Hurricane Sandy: New Jersey’s Fiscal Cliff

In Washington Democrats and Republicans generally agree that U.S. debt, expenses and entitlements are problems that need addressing. The Republican approach is basically to cut expenses and entitlements while the Democrats seek to raise revenues.

The same dichotomy is apparent in New Jersey where Governor’s Christie’s mantra has been to reduce expenses. What we see in Washington plays out here where Christie’s cuts disadvantage the poor and the middle class, whereas the legislature seeks more tax revenue from the very wealthy. The problem in New Jersey will only grow worse as we face increased expenses to recover from Sandy. Next year’s much higher pension contribution and transportation fund costs, coupled with state revenue already way behind budget, only make the matter worse.

Yes, FEMA, insurers and foundations will help fund the recovery effort. But there will remain a substantial gap which New Jerseyans will have to bear. As with the U.S. fiscal cliff, that gap financing should not be thrust upon the poor and those who can least afford it. Christie’s inclination is to cut, but Democrats must insist on also raising more revenue.

The millionaire’s tax surcharge or even one on people’s income above $400,000 should be the line drawn in the sand by the legislature before  contemplating cuts that might hurt those who are not wealthy. Forget about the 10% tax cut which Christie proposed and even the related property tax relief which the legislature proposed. Time will tell, but it may be necessary to add a property and business tax surcharge in those areas most affected, or in the state as a whole.

We must not fall over the cliff while Christie, with a view toward running as President in 2016, follows Republican dogma. President Obama and Democrats in the Congress and Senate are insisting on revenue enhancements. In New Jersey we must do no less.  

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