"We broke it; don’t know how to fix it and you are just gonna have to keep paying for it."
- May have been overheard at the State House in Trenton.
The proponents of the gas tax will tell you that the
Transportation Trust Fund is separate from the general fund and needs to be addressed
directly. They’ll tell you that the
government’s hands are tied due to the massive debt and legal obligations of
paying pensions and benefits. They’ll
tell you the entire $30+ Billion dollar state budget is spoken for so there is
simply no choice but to raise another tax.
As gas prices rise again after a couple of months of
enjoying less than $1.70 a gallon prices in the Garden State, many in the
legislature are seriously considering raising the gas tax. Drivers understandably are upset by the
prospect having had only a short while to enjoy really low prices. We've come to expect somewhat lower gas prices in the Garden State partly because of our
historically low tax on gas. The issue
is coming to a head now due to the cries from construction unions and civil
engineers claiming the hundreds of NJ bridges are in such disrepair we're
facing a possible repeat of Minneapolis 2007. And they've got a video to scare
you into believing it... https://www.facebook.com/njallianceaction?fref=photo
Let’s take it at face value and agree that our aging roads
& bridges are in need of a major overhaul.
Although it's unclear exactly how much money would be needed to bring NJ
roads & bridges out of the 'scare zone' the Transportation Trust Fund (TTF)
currently expects more than 1.2 Billion dollars in funding annually. http://www.state.nj.us/ttfa/faq/
The fund is going to need hundreds of
millions more to begin new projects.
Unfortunately, the money supposedly allocated to the fund is
often spent on other state budget priorities and debt service and the fund has to make up the
difference through additional borrowing. http://www.njaflcio.org/transportation
The easy ‘knee-jerk’ reaction from politicians is to seek
immediate revenue through a new tax.
After all, if you’re facing potential death on the road, what’s a couple
hundred more dollars a year, right? Gas
tax estimates will raise approximately $50 million for every $0.01 of a gas tax
increase. http://www.app.com/story/news/politics/new-jersey/2015/02/09/gas-tax-alternatives-blasted-asinine-asburd/23139887/
According to the state TTF site, current expected minimum revenue from motor
fuels tax is set around $500 million. With
dollars diverted to pay debt service it would take another $0.10 in new gas tax
revenue to meet that number.
The challenge from consumers is partially due to opposition
to higher costs at the pump in a state that already has among the highest costs
of living in the US. It's also about a
lack of trust for the Trenton government's ability to prioritize and allocate tax
dollars appropriately. Remember, it's
this same legislature and previous administrations that got us here in the
first place.
Some have suggested shifting dollars from other parts of the
budget, namely education and using that money to fix the infrastructure. Some simply want to blame Governor Christie
even though the current state of affairs was set in motion decades ago. For the most part, Republicans have been very
good at throwing up roadblocks to tax hikes without offering a workable
solution to fix the problem of continued borrowing. We've been borrowing and taxing our way into
the mess we’re in now for decades. We
need a new plan. We’re already
overtaxed. And we spend more than we
take in annually. We’re not going to be
able to borrow much more money, if any. The
need for government spending especially on transportation is critical for the
economic future to get NJ back on a positive financial footing.
Let’s move past the ‘tax or die’ debate. There are other possible solutions. Instead of raising another tax, why not let
current consumer demand help raise revenue by creating new business, jobs and
opportunity for communities to grow?
Here are two short term solutions:
Sports Betting Revenue
The opportunity to capitalize on the bi-partisan support for
legalized sports betting in NJ may be the fastest solution to raise revenue and
start fixing our aging transportation infrastructure. Legalize it and spread the wealth and the
revenue across bars and restaurants throughout New Jersey. If the FBI estimates on illegal betting
revenue are accurate, there's enough potential revenue to immediately begin
funding the TTF with revenue instead of borrowed dollars without raising the
gas tax.
Since there's a bond required for a liquor license holders
under current regulations, there’s already an enforcement mechanism and process
in place to protect the consumer.
According to State Senator Ray Lesniak, the FBI reports that the revenue
from illegal betting is between $500-600 million. http://www.njtvonline.org/news/video/sen-lesniak
-sports-betting-would-bring-revenue-to-the-state/
Although he does qualify the number by saying it’s
undetermined how much would find its way to the state coffers.
The point is that a legal sports betting
program that was open to bars and restaurants could send the revenue number
through the roof. More businesses will
profit and expand creating more jobs and increasing the revenue to the state
indirectly in addition to the gaming tax.
Let’s face it, the only reason illegal gambling is flourishing is that the
government has prevented private business from capitalizing on the incredibly
high demand for betting.
Opt Out of Common Core
New Jersey already has some of the best schools in the
nation. http://www.northjersey.com/news/nj-students-surpass-many-countries-in-ranking-of-test-scores-across-world-1.607220
The new Common Core directive from the Federal government has met with stiff
opposition from parents and teachers. Opting out would be both practical from a
political and financial perspective. An
unlikely ally for sure, The NJEA is already funding an all-out assault on the
assessment component of Common Core, the Partnership for Assessment of
Readiness for College and Careers (PARCC) test.
Several states have already opted out of Common Core
altogether due to the cost, testing, accountability and privacy issues. http://www.scholastic.com/browse/article.jsp?id=3758244
Given the specific concerns with the PARCC tests and the
united opposition from conservative school choice groups like Eagle Forum and
the teachers union, opting out would be a relatively popular position taken by
the Trenton government. This certainly
wouldn’t hurt Governor Christie as he looks to 2016. The test itself might be a wedge issue on a
national level with the current Administration in Washington.
How would this help eliminate the need for a
gas tax hike? The biggest benefit would
be the hundreds of millions of dollars saved by NJ which could be allocated
going forward for Transportation. The estimated
cost of the implementation of common core testing and standards in NJ is as
high as $450 million dollars. http://www.app.com/story/news/education/2014/10/06/common-core-debate-nj/16832533/ This is nearly the amount of revenue needed
for the TTF expected revenue from a new gas tax.
Here are a few ideas to fix the long term problem of financial
stability in the Garden State:
Remove gaming
license restrictions to enable and empower smaller venues to capitalize on
gaming demand and revenue.
The model of the big casino developer attracting people to
one destination has failed in NJ. And it
failed miserably. Casino after casino are
folding in Atlantic City. http://www.reuters.com/article/2015/01/22/us-usa-atlantic-city-emergency-idUSKBN0KV1RL20150122
Millions of dollars that could’ve and should've been focused on rebuilding the transportation
infrastructure were squandered on propping up a failed business model. http://www.breitbart.com/big-government/2013/02/20/chris-christie-s-bad-bet-casino-that-received-taxpayer-funds-to-file-for-bankruptcy/
Enough already. Las Vegas is successful as
a destination without an ocean or millions within a short drive.
The streets are clean and crime is relatively low for a big city. What are they doing right? One of the main success stories in Vegas are
the small businesses who directly benefit from the gaming demand. There are slot machines and electronic gaming
machines in the airport and in diners across the city. The market meets the demand in tandem with
the big developers. Small business and big developers are not
mutually exclusive. Imagine slot
machines in Wildwood and in the Meadowlands retaining those NJ residents and the revenue we're currently losing to our neighbors?
Change collective bargaining for state workers
and teachers so that benefits are negotiated locally.
This is essentially what Governor Walker did through Act 10
in Wisconsin. The state was facing a $3.6
billion deficit when he took office in 2010. http://www.forbes.com/sites/realspin/2014/08/12/its-working-in-wisconsin-high-court-upholds-act-10/
Without raising taxes, the state has
enjoyed a surplus in each subsequent year.
The plan took collective bargaining for many government
workers and teachers off the table and forced the unions to negotiate
locally. What's interesting is by
allowing local communities to decide how to spend dollars to attract and retain
teachers, starting teacher salaries rose in some places after implementation. http://walker.wi.gov/wisconsin-priority/reforming-government/reforms-and-results/act-10-reform-updates
This did not impact Fire Fighters and
Police unions. http://www.politifact.com/wisconsin/article/2013/aug/02/context-walker-extending-act-10-police-firefighter/
Local negotiations by school boards and municipal leaders
accountable directly to the voters put the parents and taxpayers back in
control. Enabling choice in health plans
and eliminating forced dues created opportunity for teachers to excel and
benefit for being a good teacher. The
bill was a win for teachers, students and taxpayers. http://watchdog.org/63485/wirep-exclusive-analysis-finds-wisconsins-act-10-saving-taxpayers-big/
Sounds like exactly what we need in New
Jersey.
Despite heavily funded attacks from organized labor,
Wisconsin’s Governor won three elections in four years and became the first
Governor in the US to survive a recall. http://www.csmonitor.com/USA/Elections/Governors/2012/0606/Gov.-Scott-Walker-makes-history-survives-Wisconsin-recall-election-video
Seems that the voters who increased his margin of victory in
the recall vote liked what they got and experienced the positive results
first-hand. Unemployment has dropped
below six percent as the state continues to offer tax relief for small businesses. Incidentally, businesses in Wisconsin polled
90% on the question of whether the state was headed in the right direction. http://www.politifact.com/wisconsin/statements/2012/mar/11/scott-walker/gov-scott-walker-says-94-percent-wisconsin-employe/
Change defined benefit
pensions to defined contribution for state workers going forward.
The very idea that there are more than 100,000 people
employed by the state not including hospitals and cops has helped create an
unsustainable drain on the NJ economy. Add to that the fact that they will all be
expecting pensions and benefits long into retirement and you area nearing an
irreversible financial crisis. http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk
The main issue is that government workers in New Jersey have
been promised a defined benefit for their years of service. There is tremendous resistance to
implementing a defined contribution with a variable benefit. The reality is that workers who are promised
payment s when they retire may not be able to collect because the system will
eventually run out of the funds to keep up with the demand. There is an
estimated $90 Billion in future liabilities from current state workers (this
includes first responders) and that number will only continue to rise. http://www.njspotlight.com/stories/14/08/11/explainer-why-state-s-unfunded-liability-for-retirees-is-90-billion-and-rising/
Combined with an $85 billion dollar debt http://www.bloomberg.com/news/articles/2015-02-13/new-jersey-bond-obligations-rose-less-than-1-to-41-8-billion
that we have to service, the state simply
lacks the revenue to pay for what it has promised without making a dramatic
change.
Instead of looking at the current liability and negotiating
recipients down, why not start fresh with the new employees coming in? 401k plans with a defined contribution and a
company match work in the private sector as a way of attracting and retaining talent.
There is no reason for government not to adopt a similar system for the benefit
of its employees and the taxpayers footing the bill. It’s
as simple as an employee contribution and a government match. http://www.manhattan-institute.org/html/cr_40.htm
Let’s Get Going Then.
Seems simple enough.
Generate new revenue from new business which will meet the
rising demand for gambling. Opt out of
an increasingly unpopular education program without hurting education and spend
the money on the roads. Open up gambling
to the rest of NJ by eliminating the failed state-protected monopoly of big
casino developers. Restructure union
negotiations by following the lead of a successful model which is both
politically viable and economically practical. Redefine benefits for future
government employees by modeling after successful private sector companies.
We should be talking about capping the gas tax at a lower
rate than today. The proposed increase
would barely be a drop in the bucket and we’ll be back at the debate a year
from now. It’s time for a some simple
but dramatic changes in New Jersey.
Who speaks for the rest of us in New Jersey? Those without guaranteed government income,
without huge legal contracts with government entities, without the unchecked
financial power of forced union dues?
Which politician will stand up and be counted? Who will speak for us; the over-taxed,
over-burdened resident of New Jersey who just wants to make a living and stay
in the state we love? Commonsense, practical
solutions ready to be championed by someone who has the courage and the
integrity to forge ahead.
Many are moving out. I’m
digging in and staying. Many have an exit plan prepared for after the
kids graduate. I’d like to be here for the long haul. We’re only a few
changes away from fixing the problem.
Call your legislators and tell ‘em to get back to work. There’s plenty to do and only a limited
window of opportunity.
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