Time for public to speak on NJ's fiscal crisis: Reinhart

Peter S. Reinhart | Asbury Park Press

Show Caption Hide Caption Facebook Live: State Senate President Steve Sweeney Members of NJ Senate discuss the findings of a report by a task force on ways to improve government efficiency and reduce taxes

State Senate President Stephen Sweeney recently released the first report from a task force of experts with recommendations to address the fiscal and economic crisis facing the state of New Jersey. Since the contributors to the report were not elected or appointed officials, but mostly academic and professional people without a partisan bias, the findings and recommendations were not made with much consideration of the political issues facing implementation of the proposals.

Immediately following the press conference announcing the report, reaction from the political side and a few interest groups likely to be impacted by the report began. In the past, reaction would typically follow familiar patterns of “we are being hurt so others can gain,” or “we can’t afford to pay for this,” or “it’s dead on arrival.” But other than the NJEA, the reaction this time was more nuanced.

Gov. Phil Murphy said he would look at it. Senators and Assembly representatives from both sides said it deserved a fair look. That’s a promising start.

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Let’s take a look at why a few groups of folks with differing constituencies should seriously consider supporting the approach of the report (without the specifics since actual legislation has not yet been drafted).

For “progressives,” those people who favor government providing services, opportunities and benefits to help the less fortunate, they should support the recommendations. It is beyond dispute that the costs of paying the pension and health costs of the retired and soon-to-be retired state workers is devouring the tax dollars to the point where money for the progressive causes will simply not be there. Or the tax increases necessary to provide those services will not be feasible, economically or politically.

For the unions whose members receive the pension and health care benefits, without paying a bit more out of their own pocket now as recommended by the report, the actions that will be necessitated by failing to address the economic and fiscal crisis will cause much more pain to the current and future members of the unions. The solvency of the pension funds is in serious short- and long-term danger. The health benefits approach created when health costs were much lower is simply not sustainable in today’s health-care world.

For the other citizens of New Jersey who are not members of the affected unions nor have a particular political bias one way or the other, the “silent majority,” the recommendations in the report present an opportunity to stop the steep rise in costs to taxpayers that threaten the economic and fiscal health of the state. Property taxes, long the number one issue in Monmouth University polls, have a very good chance of being stabilized. Income taxes to individuals and businesses can be stabilized so people and companies can make a rational decision to stay in New Jersey rather than look for other states to relocate.

Charitable organizations have a good chance to see donations increase if the recommended gross income tax deduction for New Jersey-based charities is enacted. This will help offset the likely drop in donations due to the 2017 federal tax changes that doubled the standard deduction, making itemized charitable donations moot for many taxpayers.

Of course, New Jersey is not alone in dealing with challenging fiscal issues. But it is among the states in the worst fiscal situation. New Jersey has many advantages, including its location, its educated workforce and its mostly excellent public education system. But unless there is recognition that the time has come to address the state’s dire fiscal situation, those advantages will not be enough to sustain New Jersey.

The elected officials who will be taking the next steps in drafting legislation and deciding whether to support the task force recommendations will want to hear from the public. It’s time for the public to let their voices be heard and not allow just the interest groups to dominate the conversation. The future of New Jersey is literally at risk.

Peter S. Reinhart is director of the Kislak Real Estate Institute and the Chair of New Jersey Future.