The Times, Trenton

Politicians In Denial

The Times, Trenton — Tuesday, June 3, 2003

EDITORIAL

When Gov. James E. McGreevey unveiled his fiscal 2004 budget in February, he invited anyone who was unhappy with its brutal spending cuts to show him the money. It turned out that not all the critics would be required to meet that condition; for example, the savvy and influential arts community applied big-time public pressure and won a commitment without strings from Gov. McGreevey to restore $9 million in arts funding. Others, however, have come forward with sound plans for raising revenue, only to be met with rejection out of hand by the Democratic governor, along with a substantial number of legislators, most of them Republican.

The Fairness Alliance, which organized a rally at the State House Saturday, is calling for a three-year hike in the top rate of the state income tax, now at 6.37 percent, for families earning above $400,000. The hike would be graduated, with the rate going to 9 percent on income over $1 million, and would raise about $972 million annually. The Fairness Alliance also would reduce taxes for the lowest income groups - people who are taking the hardest hits from the economy and the state's austerity budget - at a cost to the treasury of $41.7 million.

Many budgetary spending cuts could be restored, at least in part, with that $930 million net increase in revenue. Medical assistance to the working poor, for example. Affordable housing subsidies. Higher-education funding to avert tuition increases. Aid to local governments and school districts to stave off intolerable hikes in property taxes. Aid to nursing homes and providers of home health care for the aged and disabled. These are a few of the programs slashed by Gov. McGreevey. With more revenue, the governor could even improve one of the rare spending increases in his budget, a $20 million hike for the disaster-plagued Division of Youth and Family Services that many believe is far short of what is needed to adequately protect the state's most vulnerable children.

It would be one thing if Gov. McGreevey and the legislative Republicans offered some reasonable, objective arguments against proposals like that of the Fairness Alliance. But all they do is say "no." They don't address research cited by the Alliance and based on Internal Revenue Service data that found that increases in state taxes don't drive high-end taxpayers to other states, contrary to widely held assumptions.

The best explanation for the governor's stubbornness is that he is in thrall to the ghost of Jim Florio's political career, which was wrecked along with those of several fellow Democrats when, as governor, he pushed a $2.8 billion tax increase through the Legislature in 1980. Gov. Florio's mistake, however, was that he made no attempt to sell the public on the need for the tax hike before imposing it. Gov. McGreevey, on the other hand, would have no difficulty making the case for a temporary tax increase on the well-to-do. Polls show that people favor the idea, and so do a significant number of more affluent New Jerseyans themselves, who would rather live in a state that adequately supports programs for the general good than have a few more dollars to spend on luxury items. Most residents who would pay the higher rates would hardly feel it anyhow, because they are among the prime beneficiaries of the federal tax cuts that President Bush signed into law last week.

Proposals like the one put forth by the Fairness Alliance aren't a complete solution to New Jersey's $5 billion budget crisis. But they would ease some of the pain this budget would inflict.

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