Is the crash of Connecticut’s high-end real estate market predictive of what’s about to happen in New Jersey? And if so, what are the ramifications? The trends say yes and it’s bad news for New Jersey’s middle class:
“The storm that is currently hitting Connecticut’s real estate market has clouds gathering in New Jersey.
When the wealthy flee a state and sustain massive losses on their homes in the process, it is unfortunate for the individual but will likely be devastating for those remaining, particularly if this occurs in New Jersey due to our extraordinary reliance on Property Tax revenues to sustain local governments and schools.
The risk now is not just those wealthy fleeing our state. As high end real estate values deflate, as is occurring in Greenwich, the taxes to support our local governments and schools will be redistributed to moderate and lower value property owners.”
“A growing workforce and more private sector jobs are both positives,” said Regina M. Egea, president of the Garden State Initiative, “but the lack of consistent and substantial growth in either of those categories means that New Jersey is struggling to gain traction.”
To mark Tax Day, when Americans file their federal and state taxes, GSI’s president, Regina M. Egea, authored the following op-ed which appeared on NJ.com regarding New Jersey’s “fork in the road” when it comes to tax policy and choosing the right path forward:
A generation ago, Massachusetts was the poster-child for high taxes and earned the unenviable label of “Taxachusetts.” Through strong leadership, the state took action – their “fork in the road,” as Yogi Berra famously advised on decision making.
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In a riveting opinion piece published on NJ.com, North Plainfield resident Philip Perinelli makes a statement that thousands of longtime Garden State residents are saying each year: This is why I’m leaving New Jersey.
“…the bitterness would stay with me and increase year after year, as I watch my taxes inexorably increase and my quality of life move in the opposite direction.”
Ryan Hutchins, Trenton Bureau Chief for Politico New Jersey, reviews the latest Rutgers-Eagleton poll, conducted in collaboration with the New Jersey Business and Industry Association (NJBIA), which finds growing discontent among New Jersey residents with affordability issues and the high level of taxation in the Garden State:
“When it comes to residents’ overwhelming frustration with taxes and other financial issues in the state, little has changed in the past year-and-a-half,” Ashley Koning, director of the Eagleton Center for Public Interest Polling, said in a statement that accompanied the poll results. “New Jerseyans across the board — Democrats and Republicans alike — continue to be upset with what it costs to live in this state, what the government is doing about it, and with the idea of any new taxes.”
In an op-ed in the Asbury Park Press, Peter Reinhart, director of the Kislak Real Estate Institute at Monmouth University addressed the issue of “fairness” for taxpayers and public employees when it comes to negotiating New Jersey’s ongoing fiscal crisis:
““Fairness” goes both ways. The taxpayers who have to pay for the costs have the right to see that every reasonable effort is made to align the retirement benefits for public employees with the taxpayers’ ability to pay. Given the fiscal realities of today, it is not fair that public employees are unwilling to agree to modify their health care plans in line with what the rest of the taxpayers receive.
Public employees have the right to be treated fairly. But fairness does not include casting a blind eye to the realities of the fiscal condition of the state and the impact on the citizens of New Jersey.”
The editorial board of the Asbury Park Press takes a look at how the 2016 agreement to replenish the state’s Transportation Trust Fund has set of a recurring series of tax increases for Garden State motorists:
“The consumption of gas in New Jersey has been tamped down largely by two things: more fuel-efficient cars, including electric vehicles and hybrids, and fewer motorists from New York and Pennsylvania, where gas prices are higher, buying their gas in New Jersey. As a consequence, less gas tax revenue has been generated by out-of-state drivers. The more New Jersey raises its tax, the more it will be a factor in dampening revenue.“
In an editorial for the Asbury Park Press, editorial page editor Randy Bergmann takes a look at how Governor Phil Murphy’s policies are impacting the state’s Middle Class and how the Governor’s office refuses to define exactly what is “Middle Class” in New Jersey. GSI’s president, Regina M. Egea, was asked to weigh-in on the Governor’s approach:
"Pursuing the strengthening of New Jersey's middle class," she said, "offers two possible paths: address the income levels needed to cover the costs that continue to escalate in our state, or address the underlying factors that have made New Jersey increasingly unaffordable and unattractive to the middle class.
"The first path, inflating incomes without related productivity gains, subsidizing educational activities without direct employment/income commitment or escalating the cost of our government above inflation levels, is unsustainable," Egea said. "It will ultimately collapse under its own weight and actually undermine the economic prosperity of the very individuals they aim to serve."
John Reitmeyer of NJSpotlight.com reports on a recent review by Moody’s of New Jersey’s revenue outlook as the state looks towards the closing months of the current fiscal year and enters budget negotiations for next year. Due to recent revenue receipts far below projections set by the state’s treasurer, the report says income tax receipts need to rise by 17 percent, before adding that “it is uncertain whether New Jersey will achieve that growth.”
Of note, for his FY 2020 budget, Governor Phil Murphy is projecting an additional increase of $1 billion in income tax revenue.
The Editorial Board of the New York Post surveys the climate across the Hudson River in New Jersey and finds that Governor Phil Murphy is determined to continue with tax and spend policies that will soon trickle-down to the Garden State’s middle class:
“Indeed, state tax revenues for the current year are already falling short (up less than 3 percent when last year’s budget assumed they’d grow 7.5 percent), mainly because the income-tax take is down more than 5 percent from the year before.
Which means Murphy’s “tax the rich” approach, without serious genuine spending cuts, will soon lead to higher rates for the middle class, too.”
As Governor Phil Murphy’ prepares to give his Budget Address, Bloomberg News’ Elise Young analyzes New Jersey’s fiscal crisis and the potential for protracted political warfare between the Governor and legislative leaders of his own party:
“Governor Phil Murphy, stung by his own party’s cutthroat politics, led New Jersey to the brink of a shutdown last year when fellow Democrats blocked his tax increases. This time, budget negotiations are fraught with even deeper fiscal and political peril. “
GSI’s president, Regina M. Egea, authored the following op-ed which appeared in the Asbury Park Press following the issuance of our report Adding It All Up: New Jersey’s Opportunity to Reduce $200 Million in School Transportation Costs:
“Operational and policy changes will be where the “rubber meets the road.” Savings can be achieved in student transportation. But it will require collaboration and coordination on both the state and school district levels and perhaps most importantly a change of attitude to get beyond “how we’ve always done things.”“
Steven Malanga, the senior editor of City Journal and the George M. Yeager Fellow at the Manhattan Institute, takes a look at the failure of the big Blue State model, with a special emphasis on New Jersey and Governor Phil Murphy:
“In New Jersey, we are moving in a new direction,” Murphy wrote in his Dallas Morning News piece. An unfamiliar reader might assume that the state was catching up after years of low taxes and underinvestment. But Jersey has been one of the nation’s most heavily taxed states for decades—and its financial woes date back more than 20 years. The question that Murphy and other big-government advocates ignore: What happened to all the money?
