in taxes and is unable to pay its bills.

"This is the state of affairs in Illinois. Is not pretty," Illinois state Comptroller Dan Hynes told Kroft.

Hynes is the state’s paymaster. He currently has about $5 billion in outstanding bills in his office and not enough money in the state’s coffers to pay them. He says they’re six months behind.

"How many people do you have clamoring for money?" Kroft asked.

"It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state," Hynes said.

Asked how these people are getting by considering they’re not getting paid by the state, Hynes said, "Well, that’s the tragedy. People borrow money. They borrow in order to get by until the state pays them."

"They’re subsidizing the state. They’re giving the state a float," Kroft remarked.

"Exactly," Hynes agreed.

"And who do you owe that money to?" Kroft asked.

"Pretty much anybody who has any interaction with state government, we owe money to," Hynes said.

That would include everyone from the University of Illinois, which is owed $400 million, to small businessmen like Mayur Shah, who owns a pharmacy in Chicago and has been waiting months for $200,000 in Medicaid payments. Then there are the 2,000 not-for-profit organizations that are owed a billion dollars by the state.

Too Much Government in Too Many Places

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Check out these words of New York Attorney General (and candidate for governor) Andrew Cuomo:

Our system of local government is broken … New York has more than 10,521 overlapping governments, including counties, towns, villages, school districts, special districts and public authorities. These entities impose layer upon layer of taxing structures — with citizens receiving multiple tax bills annually — resulting in the highest local property tax burden in the nation … To hold government to account the people must have a government they can understand. But what they have today instead at the local level is a ramshackle mess. The current local government system is the product of sheer historical accumulation — not logic, reason or common sense.

Well said. No, make that very well said. The Indiana Chamber and many, many others have put forth a strong case in recent years that township government in our state is beyond repair. Each new revelation of outlandish township reserves, unsightly administrative costs to deliver poor relief and outright criminal behavior further makes the point.

But like most challenges, it’s not just an Indiana problem. The Governing magazine article that featured the Cuomo quote also included the following. Maybe, just maybe, the momentum will grow, lawmakers will step up to the plate and all Hoosiers will benefit.

Rich Pahls, a Nebraska state senator from Omaha, has proposed merging many of his state’s 93 counties. The jurisdictions were designed for the days of the horse and buggy, he pointed out to the New York Times, not an era when “people will drive 100 miles to the grocery store.”

New Jersey, meanwhile, has some of the highest property taxes in the country, thanks in part to its 567 municipalities, a third of them with fewer than 5,000 residents, along with 611 school districts and 486 local authorities. Bergen County alone has 70 school districts and 76 superintendents.

New York State has more than 10,500 governmental entities that levy taxes and fees, and that depend on state largesse for any number of needs. This includes towns, villages and a multiplicity of water, sewer, lighting, school, 911 and other districts. Erie County, which is where Buffalo is located, has over 1,000 such local governing entities alone.

But while political leaders in the U.S. have been talking about local government rationalization, in Denmark, they’ve actually done it.

In 2007, Denmark shrunk the number of municipalities from 271 to 98. County government was completely eliminated. Fully 455,000 local government employees were involved in the restructuring; and 30,000 physically relocated to a new site. The government projects $274 million (1.6 billion DKK) in savings from the restructuring.

The implementation of this massive reform, which began in 2002, offers important lessons as other governments look to achieve big cost savings through rationalizing local government.

Anyone hoping to rationalize the delivery of services from the state level on down must first understand where the opportunities lie to eliminate duplication and inefficiency. Then, you need to lay the groundwork for public acceptance of the change. Both of these goals can be served by gathering hard data on what every unit of government does, how much it spends and what it gets for its money. Only after these goals have been achieved can you make that information readily available to the public.

This is not an easy task. The collection of data alone is enormous. But data gives you the ability to shine a light on what is taking place under the status quo, making the tough task of driving change a little easier.

Starting School Funding Cuts at the Top

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Education funding ALWAYS generates interest. For many years, it was the funding percentage increase that schools would receive. In recent times, the focus has switched to cuts and trying to minimize the dollar reductions.

In New Jersey, cost cutting governor Chris Christie has state budget woes and education tied together. His target, however, is superintendents’ pay. Not only are there 591 school districts in the Garden State (that’s a ridiculous number), but apparently bidding wars contribute to driving up salaries. While the governor makes a tidy $175,000 a year, that salary is exceeded by 253 of the school leaders.

The solution (one that does not require any legislative or regulatory steps): superintendents will be paid on a sliding scale — the smaller the district, the smaller the salary. It was reported that 366 of the current 591 would be getting pay cuts. In addition, state government will negotiate the pay for the leaders of the 16 largest districts. There would also be caps for assistant superintendents and business administrators.

Christie’ s response when asked about the possibility of superintendents leaving the state: "If that’s the sole reason they’re here, then goodbye."

It just might be that Christie sees too much red tape to reducing the number of school districts (New Jersey also has tried unsuccessfully to eliminate townships), so this is a money-saving alternative.

More Campuses Just Saying No to Smokers

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In 2007, about 60 colleges and universities had enacted a smoke-free policy. That number has grown to nearly 400.

There has been some external push. Clean air laws in Illinois, New Jersey and Wisconsin require smoke-free university housing. Smoking is prohibited on all public campuses in Arkansas and at every school (public and private) in Iowa. A couple of big players soon join the list, with no smoking at the University of Florida this fall or at any of the three University of Michigan campuses starting in 2011.

For those that still allow lighting up, more have policies that restrict the number of areas and move smokers away from building entrances. What have student reactions been? According to a CongressDaily story:

A Student Tobacco-Free Task Force was created when the University of Denver went smoke-free in January. Similar associations have been created at other colleges to help enforce the policy and support the change.

However, students who oppose the ban on smoking cigarettes outdoors have not remained silent. Groups of students held daily "smoke-ins" in protest when the University of Pennsylvania attempted to ban smoking at all 14 of its campuses in 2008.

The University of Denver found that about two-thirds of the student population was in favor of banning tobacco. "Interestingly, these divisions were not necessarily based on one’s personal use of tobacco," said Katie Dunker, the assistant director of health promotions at the school. "We had students who use tobacco who were for it and students who didn’t who were against it."

A list from the American Nonsmokers’ Rights Foundation puts campuses of 15 Indiana colleges and universities in the total smoke-free category. There are another nine Hoosier campuses rated smoke-free with the exception of some remote outdoor areas.

New Jersey to Public Workers: You Want Our Money? We Want Your Taxes

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It sounds good on paper, but personally I’m not buying it. In this case, "it" is a New Jersey proposal that says if the state is going to give you your paycheck, you have to live within its borders.

With our capital’s geographic presence in the middle of the state, I can’t imagine too many are commuting from Ohio, Illinois, Kentucky or Michigan to Indy. But state workers are not confined to the big city. The New Jersey bill would impact teachers, police officers and firefighters as well as all city and county government employees.

There are strong Indiana connections to Cincinnati, Chicago and Louisville in addition to numerous other areas in the four neighboring locales. I grew up in Dearborn County, a lot closer to Cincy than Indy, and a tri-state ingredient seems to be active in all four corners of the state.

The full New Jersey article is here. Below is a quick summary:

State Sen. Donald Norcross (D., Camden), the sponsor of the bill, said, "It is very simple. If you want a paycheck from New Jersey taxpayers, you should have to live here, pay your taxes here and be part of your community."

Norcross, who also leads the 85,000-member South Jersey AFL-CIO Central Labor Council, said an estimated 10,000 public employees live out of state, costing the state about $22 million in income taxes.

"What really gets me is when I look at the mass exodus every night out of Trenton to Pennsylvania," Senate President Stephen Sweeney said. "If it’s good enough to work for the state, it should be good enough to live in the state of New Jersey," he added.

Public employee unions said that while relatively few of their members work out of state, they strongly oppose the measure for those who do.

"I think it’s a ridiculous proposal," said Bob Master, regional political director for the Communication Workers of America. "It will have no meaningful impact in the long run on the state’s budget problems and it will cause completely unnecessary hardship for our members."

Master said that if New Jersey’s neighboring states were to adopt similar tactics, the results would not be pretty.

New Jersey Governor Freezes Spending

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His fellow conservatives are calling it a necessity. The opposition says he’s forcing school districts to raise property taxes. Either way, new New Jersey Governor Chris Christie says he is just following up on a campaign promise to drastically cut spending in the Garden State by declaring a spending freeze. I’m curious, is there any chance somebody is willing to freeze production on "Jersey Shore" for the general benefit of society?

The snow isn’t the only thing that’s causing a chill in the Garden State.

Calling New Jersey’s budget a "shambles," Gov. Chris Christie announced Thursday he is immediately freezing all state spending.

Saying New Jersey is on the verge of bankruptcy, Christie declared a fiscal emergency, announcing drastic cuts. Among them, aid to school districts that have excess surpluses.

"Today we are going to act swiftly to fix problems too long ignored. Today I begin to do what I promised the people of New Jersey I would do," Christie said.

The move had Democrats in an uproar, angry the governor used his executive powers instead of working with the Legislature.

"What that’s going to mean is that those school districts without that money are going to be raising property taxes in the upcoming year to make up for that shortfall," said Assemblyman John Wisniewski, D-19th District.

The governor also cut state subsidies to New Jersey Transit, saying it needs to become fiscally efficient.

"Revisit its rich union contracts," Christie said. "And they may also have to consider service reductions or fare increases."

‘Public Enemy Number One’ Back in Power

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It’s always fun to talk education. Why? Only because there are so many interesting personalities involved and it’s so important for so many people.

In New Jersey, the new governor (Chris Christie) has appointed new commissioner of education (Bret Schundler) who has an old history with the state’s teachers’ union. School choice is the education topic at the forefront, with a heavy dose of politics. CQPolitics tells the story in these excerpts:

In making the appointment, it’s clear, Christie has decided to teach the teachers’ union a thing or two about politics.

Schundler — who was the first Republican elected mayor of Jersey City in 75 years, and who served in that position from 1992-2001 — was, through the course of his two-plus terms in office, a noted proponent of school choice.

His determination to empower parents with more control over their own children’s education was so strong that within a year of his taking power in Jersey City, the National Education Association had labeled him "Public Enemy Number One."

In the gubernatorial campaign of 2001, Schundler made his school choice agenda central to his campaign platform. Eschewing the kind of traditional GOP campaign advice that says it’s a waste of time and resources to campaign in the inner cities, he insisted on taking his education reform message right into the poorest urban areas of the state.

He accepted an invitation to speak to the annual convention of the New Jersey Education Association — at 170,000 strong then (and 200,000 strong now), the most powerful single special interest group in the Garden State. Given the union’s opposition to merit pay, school choice, and other empowerment agenda reforms, it was an interesting exchange.

Schundler told them some uncomfortable truths. Unlike his two opponents at the time — Democrat Jim McGreevey, and Republican Acting Governor Don DiFrancesco — he didn’t try to woo them. Instead, he explained why he thought they were wrong. He wanted to reform New Jersey education by introducing more competition into the system — and to do that, he said, he wanted to reform the state’s tax code to allow for greater deductibility of charitable contributions for scholarship foundations that would use their money to pay for private or parochial school tuition for children in distressed urban areas.

I’ve never forgotten the response from the teachers’ union’s leader, which was something along the lines of, "I congratulate Mayor Schundler for having the courage to come here. And I congratulate our teachers for not throwing their knives and forks at him."

But McGreevey was able to turn the tables on Schundler on the education issue. When Schundler talked about reforms that would allow taxpayers to save $600 million in property taxes, McGreevey said that meant Schundler "wanted to take $600 million out of the public schools." It wasn’t true, but it was loud, and it was repeated endlessly.

That was eight years ago, and nothing has happened to make urban education in New Jersey any better. In fact, by many measures, the problem has gotten worse.

In fact, it’s gotten so bad that key traditional Democratic allies — including urban lawmakers, ministers, and community leaders — have broken with the teachers’ union to join with conservatives to push for a pilot program that will allow vouchers in the eight cities in the state that have the worst schools. The pilot program would allow businesses to direct a portion of their state taxes to scholarships that needy students could use to pay for private or parochial school tuition.

If that pilot program sounds familiar, it should — it’s remarkably similar to what Schundler was proposing as his campaign’s centerpiece back in 2001. But unlike Schundler’s proposal — which would not have diverted a single dime in state funding — by allowing businesses to direct a portion of their state taxes to the scholarships, this pilot program actually would move state taxpayer dollars.

It will be interesting to keep an eye on developments in Jersey. Maybe Schundler will seek input from Indiana’s Superintendent of Public Instruction Tony Bennett.

 

Tax News: Good to Be Tied to Arkansas in This Case

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Interesting numbers from the Tax Foundation, which is in the business of analyzing interesting (tax) numbers. Its annual review of what states did with their tax policies included some strong praise for Indiana. A few excerpts from the release and a link to the full study, which takes some to task for targeted tax hikes and accounting gimmicks (instead of reducing spending).

Nine states increased individual income tax rates (five states reduced their rates), six states raised general sales tax rates, 17 states increased excise taxes on cigarettes and five states increased rates of alcohol excise taxes.
 
“Two states – Arkansas and Indiana – managed to roll back spending growth commitments and take actions to limit spending, but other states have either kicked the budget can down the road or increased taxes,” said Tax Foundation Director of State Projects Joseph Henchman, who authored Tax Foundation Fiscal Fact No. 204, “A Review of Significant State Tax Changes During 2009.”  

“With state revenues declining due to the tough economic situation, most state leaders in 2009 have tapped high-income earners, smokers, out-of-state business transactions, or other targeted groups, those being the only people that politicians feel safe raising taxes on,” Henchman notes. 

California, Connecticut, Delaware, Hawaii, New Jersey, New York, North Carolina, Oregon and Wisconsin increased individual income tax rates. States that increased sales taxes include California, Massachusetts, Minnesota, Nevada, North Carolina and the District of Columbia.
 
Other miscellaneous tax changes in 2009 include obesity and soda taxes, excise taxes on plastic bags (often mischaracterized as “fees”) and “Amazon” taxes, which force out-of-state retailers to collect sales taxes from customers if the companies have affiliate and advertising relationships with in-state businesses.

Jersey Devil is in Details Over Property Tax/School Formula

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New Jersey has an interesting predicament. It needs to dissolve some school districts because they, you know, don’t actually have any students. However, some residents are up in arms because doing away with the districts would boost their property taxes. Alan Greenblatt of Governing writes:

New Jersey has just 21 counties, but it has more than 600 school districts. Although merging small districts is a problem everywhere, New Jersey’s system is so out of whack that it borders on comedy. This year, the state took what it thought was an easy first step: closing districts that don’t actually operate any schools. But even that has proven to be controversial.

Several other states allow what are known as “non-operating districts.” These have school boards and part-time staffers who take care of paperwork—largely writing checks to a neighboring district for educating the kids they send over. But they have no students and no schools. “This was a prime target to go after,” says Lucille Davy, the state education commissioner. “Clearly, it’s not efficient to have a whole system in place, with employees who are not educating any children.”

But when the state moved in July to shut down half of its 26 non-operating districts, it ran into surprising resistance. Residents of those districts groused that their property taxes would shoot up because the funding formula would switch from a per-pupil calculation to one based on home values. “When you look at the individual situations,” says Frank Belluscio, spokesman for the state school board association, “you realize that most of these arrangements are in place because it was cheaper to send their students to another district.”

The state is allowing the non-operating districts to phase in tax increases over a multi-year period. State Representative John Burzichelli, a sponsor of the legislation that led to the closures, says that the increased bite these communities are now facing reflects the fact that they have been enjoying a tax haven. Writing a check to cover an individual pupil’s education didn’t reflect the neighboring district’s full costs, including its administrative burdens. As taxes rise within the shuttered districts, they should go down by a concomitant amount within the districts that actually hold classes. And the costs of staff and paperwork in the closed districts go away.