Saturday, April 08, 2006

The Mob That Whacked Jersey

Great piece from the City Journal by Steven Malanga:

The Mob That Whacked Jersey

For more than a century and a half, New Jersey, nestled between New York City and Philadelphia, offered commuters like Thannikary affordable living in pleasant communities. Wall Street tycoons, middle managers fleeing high-priced Gotham once they’d married and had kids, and immigrants who settled first in New York but quickly discovered that they could pursue the American dream more easily across the Hudson—all flocked into the Garden State. Eventually, New Jersey’s congenial living attracted even corporations escaping New York’s rising crime and taxes. The state flourished.

But today Jersey is a cautionary example of how to cripple a thriving state. Increasingly muscular public-sector unions have won billions in outlandish benefits and wages from compliant officeholders. A powerful public education cartel has driven school spending skyward, making Jersey among the nation’s biggest education spenders, even as student achievement lags. Inept, often corrupt, politicians have squandered yet more billions wrung from suburban taxpayers, supposedly to uplift the poor in the state’s troubled cities, which have nevertheless continued to crumble despite the record spending. To fund this extravagance, the state has relentlessly raised taxes on both residents and businesses, while localities have jacked up property taxes furiously. Jersey’s cost advantage over its free-spending neighbors has vanished: it is now among the nation’s most heavily taxed places. And despite the extra levies, new governor Jon Corzine faces a $4.5 billion deficit and a stagnant economy during a national boom.

Unless Garden State leaders can stand up to entrenched interests—and the signs aren’t promising—the state may find itself permanently relegated to second-class economic status. New Jersey “could become the next California, with budget problems too big to solve without a lot of pain,” warns former Jersey City mayor Bret Schundler. “The old way of raising taxes to solve budget problems has been tried, and it’s done nothing but make things worse.”

25 Comments:

Anonymous Anonymous said...

Ah, Grim, I like your economics, but not your politics. The state's problems started with the big tax cut Whitman served up in the '90s, as part of her hail mary pass to beat Florio, under the advice of the king-of-all supplysiders, former treasury secretary William Simon. The problems of the state are really rooted in citizen committment to tiny town governments--they would rather pay up than become entangled with the most likely poorer, browner/blacker neighbors next door. Also keep in mind the that state's tax effort--the best measure of a state's tax justice--has remained pretty constant over the past few decades. The problem, perhaps, is the service on the debt that Whitman started to pile up. Old Steve at the Manhattan Institute is quick to stick it to the unions, but their wage growth has been rather flat in recent years. I am happy Corzine is in the statehouse; he will govern in the tradition of Florio, spreading the pain, and righting the ship.

4/08/2006 10:00:00 PM  
Anonymous Anonymous said...

Sorry grim, I agree with 11pm anon.

4/08/2006 10:08:00 PM  
Blogger grim said...

I don't necessarily agree with everything that I post up, nor does what I post reflect my political views. The last thing I want to see happen here is to develop some kind of separation or segregation due to politics.

This particular piece made it up because I thought it was relevant and well written, that's all.

grim

4/09/2006 05:52:00 AM  
Anonymous michelle said...

Spreading the pain?

Given marginal taxation and property taxes based on valuation instead of usage or impact, how can you possibly think that pain will be spread to anyone other than than the middle to upper middle class? We take the brunt of the pain regularly, and are the first place it will be more heavily "spread".

Of course one surefire way to spread pain to lower wage earners is to heavily tax businesses so that they move out of state and take all their jobs with them. Good plan there. It never ceases to amaze me that people think that taxing businesses is going to "stick it to the man" or create some kind of justice. It ALWAYS has the most severe negative impact on the lower folks on the totem pole.

While I'm not necessarily disagreeing with your assessment of how we got here (frankly I don't know; just moved back to the state after a logn absence), I cringe at the statement "spreading the pain" because as someone in the AMT class I'm already pretty bent over and sore.

4/09/2006 07:38:00 AM  
Blogger Rob Ryley said...

Anonomous,

I'm sure you wouldn't like my economics or politics.

"The state's problems started with the big tax cut Whitman served up in the '90s, as part of her hail mary pass to beat Florio"

Why is it always tax cuts that are the problem? Why does the state have a problem with cutting spending?

I know, because you think "the rich" will pay the taxes, while you get the goods from govt. spending.

Tax cuts are NEVER a problem, but govt. spending IS.

"The problem, perhaps, is the service on the debt that Whitman started to pile up."

And why does this debt pile up--BECAUSE THE GOVT. SPENDS TOO DAMN MUCH!

Look at the billions spent on schools in NJ. What did we get for it?

"Old Steve at the Manhattan Institute is quick to stick it to the unions, but their wage growth has been rather flat in recent years."

Thank God for small favors! Their benefit package dwarfs what most people who work in the productive (ie. private) sectors get. It is about time the govt. workers get a sense of what the real world is like.

It is certainly easy for the politicians to promise the unions the sun, moon, and stars, when they can send the bill (or the bill colletors), to the productive businesses and workers in the private sector of the economy.

4/09/2006 08:34:00 AM  
Blogger pesche22 said...

more looting:

see the article about pre school
looting,, and it continues

4/09/2006 08:58:00 AM  
Blogger grim said...

How public money fed private greed

4/09/2006 09:13:00 AM  
Anonymous Anonymous said...

This makes me angry (not that I'm surprised). Business is leaving NJ in droves due to high taxes, corrupt politicians owned by the unions raise taxes..Eventually NJ has 100% tax rate so teachers union should be happy.

4/09/2006 09:33:00 AM  
Blogger pesche22 said...

see grim

this is the important stuff

the looting of the nj taxpayers
just continues. and theirs more

4/09/2006 09:44:00 AM  
Blogger grim said...

That pre-school article is an eye-opener. I had no idea the state was funding this.

grim

4/09/2006 09:45:00 AM  
Blogger pesche22 said...

its going on in individual towns
as well,,, the looting of the
taxpayers.

the newspapers are just getting
going on it.

how bout the local boards of educations

4/09/2006 09:50:00 AM  
Blogger RentinginNJ said...

"I am happy Corzine is in the statehouse; he will govern in the tradition of Florio, spreading the pain, and righting the ship."

Well, he won't be spreading the pain to me. I will vote with a moving van and leave this state.

Corzine (& McGreevy before him) seems to think that they have a captive audience. Taxes are already chasing both people & businesses out of the state. Raising taxes (i.e. moving farther right on the Laffer curve) will only hasten NJ’s decline. NJ needs to spend less & reign in the unions & special interests.

I do, however, agree with you on regionalization. This- every town being its own Kingdom business -needs to be changed. Little bedroom towns in Northern NJ have cops making $100k writing parking tickets, more fire trucks than many small cities, and too many school administrators making big $ for a few hundred students.

4/09/2006 10:41:00 AM  
Blogger RentinginNJ said...

BTW...That’s not to say Whitman doesn't share some blame. This isn’t a Republican or Democrat problem, but rather a systemic problem. I do, however, think McGreevy was particularly hard on businesses. Under him, NJ went from being a difficult state to do business in to outright hostile toward business.

4/09/2006 10:46:00 AM  
Blogger pesche22 said...

100k for the cops thats nothing
what about the bennies,, and
how bout the local boards of
educations.. its called the looting
of the taxpapers.. and many in these towns love it cause they are in on the action

4/09/2006 10:51:00 AM  
Anonymous Anonymous said...

The costs, costs, costs! Steve told it like it is in this interview from NJ 101.5 .. The state of PA has ... more people, more highways, more land area ... and a budget that is 4.5B lower!Steve Lonegan Interview

4/09/2006 12:45:00 PM  
Anonymous Anonymous said...

Pennsylvania vs. NJ: 43% more people (3.7M), 6x land area, 10x more roads PA discussion, Steve Lonegan

4/09/2006 01:16:00 PM  
Anonymous Anonymous said...

I'm pretty sure that mob & teachers union & unelected judges do not control PA the way the do control NJ.

4/09/2006 02:03:00 PM  
Blogger RentinginNJ said...

Anon 1:45 & 2:16
Great interview. It was definitely worth listening to. Interesting to note that 2 of the callers mentioned housing prices as a reason for leaving NJ, although it wasn’t actually the topic of the show. One caller cashed out and moved to a McMansion in Atlanta. The other caller was not a homeowners, late 20’s, just married and looking to start a family. Moving our do to housing prices and high property taxes.

4/09/2006 02:43:00 PM  
Anonymous Anonymous said...

Isn't it so that MA, NJ and CA are losing population all the time (illegal immigration slows the decline slightly but it certainly does not help financially).

The main reasons for escaping MA/NJ/CA are high cost of living (house prices) and high taxes. Business owners are also leaving in droves (in CA they are moving to AZ,UT,NV).

Politicians never learn. High taxes do not solve anything!

4/09/2006 03:00:00 PM  
Anonymous Anonymous said...

The Number one problem is: Tooo many taxing authorities --- We got to get rid of small towns -- We are not Maine anymore -- We are Queens West -- Therefore this home rule thing were towns like Guttenberg (12 x blocks), East Newark (3 x 6 blocks) and Teterboro (13 families) has to stop. Unless it is 100K in population -the town is dissolve and county takes over. Either we do it like Maryland (County does everything) or we do it like Connecticut (they got rid of County Government a State does everything that towns can't do). Along with this we got to get rid of double-dipping - Same person is a Mayor/State Assemblyman/ Freeholder. Yes, it means that Franklin Lakes resident can't have a Police Dept to harrass non-residents.

4/09/2006 04:37:00 PM  
Blogger delford said...

Small town government, and elected officials in these small towns with big egos,also contribute in a major way to the mess.

We approved a massive school expansion project, becasue the BOE sold it as protecting property values, and that we needed to approve this now (last year)I order to get the money form the SCC.

I tried to point out to people that the money from the SCC was just a promise, and not a gurantee, nobody would listen.


Know this project has been approved, and th BOE has no idea, or will nto address what the impact will be on the operating budget, once the construction is completed.
The people do not seem to care, but they will once they see ehat the increases are going to be.

4/10/2006 08:41:00 AM  
Anonymous Anonymous said...

Great article about the problems in education sector. More money (higher taxes) has not helped:
http://www.washtimes.com/op-ed/20060409-101256-6627r.htm

Basically, as long as teachers union controls the state (and majority party) NJ is doomed.

4/10/2006 10:41:00 AM  
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