January 20, 2008 - 3:51pm
Some advice for Jon Corzine
By Dr. Joseph R. Marbach
Tags: Jon Corzine
In an op-ed piece I wrote for the Bergen Record on Sunday, January 13, 2008, I observed that Governor Corzine's financial restructuring plan was taking a page out of the state's history. From 1830 until the 1860s, the state relied on a deal it struck with the Camden & Amboy rail line to fund most of the operations of state government. The deal granted the C&A a monopoly on the highly profitable route between Philadelphia and New York. In exchange for this grant, the railroad provided the state with stock in the company and guaranteed it an annual dividend that amounted to over ten percent of the state's operating budget. In addition, the state taxed riders. The total income from this deal provided the state with more than half its annual budget.
The costs were largely passed on to out-of-state riders, who because of the monopoly paid fares that were estimated to be four times higher than comparable rates charged by railroads in states that permitted competition.
Fast forward to 2008 and we see a deal that is very similar. The proposal calls for the state to enter into an agreement with a non-governmental entity, in this case a Public Benefit Corporation (PBC). In exchange for giving up control over the major transportation systems in the New Jersey, the state will reap a monetary benefit that will underwrite vital state functions of state government. We are also told that the burden of the increase in toll hikes will be borne by out-of-state motorists.
The governor also demonstrates that he is an astute student of history by creating a PBC that will lock the in the toll hikes for the long term future. Recognizing that since 1991, when the Florio tax increases were implemented and voters reacted by throwing out the majority party, both executives and legislators have lost the resolve to raise taxes (or in this case tolls) to cover the spending they have approved. The governor's plan takes that decision out of their hands and turns it over to a third party. This move allows elected officials to disavow any connection to these toll hikes. The plan conveniently puts off any toll increase until after the next gubernatorial and assembly elections. This is a clear indictment of the political will and ability of current and future elected officials to do the right thing.
The governor has challenged critics to offer alternatives. Here's one: K.I.S. (Keep It Simple). Rather than create a new agency to borrow $40 billion to pay down $20 billion in debt and fund infrastructure improvement, why not pass legislation or a constitutional amendment that will immediately dedicate regular toll increases to these expenses? This eliminates the costs of borrowing, the creation of another quasi-governmental agency and the additional debt that would be taken on by that agency. In all likelihood the toll increases would also be lower.
If the legislature is feeling bold enough, it could prove the governor wrong and along with regular toll hikes to pay down our debt, cut state spending and pass moderate (and temporary) increases in sales and income taxes to address the state's current fiscal mess.
Does the legislature have the wherewithal to do this? On this count, recent history indicates that the governor is probably right.
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Earth to Doc...
Anyone who pays taxes in this state knows how ridiculous the statement below is.
"Recognizing that since 1991, when the Florio tax increases were implemented and voters reacted by throwing out the majority party, both executives and legislators have lost the resolve to raise taxes (or in this case tolls) to cover the spending they have approved."
Democrats have raised taxes again and again since taking over in 2002, many times with Republican votes but always with the knowledge that the impotent minority would rather settle for a few crumbs or a new copier than stand up for the people who elected them.
The question is at what point do Republicans get fed up with the stale patrician crowd running the party and decide to go outside the box for leadership that stands for taxpayers, not government employees, welfare recipients, cultural elitists and connected insiders.
For A Few Crumbs . . .
Bingo, Mountaintop. They're just the pols who can't say no! But a few of the Democrats will indeed take a walk on this one.
In fact, the plain political reality is that the Senate will not pass the Governor's plan intact without the participation of some Republicans. That is why the Governor brought in Bob Franks, to help lead a few of them to the trough . . . for a few crumbs.
Anyone who thinks that District 19 Democrat Senator Joe Vitale, or Assemblyman John Wisniewski, or for that matter District 18 Senator Barbara Buono, whose districts all lie atop the highway hub at the center of this plan, are going to vote in favor of it, is just dreaming. I'd say, look for Appropriations Chair Buono to allow a motion "Without Recommendation" to allow this stinker to slip out of the Appropriations Committee for a floor vote. And then, of course, she'll vote against it on the floor.
Their constituents, who pay the tolls, would have them for lunch if they voted for it. Senator John Adler will not vote for it either. And Linda Stender will no doubt take a pass on it as well. And there are more.
But on the Republican side, there is no Bill Gormley to sell out for a few crumbs. He's on the "steering committee" now. The Republican senators know full well what Bill Gormley is, and was, all about!
There should also be a Republican party position on any and all new spending as well.
If Leonard Lance wants to succeed in his desire to run for Congress, he should be the first one to step up to the plate and publicly say, "No new spending, period!" . . . in a gentlemanly way, of course.
In the past, he has opposed irresponsible borrowing on principle, borrowing that mortgages the future. He wants to prove he's a fiscal conservative, he should take that position right now.
So, this should become a real test of the leadership of Tom Kean, Jr. Tom should call for a party position on this one. If some Republican Senator decides to play the piker on this one, shame on him!
And if the Republicans allow anything remotely like it to happen without substantial budget cuts, then we should all start calling Mayflower, and plan to pay for the increased toll only once -- on the way across the border!
by Trochilus
Well Look at This
Well, look at this . . . a united "no new spending" stand . . . seems like a good start.
But it is only a start. And with a very curious and mighty short fuse attached to it, too! Why only a month?
Why not just plain no new spending, period?
In fact, has the time not FINALLY come to trim the budget down to something we can afford? Families have to do that or they suffer the consequences. Why must government always get fatter?
Why are we seriously looking at a proposal -- no, a scheme, that will further imperil our quality of life by driving traffic off of what will become expensive and unaffordable toll roads, and on to a local road system that is already choked with traffic?
For the bucks? So that Jon Corzine can irresponsibly and exponentially increase the size of state government? And then head off before the bill comes due?
We do not need one of these dishonest slowing down the dizzying rate of growth deals. It is time to trim the size of government. Cut the budget!
We simply cannot afford anything else. Some would say we cannot afford anything less -- but we can certainly afford less government!
by Trochilus
This is exactly
what I have been saying since Corzine released the details.
The governor has challenged critics to offer alternatives. Here's one: K.I.S. (Keep It Simple). Rather than create a new agency to borrow $40 billion to pay down $20 billion in debt and fund infrastructure improvement, why not pass legislation or a constitutional amendment that will immediately dedicate regular toll increases to these expenses? This eliminates the costs of borrowing, the creation of another quasi-governmental agency and the additional debt that would be taken on by that agency. In all likelihood the toll increases would also be lower.
Don't go through the middleman. Keep it all in-house.
Corzine's Toll Plan is a Wolf in Toll Collector's Clothing
Dr. Marbach's K.I.S. plan forgets the Governor's main objective - more spending.
Once Corzine pays down $18 billion in current state debt - and thereby lowers annual state debt service - he will then say that the State has sufficient recurring revenues in the budget to support another $2 billion in state spending for things like universal health care, universal pre-school, and universal-who-knows-what-else.
The toll plan is nothing but a ruse to support more state spending by moving 50% of the state's debt off-balance sheet.
Dr. Marbach does not quite get it.
Dr. Marbach:
I appreciate the historical background. Stick to the role of historian. Your advice is bad. Why raise taxes at all? Only 3 billion dollars of debt is general obligation (read - voter approved). The rest is not approved by the voters.
K.I.S. and repudiate debt not approved by the voters. The bonds themselves state they are not backed by the full faith and credit of the State. The appropriations can and should be denied for debt not approved by voters.
Laus Deo,
Jesse O. Kurtz
Managing Editor for The Atlantic City Scoop
http://cityofatlantic.wordpress.com
Jesseokurtz@gmail.com