Christie and the Day of Reckoning

Despite all the claims about how Gov. Chris Christie is balancing the budget on the backs of the middle class and how he's going to destroy the state, the problem that the unions and the pundits keep ignoring is that there is no money. Memo to Chris Stile - this isn't trickle down economics. It's that New Jersey is broke and trying to fix the problems with the same recipe of tax and spend is precisely how we got into the mess in the first place. Driving the businesses that are critical to the economy out of state with higher taxes and fees is the wrong way to get the state back on to sound fiscal footing.

Christie is proposing to change the way the state does  business and it's going to run into quite a bit of opposition from the usual suspects who are trying to make this into class warfare rather than trying to get the state budget into structural balance by dealing with the issues that are causing the structural imbalances.

He's calling for an end to the binding arbitration system that has allowed state workers to see pay increases at every opportunity when private businesses are limiting increases or cutting workforce.

And his speech contained much to like. He would fix the outrageous system of binding arbitration that has escalated public salaries to the point where the average cop in a town like Edison makes over $100,000.

He took on the dark lords of the teachers union, pointing out that they are not protecting children when they refuse to contribute to their own health insurance plans, or when they block New Jersey’s attempt to win federal stimulus money over their objection to merit pay.

He rightly called the steady growth in government over the last 20 years a threat to the state’s economy. He slammed schools and towns for adding 11,300 new employees last year, despite the recession, a move that he called "madness." It was all satisfying stuff. The new guy was making sense.

And then he blew it. Because he stuck with his plan to cut taxes for the rich. He asked no real sacrifice from them at a time when the state needs everyone to climb out of the car and help push.

With this tax cut, he would hand out $1 billion to families who earn more than $400,000, the richest two percent.

No it's not a handout to those taxpayers - it's allowing them to keep more of the hard earned money they make so that they can get their businesses up and running and hire more people and to spend more money. After all, one has to look only at New York City to see how this works - with Wall Street's collapse, it was the loss of revenues from the richest 1% that led the state and city to run massive deficits. No money coming in meant that the budgets had to be balanced on everyone else. The richest in New Jersey contribute the most in raw dollars to the state budget, and they contribute the most to the state's economic engine. Continuing taxes that were meant to be temporary (and didn't do the job) for the sake of claiming that the pain would be shared by all makes no sense from an economic standpoint.

The state also owes more than $45 billion to the pension funds, which it has underfunded (or not funded) for years on end. That has to change, and while Christie isn't providing $3 billion for the pension fund in his state budget, he's calling for structural changes to how the pensions operate and demanding more from the state workers to contribute to their own medical and benefits packages. That would bring the state workforce more in line with how private companies compensate their workers. Expect that the unions will complain bitterly over how the books are being balanced on the backs of state workers who are in the middle class, but the rest of the state - including those middle class workers in the private workforce can't support the benefits that have been extended to the public workforce for decades without any measure of cost containment.

Among the more interesting proposals is Christie is calling for an end of the Bergen County blue law to raise $65 million. He's going to get quite a bit of opposition from local governments here, even though the proposal wouldn't actually cost the state or localities money.

John Holub, leader of the New Jersey Retail Merchants Association, said his organization completed a report two months ago, showing the state was losing significant business to New York State on Sundays.

The study showed that Sunday hours would generate $1.1 billion a year in extra business for Bergen retailers, and that another $700 million would be generated in ancillary businesses, such as newspapers. Eliminating the law would create 3,200 jobs and generate $65 million a year in state sales tax revenue, he said.

“We will definitely be rolling out a much broader coalition in the weeks and month to come,” Holub said.

He said the proposal was not prompted by the Xanadu project in the Meadowlands, which could be one of the biggest beneficiaries if Sunday hours are allowed in Bergen.

The state is negotiating with New York developer Stephen Ross to take over the troubled project, which is less than 5 miles from midtown Manhattan easily accessible from there via bus and train.

Paramus, which has its own borough ordinance barring most retail activity on Sundays, could become the last bastion of blue laws if the state law is repealed. The borough’s Police Department estimates at 250,000 people occupy the borough during business hours — more than eight times larger than its population of 30,000.

The ban on Sunday business has long been a political rallying point in the borough, with residents embracing it as their only respite from punishing weekday and Saturday traffic jams. When the stores are closed, much of that traffic disappears.

It would mean more traffic on the Route 4-17 corridors, but that's a small burden compared with the revenues that would be raised for the state and local governments.

Paramus would still try to hold on to their own more stringent Sunday restrictions as a lifestyle option, which will put its businesses at a competitive disadvantage. That's been a problem with Bergen County for decades, as consumers have had to go outside the county or to New York to do their shopping.