A Penny In, A Penny Out Another Penny In
Posted October 22, 2007

As children, we all played the game in which someone whispers a phrase into the ear of his neighbor, who then whispers it to the next child in line, etc.  By the time the phrase has come full-circle, it has usually morphed beyond recognition and, more often than not, provides good cause for a chuckle.

Unfortunately, the circuitous route on which the New Jersey legislature wants to send our taxpayer dollars is anything but humorous.

When voters enter the voting booth on November 6, they will be asked to decide on Public Question No. 1, which reads:

DEDICATES ANNUAL REVENUE OF AN AMOUNT EQUAL TO A
TAX RATE OF 0.5% UNDER THE STATE SALES TAX FOR PROPERTY TAX REFORM

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 0.5% 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?

Translated, this question asks voters to approve a constitutional amendment allowing one half cent of sales tax revenue to go towards property tax relief.  Last year, voters approved a similar measure, and approval of the current measure would bring to one cent the amount of sales tax that will be funneled towards property tax relief.  According to Assembly Speaker Joseph Roberts (D-Camden), in real tax relief dollars, the combined one-cent allocation would amount to $1.4 billion.

This may sound all well and good at first glance, but consider this: last year’s sales tax hike, approved by Governor Jon Corzine, raised the sales tax rate by how much?  One cent on every dollar.  That’s right, one cent. 

When viewed comprehensively, then, in essence, the legislature’s scheme takes taxpayer money through sales tax only to turn around and redistribute it through property tax ”relief.” (Of course, real relief would mean homeowners would not be forced to pay astronomical property tax bills in the first place.)  Still, like the whispered messages that become distorted through transition in the childhood game, tax dollars that are funneled through government hands rarely if ever emerge carrying their original value.

Moreover, while Trenton plays Russian roulette with New Jersey’s tax dollars, the governor recently ordered his Cabinet members to cut as much as $3 billion from next year’s state budget.  The governor’s directive comes on the heels of reports that predict a budget deficit next year equal to this amount. 

According to an official who spoke with the Star Ledger on condition of anonymity, “We can’t afford to do everything we’re doing.  Something potentially has to go.” 

Despite the stated determination to cut spending, however, the Associated Press reports that a few things that are not on the state’s chopping block are state aid to schools, property tax rebates (or rather, tax redistribution), debt, and funding for psychiatric hospitals and prisons.  According to Corzine’s Chief of Staff Bradley Abelow, state municipal aid is also unlikely to be cut.

This latest news of New Jersey’s disturbing fiscal crisis comes on the heels of last week’s report of the continuing mass exodus of New Jersey residents due in large part to our exorbitant tax rates.  In fact, the AP notes that according to the non-partisan Tax Foundation, New Jersey carries the third-highest tax burden in the nation. 

While Trenton scrambles to couch last year’s sales tax hike in terms of property tax relief, and as long as legislators fail to offer any real tax reform, New Jersey will continue to send the message to hardworking families that they are not welcome in the Garden State. 

 

 

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