Monday, November 05, 2007

A Guide to New Jersey's Referendum

Turnout is expected to be quite light tomorrow, which means that those who do turnout will have an oversized say on how the state spends money for many years into the future. There are four referendum on the ballot, three of which could saddle taxpayers will millions of dollars in debt payments for decades to come.

The four questions are as follows (text from the State):

Question #1:
Should 1% of sale tax revenue be dedicated to property tax relief?
Do you approve the amendment of Article VIII, Section I of the Constitution of the State of New Jersey, to provide for the annual dedication and annual appropriation of an amount equal to the annual revenue derived from a tax rate of 1% imposed under the New Jersey Sales and Use Tax, exclusively for the purpose of property tax reform, through a special Property Tax Reform Account established in the constitutionally dedicated Property Tax Relief Fund?
This is nothing but a fiscal gimmick used to raise one tax - the sales and use tax - to cover a portion of property tax increases.

It does absolutely nothing to halt the crushing tax burden on state taxpayers, including property tax owners. It may claim to shift the tax burden on to non-property owners, but everyone doing business in the state will pay more, and the state's fiscal situation does not improve one iota with the passage of this measure.

Let's take a short history lesson about New Jersey politics. Once upon a time, the state had a property tax, which provided the overwhelming majority of revenues. Property owners got upset about the high property taxes, so along came the gross income tax. Now, instead of paying one tax, New Jersey taxpayers were paying two taxes to cover state spending. Property taxes rose anyway.

Property taxes continued to rise at a rate exceeding that of the rate of inflation, and no one in Trenton was doing anything about the insane state spending either.

So, the latest fix was to increase the state sales and use tax to use from 6% to 7% and use the increased revenues to provide property tax rebates to certain taxpayers. Instead of simply reducing property tax rates across the board without creating a whole new program, the state increased taxes. Trenton engaged in the classic shell game - making taxpayers think that they're paying less property tax or getting money back, even though they're now paying more in sales tax every single day.

Property taxes will continue to increase, and it is anything but a given that sales tax revenues will go to property tax rate reductions, even with the current language, largely because property taxes are levied at the local level to cover costs at the local and county levels.

I oppose this item because it once again highlights the fiscal irresponsibility of Trenton. It always seeks to increase taxes without even considering reductions in state spending. The state's priorities continue to be a detriment to all those who make the state their home, and that is why the state continues to see people flee to states with a lower tax burden.

Question #2:
Should New Jersey invest in stem cell research?
Shall the “New Jersey Stem Cell Research Bond Act,” which authorizes the State to issue bonds in the amount of $450 million for grants to fund “stem cell research projects,” as defined in the act, at institutions of higher education and other entities in the State conducting scientific and medical research, and providing the ways and means to pay the interest on the debt and also to pay and discharge the principal thereof, provided that recurring revenues of the State are certified by the State Treasurer to be available in an amount equal to the sum necessary to satisfy the annual debt service obligations related to such bonds, be approved?
I am not opposed to conducting stem cell research, but this is an extremely poorly conceived program. Corporations are free to engage in stem cell research anywhere they want and are more than free to use their own money to do so. They do not need New Jersey to finance a research center and staff it with personnel, especially at a time when the state simply cannot afford any more debt. The state is billions of dollars in debt and will have budget deficits for years to come, and yet Gov. Corzine (D) and others want taxpayers to pay for this program, and its ongoing debt.

There are other ways to encourage companies to do stem cell research that do not involve increasing the debt load for state taxpayers. New tax credits for stem cell research would encourage companies to do research in the state, and it would not cost the state anything by providing those credits. Indeed, over the long run, establishing credits would be a net benefit to the state based on the number of new employees who would be hired to work at those facilities. Such credits could go to corporate and personal income tax, sales and use tax exemptions for equipment purchased for use at such facilities, and property tax exemptions for equipment installed at such facilities.

I strenuously oppose this referendum on the shaky fiscal grounds and the state's inability to pay existing programs. It is a luxury item that the state cannot afford unless and until it gets its spending under control. Since that isn't going to happen anytime soon, tax credits can and should be considered instead. That, however, is not part of the referendum.

Question #3:
Should the "Green Acres Act" be approved?
Shall the “Green Acres, Farmland, Blue Acres, and Historic Preservation Bond Act of 2007,” which authorizes the State to issue bonds in the amount of $200 million to provide moneys for (1) the acquisition and development of lands for recreation and conservation purposes, (2) the preservation of farmland for agricultural or horticultural use and production, (3) the acquisition, for recreation and conservation purposes, of properties in the floodways of the Delaware River, Passaic River, and Raritan River, and their tributaries, that are prone to or have incurred flood or storm damage, and (4) funding historic preservation projects; and providing the ways and means to pay the interest on the debt and also to pay and discharge the principal thereof, be approved?
While this bill also significantly increases state debt loads, the purpose of the bill fits tightly with the state's essential need to protect its vital natural resources and green spaces.

New Jersey is the most densely populated state in the country. Protecting open space is a vital need, especially in watershed areas so that everyone has access to safe drinking water supplies, and the funds will also go to protecting vital areas along certain waterways from flooding.

I would vote for this measure.

Question #4:
Should voting rights be amended?
Shall the amendment of Article II, Section I, paragraph 6 of the Constitution, agreed to by the Legislature, revising the current constitutional language concerning denial of the right to vote by deleting the phrase “idiot or insane person” and providing instead that a “person who has been adjudicated by a court of competent jurisdiction to lack the capacity to understand the act of voting” shall not enjoy the right of suffrage, be adopted?
This one is a no-brainer. Eliminating archaic language in the State Constitution should be approved. Now, if we could only get archaic politicians removed from Trenton, the state would be a whole lot better off.

UPDATE:
EnlightenNJ has a roundup of opinions on the referendum from a variety of New Jersey bloggers.

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