The Trenton way: Save $1, spend $2,800 more

Fourth in a weeklong series

This summer, a single word on Jim Jablonski’s thermostat told more about Trenton’s property tax reform gridlock than a thousand political speeches.

That word was “off.”

Jablonski set his air conditioner to off because he could no longer afford to cool his home and pay his $9,438 in annual property taxes at the same time.

The choice was not pleasant. The persistent heat set a new state record, yet the 62-year-old Millstone Township resident didn’t flick on the AC even when the temperatures cracked 90 more than a dozen times.

SEE ALSO: Tax Crisis: Meet the $200,000 officer http://dailyre.co/1LsdKfv

The retired Exxon refinery chemical plant electrician said he has to stretch a fixed income to cover his property taxes. He thinks the levy would be about a fourth of what he pays now if his home, on a half-acre lot, were located somewhere outside New Jersey.

“That $6,000 or $8,000 difference, that’s a lot of beer. That’s a lot of taking your wife out to dinner. That’s maybe going on a decent vacation, or maybe it’s buying that extra nice pair of sneakers or just maybe not having to cut the grass when you get older, which I still do,” Jablonski said.

New Jersey’s property taxes are the highest in the nation, with the average residential bill reaching $8,200 last year.

SEE ALSO: Exclusive: Fighting New Jersey’s property tax crisis http://dailyre.co/1LphJcE 

All told, half of all taxes in the state are raised through the property tax — $27 billion last year — and it has grown by more than half a billion dollars each year.

Local taxes are inextricably tied to the Statehouse and politics, where billions of dollars each year are sent to local towns to offset school and municipal spending. The more the state sends, the less local governments have to tax homeowners. And the less money residents such as Jablonski would have to pay.

But Trenton hasn’t found its off button yet for runaway borrowing.

READ MORE: Coverage of New Jersey's property tax crisis http://php.app.com/taxpain/

A Gannett New Jersey analysis of legislative bills proposed over the past 18 months found a stark disconnect between spending and savings.

For every dollar proposed in cuts, lawmakers put forth $2,800 in new spending or taxes, Gannett found.

Among the findings:

•Billions in new spending. So far in this legislative session, lawmakers have proposed bills that would add $2.8 billion to state spending over their first three years, according to a review of more than 450 bills that contain appropriations or underwent a formal fiscal review by legislative staffers. The proposals would also compel $260 million in spending by local governments.

•Billions in new borrowing. There have been proposals for the state to borrow money for open space, municipal property tax relief, sewers, libraries, flood-control projects and other ideas. These total almost $3.7 billion.

•Few cuts. On the flip side, just three of the proposals that underwent legislative fiscal review were deemed to lead to state savings. And their impact would be a pittance — a combined $2.3 million over three years, equal to $1 saved for every $2,809 in proposed new state spending.

•More fees and taxes. Taxpayers were on the losing end as well when it comes to counting tax and fee proposals. These measures would hit taxpayers in the wallet but net the government around $2 billion over three years. That includes $3.4 billion in additional taxes and fees, offset by almost $1.4 billion in proposed tax cuts.

No plans

Lawmakers insist they’re trying to make New Jersey less hostile to the middle class.

“The problem with New Jersey is affordability. We just are no longer affordable,” said Assemblyman Anthony Bucco, R-Morris. “Unless we do something to correct that, we are going to go off the cliff.”

Assemblyman Gary Schaer, D-Passaic, the budget committee chairman, said he wants to cut taxes, but New Jersey has bills to pay. Even with lawmakers’ proclivity to spend, New Jersey still manages to underfund pensions, public schools and property tax relief.

Moreover, the state has no realistic plans for closing a $10 billion gap between the amount it spends now and what it would spend if it followed all the laws on its books.

“If we’re going to have a robust discussion of taxation and tax policy in this state, then let’s have an honest one and a fair one,” Schaer said, “because I’ve yet to hear from anyone that we’re going to reduce the amount of money that we should spend on education or on developmental disabilities or on so many other fundamental areas of the state’s concern.”

That robust discussion isn’t taking place, though. State lawmakers instead stick close to their party’s power base — the constituencies whose support makes them prohibitive favorites for re-election, regardless of action or inaction in Trenton.

Unions remain potent in Trenton

For Democrats, satisfying their party’s base often means advocating for public-sector unions.

Consider the top elected state Democrat, Senate President Stephen Sweeney of Gloucester County. Another hat he wears is vice president in the International Association of Iron Workers.

His relationship with all the building trades is rock-solid. But his relationship with public-sector unions has been another matter at times, dating back to his advocacy for pension reforms during Gov. Jon Corzine’s term, when unions held rallies calling him a rat, and to his cooperation with Gov. Chris Christie on benefit reforms in 2010 and 2011.

These days, however, Sweeney is on the same page with the public-sector unions. It’s evidenced by his refusal to engage Christie in more talks about reforms. His going to court to seek to force contributions to the pension funds. His proposing a millionaires tax repeatedly. His proposing quarterly payments into the pension funds even though it would require borrowing to do so.

Most recently, Sweeney’s new strategy is to lobby Congress to establish a federal program through which states could borrow money at low interest rates to make their pension systems whole — in New Jersey’s case, a tab exceeding $51 billion.

Sweeney says the proposals are about good government, not mending a political relationship. But those underlying tensions from earlier reform fights are never far from the surface. In July, at a news conference with top NJEA officials, Sweeney acknowledged that the political scene in 2011, when the last benefit reforms were passed, was “pretty ugly.”

“In fact, I appreciate my friends talked to me again,” Sweeney said, in a nod to his amends-making efforts.

Assembly Majority Leader Jon Bramnick, R-Union, says Sweeney’s pension borrowing concept, which seems highly unlikely to get through the Republican-controlled Congress, is too risky, yet a sign of things to come.

“That, to me, was the most ridiculous concept. Anyone who’s ever borrowed money to invest in the stock market has to be pretty sure that the return in the stock market is going to be greater than your borrowing costs. There is no one who can reasonably make that prediction,” Bramnick said. “That was another play to the public unions, and you’re going to continue to see this.”

Stopping the red tide

Why do many lawmakers go to bat for the public-employee unions? Because the campaign contributions and votes the organizations can generate can make or break political careers.

The New Jersey Education Association, for example, has 195,000 members, making it the state’s largest teachers union. Annual member dues vary by job classification, topped by the $817 charged to teachers and other full-time professional staff.

Even teachers who aren’t members have to pay the NJEA.

The New Jersey Employer-Employee Relations Act specifies that the NJEA and other public-sector unions are entitled to payment of up to 85 percent of union dues from workers who don’t want to be members, because those workers in theory still benefit from union activities. The union collects about $140 million annually in dues.

The accumulated money helps make the NJEA a formidable political force. A political action committee is funded by voluntary contributions, but dues fund a super-PAC and pay for a team of lobbyists to work connections with state lawmakers for favorable legislation — and sometimes to block measures disfavored by labor.

For example when state Sen. Joseph Kyrillos, R-Monmouth, introduced a bill to end last-in, first-out seniority layoff rules that he said ignore teacher effectiveness, the NJEA pushed back, and Democrats never scheduled the bill for a public hearing.

The NJEA has much to show for the largesse. New Jersey has the highest average starting salary for teachers at $48,631, according to the National Education Association. Overall, the average teacher salary in the Garden State is $68,797. Only New York, Massachusetts, Connecticut and California have higher averages.

The NJEA spent a record-shattering $19.5 million on lobbying and political messaging in 2013, according to state Election Law Enforcement Commission records. The amount far exceeds what any other lobbying organization in the state has spent in a single year.

The election of the governor and the entire Legislature took place that year, but Ginger Gold Schnitzer, the organization’s chief lobbyist, said the stakes were high for other reasons as well.

“If you look at other states, there was this red tide. In New Jersey, we were the first state to stop that red tide,” Gold Schnitzer said.

“Think about places like Ohio, Wisconsin, Michigan and North Carolina,” she said. “Not to sound partisan, but our colleagues in other states with a Republican governor and two Republican houses in the Legislature were losing their collective bargaining rights and their rights to organize, and there were draconian cuts to the education budgets.”

NJEA’s domination of campaign spending is continuing in this year’s Assembly races. Disclosure reports released Tuesday show the union had donated $2.75 million to a pro-Democrat independent committee, which has nearly totally bankrolled that group’s campaign efforts. It equals 42 percent of the combined spending of every candidate running for Legislature.

Christie: ‘I understand there’s frustration’

For Republicans, sticking by the party’s power center means standing primarily with Christie.

To be sure, business interests account for a significant financial base for the party’s lawmakers, but the bright star with all the gravity at the center of the New Jersey GOP’s universe is still Christie.

The second-term governor gave his party relevance in a Democratic state when he won in 2009 and has maintained that sway even after his political standing was damaged by the George Washington Bridge scandal and as he has emphasized increasingly conservative viewpoints as he campaigns around the country for the 2016 GOP presidential nomination.

Christie says that he’s been trying for six years to lower state taxes, but that lawmakers haven’t gone along.

In September, asked about taxes by Townsquare Media on his “Ask the Governor” radio show at FM 101.5, Christie said New Jersey has been more affordable because of his governorship.

Property taxes have been rising at a slower rate. In the 10 years before Christie became governor, property tax bills increased by an average of 5.6 percent a year, which compounds to a 72 percent increase. Increases have averaged 2.3 percent during his tenure — though in dollars, that’s still a $500 million-a-year increase.

“And if we put the other reforms in place that I wanted, which the Legislature would not do, we would be at zero,” said Christie, who continues to advocate for changes that have been stalled since 2011.

“I understand there’s frustration about the fact that we haven’t cut taxes. Well, then give me a Republican Assembly this fall. We’ll pass tax cuts and see what the Democratic Senate does with it. But we have stopped the train of tax increases in this state for six years,” Christie said. “And believe me, if you get a Democrat who replaces me when I leave the governorship, you’re going to look back on this as the good old days, man. The good old days.”

Democrats challenge Christie’s claim that there haven’t been tax increases. They note Christie called for and enacted tax-law changes in 2014 designed to boost collections by more than $100 million a year. They say Republicans have fought them on bills that would have helped New Jerseyans’ wallets through property tax aid, funding for women’s health clinics, college costs and more. Tom Hester, spokesman for the Assembly Democrats, calls the GOP “loyal foot soldiers to a no-show governor.”

Next steps: Not clear

Assembly Speaker Vincent Prieto, D-Hudson, said property taxes have been difficult to tackle because of all the other problems facing state government. That is no small list.

He said a 4 percent cut in property taxes statewide — “which is not a hell of a lot,” he noted — would require $1 billion and then be erased by growth in local spending in two years.

“It’s a beast that you can’t feed, so we need to look at how we reform this together,” Prieto said.

Prieto said a lot of ideas are being considered. While property taxes haven’t been put on the back burner as an issue, he said, topics such as transportation and pension funding are commanding Trenton’s immediate attention.

“It’s definitely on my radar screen because when I talk to my constituents, property taxes are issue No. 1,” Prieto said. “That’s the tax we need to cut, the property tax.”

He said he could not provide details of any specific proposals.

Sweeney said the Legislature should pass a bill he has sponsored that would encourage counties, municipalities and school districts to share services through various strategies, including changing civil service rules and withholding state aid from towns that don’t try to share services when such has been recommended by a state commission.

Ultimately, Sweeney said, property taxes are determined by local decisions.

“You got 565 municipalities. You got 600 school districts. And until they start doing what we did in Gloucester County, which is combining services to reduce costs, property taxes aren’t going to be lower,” Sweeney said. “We don’t assess property taxes in the state Legislature.”

Such talk without action, on property taxes, transportation and other issues, exasperates residents and business owners alike. A coalition of New Jersey business groups surveyed 413 business leaders and found that 36 percent identify taxes as the single biggest issue that needs to be addressed to grow the state’s economy. Fewer than half are optimistic about the state economy’s near-term future.

“The time for action is now on so many of these things,” said Paul Boudreau, the Morris County Chamber of Commerce president. “We’re just frustrated. We don’t want to talk about it anymore. We actually want to see some things happen for the betterment of the state moving forward.”

The last serious talks in Trenton to design an entirely new tax and spending system took place a decade ago.

In 2006, the Legislature formed four joint committees to develop proposals to bring about tax reforms. Some of the recommendations by those committees were enacted, but lawmakers say they had little impact — as evidenced by the $500 million annual creep in property taxes.

How to prod lawmakers?

Retired economist Cy Thannikary says New Jersey needs “smart” reforms. An Upper Freehold resident who worked for Gov. Christie Whitman’s administration, Thannikary formed a grassoots group, Citizens for Property Tax Reform, to try and fight for changes more than 10 years ago.

Thannikary was named by then-Gov. James E. McGreevey to a panel that was supposed to get the ball rolling for a constitutional convention. The committee’s December 2004 report called for $3.8 million in funding to convene a constitutional convention at Rutgers University for the purpose of making recommendations to install a fairer property tax system.

The following May, a bill recommending a property tax convention passed the Assembly, 45-30, with two voting to abstain, but the measure stalled in the Senate.

Thannikary said the result of the inaction 10 years ago has allowed the tax bubble to become more ominous for New Jerseyans.

“The taxes are pretty high. People cannot afford it. Job creation in the state is extremely poor. People are unemployed and having a difficult time. Somebody should do something, and that should be the Legislature, but how do you motivate them to do it?” he said. “It’s time to sit down and come up with a strategy. We haven’t done anything in the last 10 years. People are kind of tied to the thinking that nothing can be done and that the Legislature won’t do anything, and that we can’t make any progress.”

Thannikary said he thought Christie could be a savior after the 2009 gubernatorial election.

“I thought when Christie came on board, originally he was talking about all these issues that nobody wanted to touch. But after that, he just stopped talking about it,” Thannikary said.

Jablonski, the Millstone Township homeowner who sweated through the summer, said the whole Legislature should be thrown out.

“We have an inept government. We should get rid of them all, start fresh. Get plumbers in there, electricians,” Jablonski said. “And for the common good of people.”

Tomorrow: Why life is good in North Carolina for former New Jersey residents.

Bob Jordan: (609) 984-4343; bjordan@gannettnj.com

Michael Symons: (609) 984-4336; msymons@gannettnj.com