Wednesday, May 26, 2010

Christie Vows To Not Let New Jersey Become Another Greece

Gov. Chris Christie continues the tough and frank talk about New Jersey's awful fiscal situation and lays out why he's sticking to the fact that New Jersey's problem isn't about insufficient revenues, but overspending. He refuses to let New Jersey become another Greece, even as he's acknowledged that the situation here is as bad or worse than other foundering states like New York and California that are swamped with multibillion dollar deficits and pension obligations running into the tens of billions.

This is the kind of talk that politicians across the nation must heed. All over the country, including at the federal level, spending is out of control and entitlements are only part of the problem. Controlling spending is critical to getting the fiscal situation under control.

In New Jersey, the situation is abysmal because spending is out of control from the municipal level on up. Curbing the hikes and putting tax hikes back in the hands of voters gives municipalities the discretion to limit tax hikes and works towards curbing the highest property tax levels (and highest tax burden) in the nation. He wants to see a constitutional amendment authorizing municipalities to increase spending by up to 2.5% and require arbitrators to take that cap into account when figuring out union agreements that leave taxpayers holding the tab. Collective bargaining enables unions to obtain raises that exceed taxpayers' ability to pay, and until arbitrators take this into account, spending remains out of control. Mandating that arbitrators take the cap into account will further curb spending growth.

Pensions for state workers also came under fire, along with the need for state workers and teachers to pay a portion of their health care benefits. The unions have demonized Christie over demanding that teachers pay 1.5% towards their health care costs - when they currently pay nothing. That's far below what the private sector demands, and the private sector in New Jersey is hurting something awful.

If Christie can get these proposals through, it may set up New Jersey on a path towards fiscal discipline and responsibility that has been sorely lacking for decades.

After all, New Jersey has previously sought to ease the property tax burden by instituting a personal income tax, raising sales tax rates to provide property tax relief, and even instituting temporary surtaxes on millionaires to balance the books, but each step is merely addressing the demand for more revenue and doesn't address the spending side of the equation. Christie is fundamentally altering the discussion by putting future spending in the crosshairs.

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