David Rebovich

by David P. Rebovich

The big story on West State Street these days is, of course, the
budget stand-off between Governor Jon Corzine and the Assembly
Democrats led by Speaker Joe Roberts. The main sticking point is the
Governor's proposed one-cent increase in the state sales tax. Democrats
in the lower chamber, along with a few in the Senate, are worried that
voting for that tax hike will create big problems for them in next
year's midterm elections. Corzine is concerned that without the
increased revenue that a higher sales tax would provide the state
budget cannot be balanced honestly and in a way that makes progress
toward achieving real fiscal integrity.

The Governor and his staff also claim that New Jerseyans are not
especially upset about the proposed sales tax increase. However, polls
do indicate that a majority of residents prefer spending cuts to tax
hikes in order to balance next year's budget. That most folks would
choose unspecified spending cuts to a tax increase should not be a
surprise. In any case, Democratic legislators claim that their
constituents are very worried about the double-whammy that Corzine's
budget proposal would deliver next year if enacted.

That double whammy is higher state taxes and higher local property
taxes due to flat levels of state aid to school districts and
municipalities, as well as smaller than promised rebate checks to
lessen the blow of the latter. And, Democratic legislators cannot see
the political sense of increasing a broad-based tax to simply balance
the state budget. They believe that such an increase should be used as
part of a property tax relief or reform plan. As such, the Assembly
Democrats have presented the Governor with a list of budget cuts and
revenue enhancers to prevent the need to raise the sales tax. Those
revenue enhancers take the form of higher projections of the amount of
money the state will garner next year from existing sources.

Governor Corzine, however, isn't biting. His staff is already
preparing for a state government shutdown in the event that the
legislature does not present him with what he regards as a fiscally
sound budget. This is not simply a battle of wills or a disagreement
about fiscal policy. It is a difference in calculations about the
political impact of that policy. The Governor believes that Democratic
legislators who are bucking him are a little paranoid. Those
legislators think that Corzine, this newcomer to state government, does
not appreciate New Jersey political history and what can happen to
those who increase a broad-based tax even with some good reasons.

For a preview of how supporting a sales tax hike can be used against
his fellow Democrats, the Governor can listen to the ads run by the
Americans for Prosperity. He can also look at the proposal of the
Assembly Republicans to cut $2.2 billion in spending from his budget
plan and pay attention to their argument. The anti-tax group is telling
residents in several swing districts to contact their Democratic state
senators and insist that they reject the sales tax hike. For their
part, the GOP members of the Assembly Budget Committee responded to the
Governor's call for alternatives to his budget proposal. In a Friday
press conference, Assemblyman Joseph Malone III (30th district)
announced $2.2 billion in budget cuts that would enable the state to
avoid any new taxes or fees, increases in existing ones, or some
undesirable spending cuts and freezes.

The budget cuts recommended by the Assembly Republicans include the
following: a $420 million dollar reduction in state aid to 13 Abbott
school districts that state officials think no longer should be
eligible for special funding; keeping over $100 million in urban
enterprise zone revenue; salary freezes for higher paid state
employees; layoffs of 800 patronage employees; eliminating the
Personnel, State and Public Advocate departments; cuts in the
Governor's proposed funding for child services, affordable housing, and
teacher mentoring program, NJPAC, NJN and the State Historical
Commission. At Friday's press conference, Minority Leader Alex DeCroce
said that state government has "...to learn to stop spending money we
don't have and cut expenses."

While the Governor's Office responded politely to the Republicans'
suggested cuts, some Democratic legislators were anything but cordial
to their GOP colleagues. Lawmakers representing urban areas complained
that many of the Republicans' recommended cuts focused on urban
programs and residents. Were the Republicans promoting unproductive
class warfare or racial politics? GOP lawmakers objected strenuously to
any such suggestion. Malone noted that the since the state spends
heavily, and sometimes imprudently, on urban areas, any effort to cut
excessive or wasteful spending will necessarily require attention to
programs and aid for cities and their schools.

Malone made this case again on Saturday at a town meeting sponsored
by 14th district Republican Assemblyman Bill Baroni in West Windsor.
Despite heavy rain, some 100 constituents came out to hear the
charismatic Baroni and the candid, feisty, and likeable Malone. The
veteran Assemblyman from Bordentown spoke passionately about the need
to confront state spending rather than raise taxes, how suburban and
rural residents need to join together to fight waste, fraud and high
taxes, and the need for major tax reform.

Malone agrees with former Governor Richard Codey and the current
Governor that New Jersey is in a fiscal mess and that we all need "an
honest understanding" of the state's plight. But Malone disagrees with
his Democratic colleagues who assert that Corzine's budget is too lean.
While he believes that the state can spend its money more productively
and equitably, Malone claims that the majority party has "no
willingness to confront how much we spend and waste." He said he
respects Governor Corzine and Treasurer Barry Abelow but does not
believe that they understand the needs and concerns of "common people"
living in suburban and rural areas of the state.

Indeed, the Governor has frequently mentioned that in his several
town meetings throughout the state, there haven't been many complaints
about his proposed sales tax hike. Malone's experiences have been
different. Citing appearances at many town meetings in and outside his
south-central Jersey district, the Assemblyman claimed that people he
met are "angry and frustrated." Their main gripes? They are fed up with
subsidizing urban areas whose public officials squander money on sports
arenas, patronage jobs and bloated government contracts. And, they
resent sending so much education aid, paid for by the state income tax,
to Abbott school districts where educational outcomes are still bad. To
make matters worse, 13 Abbott districts can, according to the Education
Commissioner, pay for more of their own education costs because of
their improved tax bases. In the meantime, state aid for schools in
suburban and rural areas has been flat for years, which has resulted in
huge increases in property taxes in these areas.

When he and other Republicans approached their Democratic legislative
colleagues about Abbott funding - especially the issue of the 13
better-off districts -, Malone said "we got stone silence." He claims
that lots of legislators, including many Democrats, are sick that
people in middle class school districts have to pay so much for the
Abbotts. But, he lamented, Democratic legislators are intimidated and
afraid to speak out because "lawmakers from urban areas control the
agenda."

A long-time educator himself, Malone recognizes that the state does
have to spend more money in certain areas to make things better. But he
wants the needs of suburban and rural school districts to be taken into
consideration as well and believes that will only happen if residents
in these areas contact the Governor and their legislators. Yes, Malone
does recommend that New Jerseyans check to see if their Democratic
legislators representing suburban districts vote for a budget that
would, as he puts it, "feed the urban beast."

When asked if he is optimistic that some meaningful recommendations
for reform can be agreed on during the legislature's planned special
session this summer, Malone admitted that he is out of necessity
focused on deliberations about the current budget. He did say, however,
that New Jersey "...needs to fund schools based on kids' needs, not on
greed," meaning that the school funding formula must be looked at
carefully. Earlier this year he supported the effort to encourage
school districts and municipalities to regionalize and consolidate
services, a favorite idea of Speaker Roberts.

When it comes to property tax reform, Malone told the West WIndsor
audience that he is aiming for a plan that gives homeowners a cut on
the order of $3,000 to $5,000. That's would be a big reduction indeed,
but one that folks in communities like Bordentown, a modest working and
middle class municipality south of Trenton, would really appreciate.
Malone and his neighbors pay a whopping $12,000 a year in property
taxes. As he said, those ever increasing property taxes in suburban and
rural areas are a fact that legislators and the Governor need to pay
attention to when they decide on taxes and state aid in the new budget.
If not, those midterm elections next year could be interesting indeed.

David P. Rebovich, Ph.D., is Managing Director of the Rider University
Institute for New Jersey Politics (www.rider.edu/institute). His also
writes a regular column, "On Politics," for NEW JERSEY LAWYER and
monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine. He
is a member of CQPolitics.com's Board of Advisors that provides weekly
commentary on national political developments.

by David P. Rebovich

Hit the mute button on your remote, close your eyes, and let your imagination take you to October of 2007. Listen carefully, and you will hear a rich baritone voice intone the following. "They promised you tax relief and ethics reform. But in the last six years that they have held power in Trenton, New Jersey's Democrats have given you tax hikes, cronyism, and broken promises. Property taxes have soared by over 30 percent. Rebate checks have been cut in half. And when faced with another multi-billion dollar budget deficit of their own creation, what did the Democrats do? They raised the sales tax instead of cutting wasteful spending and jobs for their political allies. No wonder businesses are leaving the state and more people find it harder and harder to make ends meet. The only way to end this mess? Vote for Republicans for Assembly and Senate and say 'no' to the Democrats' destructive policies."

If you were wondering why there is a standoff between the Governor and the state legislature over the budget for fiscal year 2006-2007, it's because Democratic legislators fear a campaign next year in which Republicans run ads like the above. This fear came to a head late last week when Assembly Democratic leaders told Governor Jon Corzine that their members would not support the one-cent increase in the state sales tax he proposed in the new budget. Rejecting the sales tax hike is a serious political blow to the new Governor who has spent months trying to sell his tightly crafted, controversial proposal to the public. In practical terms, rejecting the sales tax hike creates a $1.2 billion hole in the budget that must be filled by either increasing some other taxes, cutting spending, or doing some combination of both.

None of these options are pleasant or easy. And, with the new budget required to be signed by July 1st, lawmakers do not have much time to decide what to do. How did the Democrats get themselves into this situation, one which may cause some New Jerseyans to think that the party in power is disorganized and not up to the task of governing during these tough times? There are several explanations, including the different perspectives of the branches of state government and constituencies they represent, the fact that Corzine is a political newcomer to state government, and the possibility that his budget may be too austere.

But, the most basic reason the Democrats have a crisis about the next budget is that they have for too long told their constituents that extensive government spending is possible because someone else, e.g., the rich, the business community, people in the next town, will pick up the tab. If not, the bill can simply be covered by some painless budget maneuver. Well, those days are gone, and Democrats are bickering over what to do about it.

To his credit, Governor Corzine has criticized his own party for irresponsible budget practices that hid the painful truth and said that he is willing to face the political consequences of taking corrective action. This is a big, lofty, and long-term goal, one that chief executives may adopt for themselves and that legislators, even those in the governor's party, are likely to resist. By virtue of his broad constituency and four year term, a governor can be concerned about the problems and needs of the entire state and its long-term well-being.

However, legislators are more likely to focus on their own districts and what their constituents need and want now. While running for reelection, as in the fall of 2007, incumbent senators and assemblymen do not want to talk about how they acted like statesmen and supported noble causes. That could sound like an excuse for failing to bring funds and programs from Trenton to help the folks back home.

But Jon Corzine ran for governor as an outsider with the blessings of the very people who are now bucking him for trying to live up to at least some of his campaign promises. Corzine said he would help New Jerseyans move beyond the politics of patronage and fiscal irresponsibility that drove up the cost of government, offended citizens' ethical sensibilities, and prevented the achievement of important policy objectives. In supporting Corzine for their party's nomination for governor over one of their own - Acting Governor Richard Codey -, Democratic legislators recognized that they needed a candidate who could credibly argue that he was not part of state government's ethical or fiscal quagmire that citizens associated with the party in power.

But did those Democratic leaders want merely an attractive candidate who would enable their party to hold on to the governor's office and then be a figurehead? Or, did they want someone who would help them reform their ways? When Corzine - who was a U.S. Senator and didn't need a new job-- campaigned on restoring ethical integrity to Trenton, citizens were be inclined to give him the benefit of the doubt. When he claimed he would use his extensive business experience to balance the state budget honestly, citizens were hopeful. After all, this former CEO wouldn't have an excuse if he fouled up the budget.

When Corzine took office, he showed that he wasn't kidding when he was campaigning. He called for comprehensive ethics reform, something that lawmakers have managed to avoid. Then he proposed a budget that was not as revolutionary as he claimed but did make some progress reversing the controversial fiscal practices of his Democratic and Republican predecessors. While spending would be increased, in large part because of mandates, so would revenues. The state would no longer rely on gimmicks to cover multibillion dollar deficits.

But the problem with Corzine's budget proposal was, of course, its political consequences. Many governors have proposed budgets that contained bad news in the form of tax hikes and spending cuts. However, to make the bad news a little more palatable, they have typically recommended some popular new programs or funding increases for some existing ones. Governors have done this for their own political good and to give legislators, who after all must pass the budget, reasons for supporting the proposal.

Corzine did not follow this formula. While there was bad news, in the form of higher taxes - especially the sales tax -, and spending cuts and freezes to higher education, towns and school districts, there was very little good news, conventionally understood. When asked what the good news was in the plan, Administration officials deadpanned that the new budget will put the state on the path toward fiscal integrity. This is a praiseworthy goal to be sure, and one that may earn Corzine a big chapter in the state's political history. But fiscal integrity is not likely to be an effective campaign theme if you are a Democratic legislator running for reelection next year.

This still leaves the serious question of what would make for a good new state budget and, yes, one that Democrats could campaign on next year. In the new world of gimmick-free budgets and citizens' resistance to pay higher broad-based taxes, Democratic legislators have a big problem. The may want to avoid making any cuts to an already lean budget proposal. But they don't want to support a sales tax increase which polls show is unpopular with most New Jerseyans.

This means that the Democrats will have to find another billion bucks in order to balance the new budget. Where can they find that kind of money? Well, Corzine and the legislature can rescind the entire rebate program, or part of it, from the budget and save a fortune. A popular move? Hardly. They can cut the Governor's initiatives for the needy and save a few hundred million dollars, so that middle class taxpayers can keep a few more bucks in their pockets. They can decrease, or even forego, the state's long overdue payment into the government workers pension fund. But this would perpetuate the state's fiscal problems rather than take a step toward alleviating them. They can support the recommendations of Sen. Steve Sweeney and Assemblymen Paul Moriarty and Gerry Green to ask state workers give back upwards of 15 percent of their salaries and fringe benefits.

The Democrats can also increase income tax rates on higher earners, despite the Governor's concern that such a move would have harmful economic consequences. And, they can look at the list of cuts the Assembly Republicans have been recommending on their web site for months now. No matter what the Democrats ultimately decide to do to balance the new state budget, they are likely to make some political enemies. You have to wonder if the Democrats wouldn't be better off simply stating that their party believes that the common good requires that the state have certain programs with certain levels of funding, and that most folks may have to pay a little more in taxes and fees. If New Jersey's Democrats are afraid to make that argument or don't know how to, the party has a bigger crisis on its hands than how to balance the new state budget.

David P. Rebovich, Ph.D., is Managing Director the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a regular column, "On Politics," for NEW JERSEY LAWYER and monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine. He is a member of CQPolitics.com's Board of Advisors that provides weekly commentary on national political developments.

by David P. Rebovich

Hit the mute button on your remote, close your eyes, and let your imagination take you to October of 2007. Listen carefully, and you will hear a rich baritone voice intone the following. "They promised you tax relief and ethics reform. But in the last six years that they have held power in Trenton, New Jersey's Democrats have given you tax hikes, cronyism, and broken promises. Property taxes have soared by over 30 percent. Rebate checks have been cut in half. And when faced with another multi-billion dollar budget deficit of their own creation, what did the Democrats do? They raised the sales tax instead of cutting wasteful spending and jobs for their political allies. No wonder businesses are leaving the state and more people find it harder and harder to make ends meet. The only way to end this mess? Vote for Republicans for Assembly and Senate and say 'no' to the Democrats' destructive policies."

If you were wondering why there is a standoff between the Governor and the state legislature over the budget for fiscal year 2006-2007, it's because Democratic legislators fear a campaign next year in which Republicans run ads like the above. This fear came to a head late last week when Assembly Democratic leaders told Governor Jon Corzine that their members would not support the one-cent increase in the state sales tax he proposed in the new budget. Rejecting the sales tax hike is a serious political blow to the new Governor who has spent months trying to sell his tightly crafted, controversial proposal to the public. In practical terms, rejecting the sales tax hike creates a $1.2 billion hole in the budget that must be filled by either increasing some other taxes, cutting spending, or doing some combination of both.

None of these options are pleasant or easy. And, with the new budget required to be signed by July 1st, lawmakers do not have much time to decide what to do. How did the Democrats get themselves into this situation, one which may cause some New Jerseyans to think that the party in power is disorganized and not up to the task of governing during these tough times? There are several explanations, including the different perspectives of the branches of state government and constituencies they represent, the fact that Corzine is a political newcomer to state government, and the possibility that his budget may be too austere.

But, the most basic reason the Democrats have a crisis about the next budget is that they have for too long told their constituents that extensive government spending is possible because someone else, e.g., the rich, the business community, people in the next town, will pick up the tab. If not, the bill can simply be covered by some painless budget maneuver. Well, those days are gone, and Democrats are bickering over what to do about it.

To his credit, Governor Corzine has criticized his own party for irresponsible budget practices that hid the painful truth and said that he is willing to face the political consequences of taking corrective action. This is a big, lofty, and long-term goal, one that chief executives may adopt for themselves and that legislators, even those in the governor's party, are likely to resist. By virtue of his broad constituency and four year term, a governor can be concerned about the problems and needs of the entire state and its long-term well-being.

However, legislators are more likely to focus on their own districts and what their constituents need and want now. While running for reelection, as in the fall of 2007, incumbent senators and assemblymen do not want to talk about how they acted like statesmen and supported noble causes. That could sound like an excuse for failing to bring funds and programs from Trenton to help the folks back home.

But Jon Corzine ran for governor as an outsider with the blessings of the very people who are now bucking him for trying to live up to at least some of his campaign promises. Corzine said he would help New Jerseyans move beyond the politics of patronage and fiscal irresponsibility that drove up the cost of government, offended citizens' ethical sensibilities, and prevented the achievement of important policy objectives. In supporting Corzine for their party's nomination for governor over one of their own - Acting Governor Richard Codey -, Democratic legislators recognized that they needed a candidate who could credibly argue that he was not part of state government's ethical or fiscal quagmire that citizens associated with the party in power.

But did those Democratic leaders want merely an attractive candidate who would enable their party to hold on to the governor's office and then be a figurehead? Or, did they want someone who would help them reform their ways? When Corzine - who was a U.S. Senator and didn't need a new job-- campaigned on restoring ethical integrity to Trenton, citizens were be inclined to give him the benefit of the doubt. When he claimed he would use his extensive business experience to balance the state budget honestly, citizens were hopeful. After all, this former CEO wouldn't have an excuse if he fouled up the budget.

When Corzine took office, he showed that he wasn't kidding when he was campaigning. He called for comprehensive ethics reform, something that lawmakers have managed to avoid. Then he proposed a budget that was not as revolutionary as he claimed but did make some progress reversing the controversial fiscal practices of his Democratic and Republican predecessors. While spending would be increased, in large part because of mandates, so would revenues. The state would no longer rely on gimmicks to cover multibillion dollar deficits.

But the problem with Corzine's budget proposal was, of course, its political consequences. Many governors have proposed budgets that contained bad news in the form of tax hikes and spending cuts. However, to make the bad news a little more palatable, they have typically recommended some popular new programs or funding increases for some existing ones. Governors have done this for their own political good and to give legislators, who after all must pass the budget, reasons for supporting the proposal.

Corzine did not follow this formula. While there was bad news, in the form of higher taxes - especially the sales tax -, and spending cuts and freezes to higher education, towns and school districts, there was very little good news, conventionally understood. When asked what the good news was in the plan, Administration officials deadpanned that the new budget will put the state on the path toward fiscal integrity. This is a praiseworthy goal to be sure, and one that may earn Corzine a big chapter in the state's political history. But fiscal integrity is not likely to be an effective campaign theme if you are a Democratic legislator running for reelection next year.

This still leaves the serious question of what would make for a good new state budget and, yes, one that Democrats could campaign on next year. In the new world of gimmick-free budgets and citizens' resistance to pay higher broad-based taxes, Democratic legislators have a big problem. The may want to avoid making any cuts to an already lean budget proposal. But they don't want to support a sales tax increase which polls show is unpopular with most New Jerseyans.

This means that the Democrats will have to find another billion bucks in order to balance the new budget. Where can they find that kind of money? Well, Corzine and the legislature can rescind the entire rebate program, or part of it, from the budget and save a fortune. A popular move? Hardly. They can cut the Governor's initiatives for the needy and save a few hundred million dollars, so that middle class taxpayers can keep a few more bucks in their pockets. They can decrease, or even forego, the state's long overdue payment into the government workers pension fund. But this would perpetuate the state's fiscal problems rather than take a step toward alleviating them. They can support the recommendations of Sen. Steve Sweeney and Assemblymen Paul Moriarty and Gerry Green to ask state workers give back upwards of 15 percent of their salaries and fringe benefits.

The Democrats can also increase income tax rates on higher earners, despite the Governor's concern that such a move would have harmful economic consequences. And, they can look at the list of cuts the Assembly Republicans have been recommending on their web site for months now. No matter what the Democrats ultimately decide to do to balance the new state budget, they are likely to make some political enemies. You have to wonder if the Democrats wouldn't be better off simply stating that their party believes that the common good requires that the state have certain programs with certain levels of funding, and that most folks may have to pay a little more in taxes and fees. If New Jersey's Democrats are afraid to make that argument or don't know how to, the party has a bigger crisis on its hands than how to balance the new state budget.

David P. Rebovich, Ph.D., is Managing Director the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a regular column, "On Politics," for NEW JERSEY LAWYER and monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine. He is a member of CQPolitics.com's Board of Advisors that provides weekly commentary on national political developments.

by David P. Rebovich

An unusual story on this spring's budget process ran in New Jersey's newspapers last week. The Associated Press reported that not only was a group planning a demonstration against Gov. Jon Corzine's budget proposal for the next fiscal year, others were preparing to rally in support of it. Now protests about a budget proposal occur almost every year, since there is always someone who is upset about spending cuts, smaller than desired funding increases, or hikes in taxes and fees. While many budgets do satisfy certain groups and citizens, rarely does anyone demonstrate in favor of a spending plan. And running television and radio ads asking the general public to get behind a Governor's budget proposal is all but unheard of.

But this year New Jersey will have demonstrations for and against the Governor's budget proposal and, yes, some ads, too. Currently the NJEA, AFSCME and the CWA are sponsoring television and radio ads that praise Gov. Corzine for taking the "right way" in dealing with the state's fiscal situation. The ads call on New Jerseyans to tell legislators, "No more gimmicks. Pass Corzine's budget. Clean up Trenton." These unions, along with others representing police officers and firefighters and private sector employees, will also conduct a rally on June 19th at the State House. On June 15th some 50 nonprofit and advocacy organizations will have their own demonstration in support of the Governor's budget. An anti-tax group will rally against the plan this month as well.

The interesting question is why there is aggressive campaigning for a budget proposal that, frankly, has caused Gov. Corzine's approval rating to drop to a paltry 35 percent, consternation among Democratic legislators, and conflict between the Administration and legislators of both parties? In fact, public officials at all levels of government and citizens throughout the state have several complaints about the Governor's austere plan. The specific recommendations that have met the most criticism are the one-point increase in the sales tax, cuts to higher education that could lead to big tuition increases, and freezes in state aid to schools and towns that will lead to higher property taxes. The Governor claims that these admittedly painful measures are necessary to bring state spending in line with recurring revenues and to avoid relying on any gimmicks to balance the budget.

While Gov. Corzine is asking for what he calls "shared sacrifice" from citizens to balance the budget, state government workers are being spared. Although New Jersey has to fill a $4 billion hole in next year's spending plan, he has not recommended layoffs for any merit system personnel. In addition, he has proposed a $1.3 billion payment into the government workers' pension fund to help shore up a retirement system that lawmakers have previously raided and then allowed to remain under-funded.

The Governor has also tried to remain true to his campaign promise to help the "truly needy." While his generosity is limited by the state's revenue problems, Corzine nonetheless put increases for child welfare, food programs, and programs for the homeless, as well as tax relief for more low income workers, in his budget proposal. Thus, compared to most other groups and individuals in New Jersey, state workers and anti-poverty advocates believe that they and their causes will do reasonably well if the Governor's budget proposal is approved as is.

However, with less than a month to go before a new budget must be signed, it is unlikely that the Governor's proposal will be approved without changes, including some fairly big ones. Legislators remain concerned about raising the sales tax rate and how voting for such a measure may be used against them in their reelection bids in 2007. While polls show that a majority of New Jerseyans prefer a sales tax hike to other tax increases, they also indicate that most folks want lawmakers to pursue cuts in state spending before raising any tax rates. And, property tax relief is a priority for most citizens, one that takes precedence over payment into a pension fund or, alas, additional programs for the needy.

Then there is the state's changing revenue situation which, according to Treasurer Barry Abelow, has changed for the worse. As painful as Corzine's original budget proposal is, he and the Democratic-controlled legislature will have to find an additional $400 million to $500 million in some combination of more cuts or more revenues to balance next year's budget. Both the Governor and Democrats in the legislature have ruled out any more taxes or fee hikes. Corzine has already announced plans to pare back some spending on new initiatives, including some for the needy.

Even with the poorer revenue picture, Republican legislators continue to argue that a sales tax hike can be avoided by making more cuts in wasteful spending and low priority programs. A group called the Americans for Prosperity, headed by Bogota Mayer Steve Lonegan, who sought the GOP gubernatorial nomination last year, will also hold a rally in Trenton against any new tax hikes before the month is out. While no one expects this event to resemble the massive, rowdy anti-tax rally on West State Street in Jim Florio's first year as governor, Steve Lonegan cannot be underestimated. His quick wit, keen speaking ability, and steadfast commitment to his cause may enable him to garner more attention than GOP legislators who are also arguing against any new taxes in the next year's budget.

But no sooner were the dates for rallies announced and the pro-budget ads on the airwaves than some Democratic legislators presented their own ideas about how to avoid a sales tax hike. State Senator Steve Sweeney (3rd district) and Assemblymen Jerry Green (22nd district) and Paul Moriarty (4th district) announced a bold plan to save the state $700 million by cutting state workers' salaries and benefits by 15 percent. These lawmakers said they want to bring public sector compensation packages in line with the private sector as a matter of equity - taxpayers should not have to pay for benefits others that they don't receive themselves - and to save money during these tough times.

State employee union officials immediately expressed outrage at this proposal. They rejected any call for give-backs in salaries or fringe benefits while contracts are in effect. The Corzine Administration and Democratic legislative leaders announced that they had every intention of honoring those contracts. But the real question is, what about the future? Well, Sweeney, himself a union leader, Green and Moriarity have to know that their proposals have no chance of being acted on by the end of the month. But they have put it on the record that Democrats are willing to take on state workers in the name of the average New Jersey taxpayer. If the sales tax increase is approved - smart money says it will be -, these three legislators have provided themselves with political cover, since they can tell their constituents that they supported a taxpayer friendly alternative.

But, the Sweeney-Green-Moriarity proposal is more than just a self-serving political ploy. After all, Gov. Corzine himself has publicly stated his interest in looking at state employee retirement and health benefits plans with an eye toward saving money. As such, state workers, and public employees at all levels of government in New Jersey, should not be surprised if in their next round of contract negotiations, they will be asked to accept small salary increases and to give back some benefits. For the Corzine-era Democratic Party, populism apparently means being more responsive to the views and concerns of private citizens who, after all, far outnumber government employees. Who will government employees then look to for sympathy, the Republicans? Heck, most GOP legislators either looking to sign on to the Sweeney-Green-Moriarty proposal or are grumbling that these Democrats stole one of their best planks for GOP's campaign platform next year.

David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a regular column, "On Politics," for NEW JERSEY LAWYER and monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine and is a member of CQPolitics.com's Board of Advisors that offers weekly commentary on national political developments.

by David P. Rebovich

During the campaign he made some promises that now he cannot keep. He also had reassured many of his party's key constituent groups that he would champion their causes in the State House. But today these Democrats realize that like most New Jerseyans, they will have to share in the sacrifice that the new Governor is calling for. That sacrifice entails tax hikes, program cuts and freezes in state aid, none of which help a politician's popularity. And to justify these unpopular policies, the Governor is making an argument that is hard to sell to citizens who want program support and tax relief immediately. His argument is that tough choices are inescapable and necessary if the state and its residents are to have a better future.

This is the situation that Jon Corzine finds himself in after a little over four months in office. Despite declining poll numbers, disaffection among fellow Democrats, and continued criticism from emboldened Republicans, the Governor is pressing forward. He has been making the rounds to further explain his budget proposal and the long-term fiscal strategy on which it rests. In the process he is demonstrating that his Administration is accessible to average citizens and that he is a candid, personable leader who is eager to engage the public in discussions about their concerns and his priorities and policies.

This is the Jon Corzine that some one-hundred and fifteen residents met at a town meeting last Thursday at Hamilton Township's Senior Citizens Center. A sprawling middle and working class suburb of Trenton and home to thousands of state government workers, Hamilton nonetheless has a well-deserved reputation as a "swing" town. Last November it gave Doug Forrester a small plurality, in part due to the reverse coattails provided by popular GOP Assemblyman Bill Baroni, who carried the Township by 6,000 votes, and a Republican sweep of three local council races.

At the Hamilton town meeting, the Governor faced a polite and politically sophisticated audience that had some hard questions about various aspects of the budget and other policy issues. But Corzine set a positive tone for the meeting and presented a framework for understanding the state's fiscal condition, the reasons he could not satisfy some of his campaign promises, and his specific recommendations for balancing the budget during these tough times.

Energetic, intent, and friendly, the Governor began the town meeting by reminding folks that the state has serious fiscal challenges, that there are no easy solutions, and that difficult choices have to be made. He admitted that he had to renege on his campaign promises to restore rebate checks to their 2004 levels and then increase them by 10 percent and to make a full contribution to the government workers pension fund. This is because when he entered office in January, he was confronted with a $4 billion budget shortfall and the task of getting the state out of its long-running fiscal mess.

The options for dealing with the shortfall in next year's budget and the state's long-term problems are not appealing and, Corzine quipped, certainly not what any elected official would voluntarily choose to do. What the Governor did end up recommending are over $2 million in "spending avoidance" and cuts, including flat funding for school districts and towns and big reductions in aid for higher education. And, he rejected revenue-raising gimmicks and instead opted for increasing taxes by $1.4 billion, most of which would be gained from a one-cent increase in the sales tax and its extension to some other purchases.

Republicans have criticized Corzine for not cutting more spending before recommending tax hikes. GOP assemblyman cite their list of billions on dollars in possible savings that has been posted on their web site for months. Some Democrats have complained that the Governor did not consider hiking some other taxes, including marginal income tax rates on high earners, in order to be able provide more property tax relief. However, Corzine insisted, and continued to do so at the Hamilton function, that the state needs recurring revenues to balance the budget, needs to be disciplined about spending to avoid future budget crises, and must recognize the effect that any tax hike can have on the state's economy.

Despite all of these concerns, the Governor remains committed to taking care of the state's most vulnerable residents. These include kids who need health care, special education, and after school programs.and seniors who need pharmaceutical and housing assistance. Yes, Corzine said, he has had to make some tough choices that have upset folks, including some who may have supported him last November. But, he claimed, if New Jersey practices fiscal integrity for the next few years and gets its economy rolling - the Governor says he is vigorously working to recruit new businesses to locate here -, the future will be bright.

Corzine warned, however, that long-term fiscal integrity and the need to keep taxes down require that state to be even more disciplined about spending in future budgets. In addition, as lawmakers consider property tax reform, they need to think not simply about alternative revenue sources but also about cutting wasteful, low priority spending and making government operations and programs more efficient and effective. Corzine told the Hamilton audience that he would have liked to cut even more spending in his budget proposal before recommending tax hikes and reminded folks that he has a government reengineering commission that is looking for ways to streamline operations and to decrease costs.

The Governor cited four other major areas where the state and its taxpayers may be able to save money. He noted that next year there will be contract negotiations with the state's unionized workers and that he is concerned about the burden on taxpayers posed by pension benefits and by post retirement health benefits. Despite complaints about likely tuition hikes caused by the cuts in aid to higher education that he recommended, Corzine said that there needs to be more oversight of the state's colleges and universities and a greater effort to control costs on campuses.

With an eye toward property tax reform, the Governor also stated that education spending needs to be reevaluated and will be during the summer. While he recognizes the obligation to provide a thorough and efficient system of education, Corzine wants to make sure that education dollars are being spent effectively in all school districts, including the so-called Abbott ones. While he admitted that some tax shifting would have to occur to provide property tax relief, the Governor wants to achieve efficiency in education spending and in the delivery of local government services. He praised Joe Roberts' CORE Reform Plan that aims at reducing the costs of local government and education through consolidation and regionalization of services and more aggressive program and budget oversight.

So while the Governor respected citizens' concerns about specific components of his budget proposal, his overriding message at the town meeting was that they consider his individual recommendations as part of a comprehensive plan to balance the budget and make progress toward achieving long-term fiscal integrity. Trade-offs and sacrifices are necessary. One of these sacrifices is a sales tax hike, which is he regards as less odious to individuals than higher property taxes and to businesses than higher corporate or income taxes. The audience seemed disappointed when Corzine could not guarantee that a property tax reform convention would be put on this November's ballot. But maybe the additional time will enable lawmakers to agree on some efficiency measures that will reduce the costs of operations and programs at all levels of government and make property tax reform part an overall tax reduction plan.

David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a regular column, "On Politics," for NEW JERSEY LAWYER and monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine and is a member of CQPolitics.com's Board of Advisors that offers weekly commentary on national political developments.

by David P. Rebovich

It isn't the property tax relief or reform that New Jerseyans want. Nor is it any guarantee that waste, fraud and abuse will be eradicated from every nook and cranny of government. But the CORE Reform Plan presented last week by Joe Roberts, the Speaker of the General Assembly, and other key legislators is good public policy and smart politics, both of which the Democrats in Trenton can use these days. The Plan may also be a prelude to bigger changes in government operations, spending and taxes. However, as Roberts pointed out at a well attended press conference, achieving administrative efficiency, effective policies, and lower property taxes will require citizens and public officials to look at politics and government structures differently, and getting both to do so may not be so easy.

CORE is an acronym for the following: Clearing hurdles to shared services; Overriding waste in schools; Reining in pension abuses; and, Empowering citizens. New Jerseyans do look to state government for help in keeping property taxes down through more aid to municipalities and school districts or with bigger rebate checks. In these difficult budget times, neither will be forthcoming. But according to Roberts, state government can help citizens and their local governments and school districts help themselves and that's what CORE purports to do..

The reforms proposed in the CORE plan gives "...residents and local officials new tools and strategies to cut waste, create efficiencies and drive down local costs." Such cost cutting is, of course, a good in itself and can provide some immediate relief, however modest, to property taxpayers. Seeking efficient practices and effective policies is also a necessity as the state considers long term property tax relief. Roberts said, "These measures will help ensure that when we identify new means of property tax relief - as we must - the money won't vanish into the current backwards and bloated structure."

By "backwards and bloated structure," Roberts means the 566 municipalities and 616 school districts in this small state. The Speaker admitted that New Jerseyans' fixation on the idea of home rule, and the deference of state officials to this fixation, has been a barrier to regionalizing municipal and educational services and to consolidating communities. However, Roberts noted that "home rule" is an illusion, albeit a powerful one. As the late Alan J. Karcher, himself one of New Jersey's most able Speakers, wrote in the landmark book, NEW JERSEY'S MULTIPLE MUNICIPAL MADNESS, "municipalities are mere creatures of the state, and nothing more...All actions of every and any type taken by a municipal governing body are exercised in a derivative manner, and are restricted to those matters specifically delegated to them by the legislature."

The implications of this are clear. State government officials can force the consolidation of substate jurisdictions - municipalities, school districts and counties. Forced consolidation is not Roberts' goal or the purpose of the CORE Reform Plan. But citizens who complain about high local property taxes that pay for their municipal government, school district and county government need to ask themselves two questions. Can their tax burdens can be decreased by changes in administrative practices and government structures? And, is it ethical for citizens to ask the state to provide more aid to support expensive administrative practices and government structures when less costly alternatives can be pursued?

The CORE Reform Plan aims at making it easier for communities and citizens to transform the very expensive status quo by streamlining the current 337 separate "...confusing, contradictory and counterproductive" laws governing regionalization and shared services into a uniform statute. Barriers to seeking shared service arrangements will be removed. The Department of Community Affairs will also develop efficiency benchmarks for various services provided by local government. Municipalities that do not meet these benchmarks will not be eligible to receive any funds through the Legislative Initiative Block Grant program.

In addition, small communities will be encouraged to consider the "township" model of government that enables them to preserve local identity while consolidating governance and service delivery under a large, more efficient municipality. Roberts cited Woodbridge Township and Gloucester Township as two examples of places where citizens enjoy the best of both. And, Assemblyman Upendra Chivukula explained how several communities in Somerset County are already sharing services and practicing regionalization.

To combat inefficiency in schools, another cause of high property taxes, the CORE Reform Plan proposes the creation of "super" county school superintendents and granting them the "broad authority to eliminate waste and overhead." Such officials could encourage shared services, provide administrative support for school transportation, purchasing and accounting by local school districts and promote joint purchasing in the county. Three especially important powers that Roberts' wants these "super" superintendents to have are approving or disapproving compensation packages for local school superintendents; eliminating non-operating school districts and authorizing referenda to create K-12 districts; and reviewing local school budgets, vetoing excessive administrative expenses, and calling for audits on administrative spending.

In addition, the CORE plan calls for the formation of a bipartisan "School Aid Reform and Accountability Task Force." This group, headed by Majority Leader Bonnie Watson Coleman, has four huge responsibilities. By September its 13 members - 7 legislators and 6 public members - will recommend a new school funding formula; determine the costs to provide a thorough and efficient system of education "...in light of the taxpayers' burden of providing education"; identify best practices for achieving student learning; and, recommend an equitable, adequate school funding formula based on a community's ability to pay in order to keep property taxes down.

The CORE plan also addresses pensions abuses and aims at empowering citizens through some election reforms. Responding to well-publicized reports of elected and appointed officials receiving big pensions, Roberts wants the Assembly to hold hearings on the matter. Assemblywoman Nellie Pou noted that the legislature needs to take steps to guarantee the solvency of public employee pension plans for the merit system personnel for which they were designed. She also wants to end pension padding in its various forms and to cap sick leave time. These are the kind of common sense reforms that people expect, especially when they are being asked to pay more taxes.

Citizens concerned about the cost and quality of public services can be further empowered by a variety of other measures. Roberts recommends that municipal and school budgets, including salary and benefits information on local officials and administrators, be made available to citizens in an easy to understand format. He also suggests moving school board and fire district elections to November to increase voter turnout. Residents would not vote on school budgets that were under the state cap. Those over it would be subject to a binding vote by local residents. And "super" county school superintendents would also review local school districts budgets and could cut excessive costs without appeal.

Fire districts budgets would also be subject to a new cap and strict oversight by the Department of Community Affairs. And, Roberts wants local residents to be able to vote in a binding referendum on proposals related to shared services with neighboring communities. This power would enable citizens to circumvent obstruction to change by local officials who may have a vested interest in the current, and expensive, local government structures and ways of delivering services.

The CORE Reform Plan has been generally well-received as representing a step in the right direction to help save taxpayer dollars during these difficult times. When pressed as to whether his plan was a substitute for the property tax reform that Democrats promised during the campaign last year they would deliver, Roberts insisted it wasn't. In fact, he and his Democratic colleagues in the Assembly have long supported a so-called citizens' convention on property tax reform. Governor Corzine also supports such a convention. And now Senate President Richard Codey is interested in having a special legislative session soon after the new budget is signed to discuss how to proceed on property tax reform.

But with uncertainty about when and how the state will proceed on the property tax issue, it makes sense for Roberts to push forward with his own reform efforts. In fact, his reform efforts will require public officials and citizens alike to consider issues that should be part of any discussion of tax reform. These include how efficiently and effectively government spends taxpayer dollars and how much those taxpayers can reasonably be expected to pay for government goods and services.

And for government personnel! The CORE Reform Plan focuses on saving money through consolidation, regionalization, administrative efficiencies, weeding out abuse, and establishing standards for services. Although Roberts and his colleagues did not mention this, these reforms will likely lead to cuts in jobs and not just administrative or patronage ones in municipal governments and school systems. Similarly, looking honestly at government spending requires not just reconsidering the compensation packages, including pensions, of administrative personnel but of merit system employees and unionized teachers who, after all, constitute most of the municipal and school district workforce. A fair question for the reform-minded is if it equitable for average New Jerseyans to pay for family health benefits for government and school district employees when most taxpayers don't get the same benefits from their private sector employers.

The issues that the School Aid Reform and Accountability Task Force" will address are particularly interesting and controversial. The task force will apparently take head on the question of what constitutes a "thorough and efficient system of education" and not simply accept the Court's decision that it is what the state's wealthiest 100 districts spend on their students. The inequity that has resulted from this decision is that most middle-income, non-Abbott school districts spend thousands of dollars less per pupil than the wealthy districts or the distressed ones. How can this be fair or constitutional? In addition, there are several questions being raised about spending practices and poor educational outcomes in those heavily funded distressed districts.

Whether Speaker Roberts really intends the CORE Reform Plan to generate all these contentious questions is not clear. But as the Governor and legislators in both parties consider how to deal with property tax reform, it certainly seems to be a good thing that local government and school officials, public employees, and citizens prepare themselves for the various issues that need to be discussed. In the meantime, in a year when the Democratic-controlled state government will ask citizens to accept state aid freezes, program cuts, and tax hikes - none of which are pleasant -, Roberts' CORE Reform Plan enables him and his fellow assemblyman to tell constituents that they are providing some help. But that help will require citizens and local officials to change the way they think about politics and service delivery in their communities.

David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a weekly column, "On Politics," for NEW JERSEY LAWYER and monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine and is a member of CQPolitics.com's Board of Advisors that offers weekly commentary on national political developments.

by David P. Rebovich

It will all come down to economic growth. That's what I blurted out when Jonathan Tamari of Gannett New Jersey asked me if Jon Corzine can turn things around after the new governor's difficult first 100 days in office. This was hardly a profound response. Nonetheless, it is important for New Jerseyans, especially those who voted for Corzine last November, to realize that in the Governor's broad policy perspective, it is economic growth that will enable New Jersey to overcome the fiscal problems he inherited and the political ones he now confronts because of his controversial budget proposal.

This focus on economic growth, however, does raise some questions. Can Corzine really do much to encourage investment in a high cost, high tax and highly regulated state like New Jersey? If he can, will he be able to do so quickly enough to help him balance future state budgets without having to recommend more tax hikes or unpopular spending cuts or freezes in state aid? And, if anticipated economic growth will provide much needed tax revenue for the state, does it make more political sense to take a pragmatic approach to the new state budget rather than ask for so much sacrifice from citizens?

A pragmatic approach is a polite way to describe the practice of balancing the state budget with one shot revenues, fund transfers and borrowing, by avoiding some necessary spending, and hoping for better yields from sales and income taxes. In the last decade both parties have used this approach. This year Democrats in the legislature are under enormous pressure from constituents to amend the Governor's budget proposal. Many Democratic lawmakers are worried that if they don't, their party will pay the price in the 2007 midterm elections when every seat in the senate and general assembly are on the ballot. It is understandable that Democratic legislators are concerned about their reelection prospects. But at some point New Jersey's Democrats - those in office and in the ranks - need to come to terms with two points.

One is that their party has become of a victim of its own success. With 49 assemblymen and 22 senators, today Democrats represent more constituents from more districts in more parts of the state who hope to be satisfied by lawmakers who they supported at the polls. The second point is that the party's policy perspective rests on precepts that are hard to adhere to when money is tight. First is the belief in an activist government that should address social and economic problems and pursue worthy public goals. Then there is the notion that people, from the unemployed urbanite to the tax-weary upper-middle class suburbanite, are entitled to assistance from government, especially if they are part of the Democratic coalition!

But when Democrats are in power and revenues are down, they have some hard choices to make. Precisely how "activist" can government be and whom - which constituents, exactly - are more "entitled" than others? Governor Corzine seems to believe that his party is at the point where these questions have to be asked and answered. State government does not have the money for Democrats to appease all of their supporters. And, gimmicks used to balance the budget do more harm than good.

As such, state officials need to do what is necessary to restore fiscal integrity, by which Corzine means honestly balancing the budget, even if this requires tax hikes and considerable belt-tightening. Fiscal integrity and stability will presumably make New Jersey more attractive to businesses who will not feel that tax and fee hikes are likely to be sprung on them or that programs that support economic development will be in constant jeopardy due to budget uncertainties. And more economic growth, spurred by policy decisions and targeted investments made by state government, will yield more revenue that will presumably enable Corzine and the Democratic legislature to return to their activist ways and to address constituents' needs that for the time-being have been put on hold.

But when one considers some other suggestions that the Governor has for helping the state achieve fiscal integrity, it seems that he is moving beyond the activist-entitlement precepts and broad policy paradigm that have defined and guided his party. In fact, Corzine's ideas for how state government, municipalities and school districts can save money are unconventional for New Jersey Democrats. And these unconventional ideas may well be more disturbing to Democratic legislators, local officials, and constituents than his calls for tax hikes, program cuts, and freezes in state aid.

For starters the Governor wants to revamp pension and health care benefits for non-unionized state workers. This move is considered to be a precursor to asking new unionized state workers to accept less lucrative pension and health benefits plans. He also is calling for the consolidation of smaller school districts and municipalities and for the regionalization of more services to cut costs. Corzine also joined some Republican legislators in suggesting that the Abbott school districts needed to be evaluated to determine if some districts should be removed from the program due to their improved local tax bases, or at least required to make a larger local contribution to their school's costs. Like the growing chorus of legislators on both sides of the aisle, the Governor is wondering why education outcomes are not better in districts that spend thousands of dollars more per pupil than the state average.

In addition, this Democratic governor decided not to increase income tax rates on the well-off or hike business taxes. Instead, he opted to recommend a one point increase in the state sales tax - a regressive levy-, cuts in several programs, and freezes in state aid to municipalities and schools. He also hopes to be able to freeze state aid to the Abbott districts, too.

In the face of a big budget deficit, Governor Corzine has decided to deemphasize his party's historic commitment to an activist government and to the notion of entitlement and instead focus on fiscal integrity and the state's long-term economic well-being. To achieve both of these goals, several key elements in the Democratic Party coalition are being asked to sacrifice, including educators, some urban property tax payers, suburbanites used to "home rule," and current and future government workers. Let's not forget other New Jerseyans who will see their property taxes increase and funding for programs they regard as important pared.

No wonder so many folks are concerned about the state's fiscal situation and Democratic legislators are worried about their political futures. Just about everyone is beginning to wonder how long the kind of sacrifice the Governor is asking for will be necessary. That's a hard question to answer. Corzine has said that he hopes to make the state attractive to investors in knowledge-based industries, like pharmaceuticals and biomedical research, telecommunications, and financial services. The business community has praised his amendment of the corporate business tax, his proposed Edison Innovation Fund, and his interest in streamlining the state's cumbersome regulatory process.

But many knowledge-based industries are looking to the state to support more research and development at colleges and universities, something it cannot afford to do at this time. Economists note that in recent years New Jersey has lost several thousand jobs in the high-tech sector and that regaining them in a highly competitive environment will neither be easy nor occur quickly. What this seems to mean is that New Jerseyans will have to make budget sacrifices for some time and consider some larger reforms involving their municipalities, school districts, government workers' compensation, and perhaps state government service responsibility. That would represent not a only just a new policy paradigm for the state's Democrats but a new paradigm for New Jersey.

David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (ww.rider.edu/institute). He also writes a regular column, "On Politics," for NEW JERSEY LAWYER and monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine, and is a member of CQPolitics.com's Board of Advisors that offers weekly commentary on national political developments.

by David P. Rebovich

It was not long ago that Republicans were calling then-candidate Jon Corzine the biggest boss of an already boss-dominated Democratic Party. At the same time Democrats in the legislature, in the party hierarchy, and in the ranks were heralding the businessman-turned U.S. Senator as just what they needed - a level-headed outsider with the right values and the financial expertise to restore credibility after Jim McGreevey and put the state's fiscal house in order. Then there were the commentators, including this one, who saw Corzine as capable of bringing strategic vision, a business-like approach, and a suffer-no-fools attitude to state government, all of which it needed.

Take the formal and informal powers of one of the nation's strongest governorships. Add a seemingly contrite and grateful Democratic Party. Then put into the governor's office a proud, non-nonsense man who because of his vast personal wealth could pay for his own campaign and be answerable only to the people who voted for him. After a less than inspiring campaign, the new governor stated that he is committed to doing what is necessary to restore citizens' confidence in their state government and to put that government on firm financial footing. He admitted that there will be political and financial costs involved and claimed he did not care if he is a one-term governor as long as he achieves his goals.

That's an appealing story-line, and Jon Corzine has tried to stick to it. Now, however, some Democrats in the legislature, including some of the very folks who all but idolized Corzine during the campaign, seem intent on following their own script. When in his Inaugural Address the new governor called for the need to restore ethical integrity to politics in New Jersey, some key Democrats were offended by his tone and suggestion that there was something wrong with the way officeholders conduct themselves. When he announced that the state was out of budget gimmicks and a sales tax increase was needed to help put it on the path to fiscal integrity, other fellow Democrats said there simply has to be another way. Another way to preserve "politics as usual," that is.

For Corzine, the state cannot afford "politics as usual" any longer, either politically or financially. While he realizes that New Jerseyans are not keen about paying higher taxes or accepting lower levels of state aid and program support, he believes that people will accept sacrifice if state officials demonstrate a genuine commitment to reform. Corzine thinks that such practices as pay-to-play, patronage hiring, dual office-holding, pension-padding, and pork-barrel spending must be eradicated in order to restore citizens' confidence in their government officials and to save taxpayer dollars.

Thus, for this governor ethical integrity and fiscal integrity are related in political and policy terms. Lawmakers at all levels of government need to clean up the political process in order to gain credibility with citizens. Credibility is necessary if those same citizens are to take their public officials seriously when they talk about the need for making changes in public policy, including such sacrifices as revenue increases and spending freezes and cuts.

Those sacrifices, as we all learned from Corzine's Budget Address, are significant. Besides the sales tax hike the Governor is calling for an increase in the cigarette tax, a new water tax, freezes in state aid to municipalities and school districts, cuts in several programs, a big cut in aid to higher education, and only a small increase in property tax rebate checks. Corzine wasn't kidding when he said he would ask for "shared sacrifice."

But the benefits of the new budget, in his mind, outweigh the costs. For the first time in years, state spending would come close to matching recurring revenues. And with anticipated economic growth, stimulated in part by state supported investment programs, New Jersey's fiscal situation will presumably improve so that in future years funding can be restored, some tax hikes rescinded, and new programs pursued.

This sounds like a reasonable plan, especially after years of recurring deficits, budget gimmicks and uncertain funding for several programs. But some of Corzine's fellow Democrats apparently don't agree. They are concerned about the impact of tax hikes, aid freezes, and program cuts on their reelection prospects in 2007 when every seat in the legislature will be on the ballot. Their biggest complaint is with the sales tax increase, which is expected to cost the average family about $275 a year.

Combined with other tax hikes and freezes in state aid to towns and schools that will undoubtedly drive up property taxes, the Governor's budget proposal may well cost many households twice that much and a lot more if a family has children attending state colleges. There's no denying that this could be a potent issue in next year's legislative campaigns. But what are the alternatives? Well, one suggestion is to reevaluate the amount of money the Governor wants to put into the government workers pension fund. A more robust stock market may have increased the value of the pension fund such that the state can justify a smaller contribution than the $1.5 billion Corzine has recommended for next year. Any money freed up can presumably be used for program support or to avoid some tax hikes.

Some legislators are also holding out for an improved revenue picture for the 2007 fiscal year, although recent tax returns have not given state officials any reason to be optimistic. That leaves returning to Corzine's script as the likely, if painful, option. Yes, some editing of that script can be done, but this will also involve some more difficult choices. The Governor himself wants to consider whether the Abbott school funding formula is fair. Republican legislators, to their credit, have argued that consolidation of school districts and municipalities, along with the further regionalization of services, must be put on the table as a possible means of saving taxpayer dollars.

Discussing these measures seem to be necessary before the state considers major property tax reform, another Corzine goal. After all, why would anyone want to pay higher income taxes - the likely alternative - to provide property tax relief to folks living in smaller communities or school districts that do not pursue economies of scale. Or, for that matter in towns or school districts that have not enacted pay-to-play reform, reigned in patronage hiring, and cut down on administrative expenses. Which brings us back to the relationship between ethics reform and policy reform. Corzine may be new to Trenton and momentarily taken aback by how his fellow Democrats in the legislature have dissed him. But the new Governor understands the big picture and the bottom line. And he also understands that running new year on a platform of "politics and budgeting as usual" is no guarantee of victory at the polls for members of his or any other party..

David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a regular column, "On Politics," for NEW JERSEY LAWYER and monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS magazine, and is a member of CQPolitics.com's Board of Advisors that offers weekly commentary on national political developments.

by David P. Rebovich

What happened to the campaign promise to restore property tax rebate checks to their 2004 levels and increase them by 10 percent? What about avoiding at all costs any increase in broad based taxes? How about support for higher education to provide high quality workers for the state's information based economy? And remember the "affordability agenda?" For anyone who read about Jon Corzine's Budget Address, it seems reasonable to conclude that the new Governor conveniently forgot about the key planks of the platform he ran on last fall. And according to some critics of Corzine inside and outside of government, the Governor may have campaigned as a reformer, but he now looks a lot like a typical politician.

However, those folks who watched and listened carefully to the Governor's Budget Address are likely to have come to the conclusion that he's not a conventional politician. If he was, he undoubtedly would have a better bedside manner as a bearer of bad news. If anything, Corzine seems like the corporate executive he once was, and his Address was less like a political speech and more like an annual report that a CEO delivers to his company's board of directors. In this case his report was a reality check about the state's fiscal condition and a no holds barred account of what he thinks must be done to put the state on the path to a better future.

The day before the address the Administration briefed political reporters and commentators on the budget. I participated in a conference call with five colleagues and two of the Governor's aides. The latter gave us a clear account of the main features of Corzine's proposal, including the reasons behind the Governor's decision to recommend tax hikes and program freezes and cuts. The briefing was thorough, highly professional and devoid of excuses, rationalizations or political spin.

But like the Budget Address the Governor would deliver the next day, the briefing was also lacked any good news, traditionally understood, that is. After hearing from his aides about the tough medicine that Corzine wants to administer, I noted that in the three decades that I have been studying state budgeting, many governors have had to deliver bad news. But no matter how austere their proposals, they always had something positive to offer citizens.. What, I asked, were the positives in Corzine's budget?

The response to this question said a lot. The "good news", we were told, was that the Governor's budget proposal represented enormous progress in restoring the state to fiscal health. While its adoption would still leave the state in a $1.5 billion hole entering the 2008 fiscal year, the new budget plan does not contain the kind of borrowing to pay for operating expenses that recent budgets did. The virtue of Corzine's proposal is that it does not allow political expediency - i.e., short term advantage - to undermine the more important goals of fiscal integrity and long-term budget health.

This is not the type of message that elicits spontaneous applause from legislators and lobbyists, and last Tuesday it didn't! Corzine was prepared for such a reaction. In his Address the Governor said, "To those who thought my financial background would mean I had some magic bullet in my holster to balance the budget, I am sorry to disappoint you. My answer is as simple as old-fashioned arithmetic. We can't keep spending more than we take in. The solution is simple - stop! We can and we must." The "magic bullet" metaphor received a lot of attention in the press as this Governor's way to contrast his approach with the gimmickry of previous budgets. As a former CEO, Corzine is less inclined to worry about political ramifications and more interested in focusing on the bottom line and the well-being of the state for years to come.

As such, Corzine used his Budget Address to explain that the state must get its books in order through honest accounting. In his plan almost all of the state's spending would be put on a pay as you go basis. Cuts in programs were based on determinations about their effectiveness and need. The most important and largest tax increase - the hike in the state sales tax from 6 to 7 percent - was recommended for several reasons. Its effect on the typical New Jerseyans will be negligible, despite its regressive quality. Its effect on the business climate is considered less negative than an increase in income tax rates on middle and upper income earners. And polls show that most New Jerseyans prefer a sales tax hike to an increase in income tax rates. Spending priorities, even those that Corzine campaigned on last fall, have to take a back seat to the overriding goal of putting the state on firm financial footing.

While the Governor did take a businessman's approach in developing his budget proposal, the plan reflects Corzine's own political values. The choices he made, of course, have consequences for various constituent groups, legislators from both parties, and citizens in general. And yes, as is often the case in politics, Corzine's values are in conflict. "We must pay our own way." "The character of a society can be measured by the support we give our most vulnerable." We must also put New Jersey "...on a pathway to fiscal stability and responsibility." And, "our final product must have the appearance and the reality of being fair."

The Governor did explain how specific aspects of his budget proposal reflects each of these values to some degree. Political leaders, more than business leaders, must reconcile competing values to try to achieve various goals and satisfy different groups. Recognizing that many New Jerseyans will disagree with various parts of his proposal, Corzine concluded his Address by calling on lawmakers' "common purpose" to serve the state. He said, "Whatever our party affiliation, whatever our regional or local imperatives, whatever our personal predispositions on policy, let us find a common ground on the big financial issues at stake."

Corzine was right that there would be disagreements with his budget proposal. Republicans are concerned about the overall increase in spending in the plan and the lack of property tax relief. GOP legislative leaders are complaining that he could have recommended more spending cuts to avoid a sales tax increase. Many Democratic legislators are not thrilled by the sales tax hike either or the double whammy of freezing state aid to schools and towns and only slightly larger rebate checks. Property taxes may increase by hundreds of dollars in many communities while rebates will go up by a few bucks.

Toss in considerably higher tuition at colleges and universities and the Governor's budget can be a hard sell for legislators, even those in his own party. Democrats are already wondering how voting for a sales tax increase, will be used against them in the 2007 campaigns. Legislators on both sides of the aisle are talking about finding more savings in the budget and about better than anticipated revenue for the next two quarters that can be carried over into the new fiscal year..

Of course if more money is found, the question then becomes, how do you use it? To increase the size of rebate checks? To increase state aid to school districts and municipalities? To restore some aid to colleges and universities? To apply towards the government workers pension system? To avoid hiking the sales tax? Ironically, an improved revenue picture may make for a more complicated budget season and, unfortunately, prevent legislators from making some of the tough choices needed to improve New Jersey's long-term fiscal condition. Let's see if the new Governor can keep his fellow Democrats on the same page and convince enough New Jerseyans that shared sacrifice is indeed necessary for a better future.

David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a regular column, "On Politics," for NEW JERSEY LAWYER and monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine.

by David P. Rebovich

In the week before Jon Corzine was to make his Budget Address, New Jersey's newspapers ran stories suggesting that the new Governor was still wrestling with difficult decisions about tax hikes and spending cuts. The hottest rumor was that he would propose increasing the sales tax from six to seven percent. But before New Jerseyans could get too worked up about that controversial idea, new headlines had Corzine considering a 60-cent hike in the cigarette tax and breaking his campaign promise to restore rebate checks to their 2004 level and then increase them by 10 percent.

Yes, since his inauguration the Governor has stuck to a common theme when discussing the next state budget - the need for shared sacrifice. But when you consider possible tax hikes, pretty firm plans to freeze state aid to municipalities and non-Abbott school districts, and as much as a couple of billion dollars of spending cuts, Corzine is talking about a lot more sacrifice than citizens expected. Especially the folks who voted for him last November.

Some observers thought that the new Governor was following the traditional practice of floating several budget balancing maneuvers to see how the public and the state's political community would react. That's fine, except for the fact that in last fall's campaign Corzine tried to cultivate an image of being a leader who will not play politics with serious matters like fiscal policy or personnel decisions. The former CEO of Goldman Sachs claimed that he understands how to manage large, complex organizations, the meaning of a bottom line, and how to make cuts to save money and improve operations.

Okay, that does sound a little like traditional campaign rhetoric. And while Corzine did beat Doug Forrester by 10 points, most New Jerseyans were skeptical about both candidates' promises to balance the new budget and provide more property tax relief by cutting waste, fraud and abuse in government. It turned out that the public was right! In his recent tour of the state to talk about the budget crisis, Corzine told large audiences that he may have lots of business management experience, but he's not a magician. He also admitted that no special wisdom is needed to understand the budget problem the New Jersey faces. State government simply spends more money than it brings in.

Yes, that is an easy problem to understand. But it's not an easy one to solve, and that of course is what Corzine has to do. Despite New Jerseyans' recognition that the state has serious fiscal problems - 91 percent said so in a recent Quinnipiac Poll - and their skepticism about Corzine's ability to keep his campaign promises, it is not clear that they will be readily accept what the Governor will propose to balance the new budget. Perhaps years of "voodoo budgeting" have made folks think that there still must be some gimmicks that can be used to avoid painful spending cuts or tax hikes and that if anyone has any financial tricks up his sleeve, it's a business wiz like Corzine Or, maybe the Governor is exaggerating the fiscal crisis and the sacrifices that have to be made, in order to make his new budget proposal seem a bit more acceptable.

There may be some truth to both of these views. But the overriding reality is that Governor Corzine is facing not just a huge deficit but several competing needs and demands. He must balance a budget that is loaded with mandated spending in the form of entitlements, labor contracts, and state aid programs. His own political philosophy compels him to try to help the truly needy in a state that is one of the wealthiest in the nation. While the size of the budget deficit does seem to require "shared sacrifice," the Governor has to be careful not to alienate important constituent groups in his party. A related matter is the concern that Democratic legislators have about helping their districts and giving constituents a reason for returning them to office in the 2007 elections.

But Corzine also has to demonstrate to the average New Jersey taxpayer that he is eradicating inefficiencies in government operations and cutting ineffective programs. In addition, he must show that he has plans to deal with the very structure of the state budget in which spending has outpaced revenues for several years now. And the Governor realizes that he must try to stimulate economic growth in New Jersey to create jobs for residents and generate revenues for state government so that future spending cuts and tax hikes are not necessary. To have such growth, however, he needs to make the state more friendly to business at a time when some of his supporters want him to raise taxes on businesses, another move that he is considering.

Prioritizing these competing demands and determining how to take a balanced approach in dealing with them are extremely challenging tasks. As such, New Jerseyans should have some sympathy for the new Governor and the budget mess he inherited. They also should respect the hard work his transition team did studying the state's fiscal situation and identifying cost savings and revenue-enhancing measures. And, we should appreciate how Corzine traveled the state to explain the budget crisis and how he would have to make difficult decisions that would be tough on most of the state's residents.

But the state and its citizens would have been better served if these explanations and proposals had been aired, discussed and analyzed during the gubernatorial campaign. Of course the candidates had no incentive to do any of this because they feared they may turn off potential supporters. But perhaps four years from now the state's media outlets and good government groups can encourage the gubernatorial candidates to participate in a formal debate devoted solely to the topic of the state budget. Candidates could be presented with the current budget, estimates of spending increases in the next fiscal year needed to maintain current programs and state aid packages, a list of their own campaign promises and the costs of keeping them, and revenue estimates for the new fiscal year prepared by the Office of Legislative Services or another independent group. If the candidate's budget proposals are not balanced, they would be asked to identify specific cuts and revenue sources that they planned to use to bring their plan in line.

Given such a debate, gubernatorial hopefuls would not be able to hide behind rhetoric about making tough decisions once in office or counting on economic growth to improve the state's revenue picture. If such a forum was held last fall, it's not clear that the outcome of the governor's race would have been any different. But Corzine, and Forrester, too, would have had to do a careful budget analysis, develop budget balancing plans, and explain precisely who would suffer and who would gain, prior to voters going to the polls.

Months later Governor Corzine is about to present his budget proposal, and New Jerseyans still aren't exactly sure where how they and their friends and neighbors will fare. What is certain, however, is that based on what Corzine the candidate said last fall, an increase in the sales and cigarette taxes, a surtax on corporate income, paltry increases in rebate checks - not a full restoration to 2004 levels -, much higher property taxes, and higher colleges tuition costs will be an unpleasant surprise. After Tuesday's Budget Address, you won't need a poll to know that most New Jerseyans will believe that it would have far better if the analysis of the state's budget situation and the serious, detailed discussion about how to deal with it, had occurred last fall.

David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a regular column, "On Politics," for NEW JERSEY LAWYER, monthly reports on New Jersey for CAMPAIGNS AND ELECTIONS, and weekly commentary for CQPolitics.com.