Sunday, June 27, 2010

Dear Trenton: This Is Why Voters Are Turning Independent

So there's a State budget in the legislature which has a $570 million hole in it. And no one in Trenton seems to care. Everyone intends to move this budget forward on the assumption that the money that isn't coming will eventually arrive. Call it the bi-partisan Tooth Fairy approach to budgeting.

Governor Christie does not want to raise the issue because:

1. After campaigning against balancing the budget on one-year fixes and other gimmicks, the Governor will have to admit that he used a one-time increase in Medicaid money to balance his budget;

2. While more than 30 states are in a similar situation, i.e., facing budget holes because of the failure of Congress to approve additional FMAP money, this Governor will be forced to admit that while he has been speaking in favor of forcing government to live within its means he has been willing to let the Federal government give New Jersey money borrowed from taxpayers in order to close New Jersey's budget deficit; and

3. The Governor is facing a mini-revolt within his own party because of the tax increases in this budget, and were he to admit to a $570 hole while pushing a budget that includes now-unfunded programs demanded by Democrats he may lose even more votes from within his own party.

New Jersey Democrats do not want to raise the issue because:

1. They do not want to jeopardize the funding for their pet programs they just got reinstated in the budget compromise with the Governor; and

2. When it turns out that this Governor's budget, voted for by every Republican in the Senate and Assembly, has a hole roughly equal to the amount of money the Millionaires Tax would have brought in, Democrats expect to make political hay.

And so it becomes apparent that there are two holes in Trenton. One is a $570 million hole in the budget. The other is the gaping distance between our government and the taxpayers.

The taxpayers want the budget done right. They don't care who is in and who is out, they don't care who is seeking national office, they just want their government to put the taxpayers first. And knowingly passing a budget that the State cannot afford is just bad government.

To the Republicans and Democrats in Trenton, a pox on both your houses. We taxpayers are ready to take our medicine and live within our means. Please put your personal ambitions and petty grievances aside and for once give us an honest budget we can afford.

Friday, June 25, 2010

Washington Republicans Blast A Hole In New Jersey's Budget

There’s a gaping hole in New Jersey’s proposed budget.

Last night, Republicans in Washington refused to allow HR 4213 to come to the Senate floor for a vote – they filibustered it. HR 4213 is primarily thought of as a bill to extend jobless benefits for the long-term unemployed. However, the bill also included a 6 month extension of enhanced Federal Medical Assistance Percentages, i.e., more money for the states.

The budget currently under consideration in the New Jersey legislature relies on that extended FMAP money. In fact, it may be these very funds Governor Christie relied on when he restored a prescription drug benefit for seniors. And he restored that program to blunt the Democratic push to extend the Millionaires Tax.

There is no fallback plan in place to restore those lost FMAP dollars, which may actually exceed $570 million. A few weeks ago, David Rosen, legislative budget and finance officer for the Office of Legislative Services, observed that if the enhanced FMAP money evaporated New Jersey would have a serious issue.

Since the Governor is already facing some rebellions from Republican legislators who object to the tax increases already in the budget, the Governor is going to have a tough time replacing those lost FMAP dollars.

UPDATE: Treasury spokesman William Quinn has been quoted as saying that the Governor will move forward on the assumption that the $570 million in FMAP money is still on the way. But since the surplus is only $300 million, that's one risky assumption. Apparently, no one has the political will to actually get the budget right this late in the game.

Thursday, June 24, 2010

Quote Of Note: The Governor Sends A Message

The New Jersey Chamber of Commerce is a pro-business lobby that has been advocating against government regulation and taxation since 1911. One would think that a pro-business lobby and a pro-business Governor would be natural allies.

At first blush, this seemed to be the case. Almost every Republican in the State who spoke in favor of allowing the Millionaires Tax to expire repeated information from the Chamber. The Chamber commissioned a Boston College study that has been widely cited as evidence that the Millionaires Tax caused New Jersey to lose $70 billion in wealth (in point of fact, the study found nothing of the kind, as discussed in an earlier posting).

However, there has been a sizable rift between the Chamber and the Governor since the Governor took office in January. The Governor felt that the Chamber in general, and Chamber President Joan Verplanck in particular, had distanced themselves from Christie during the campaign, essentially betting that Governor Corzine would win re-election. When Christie won, it was payback time.

So the Governor boycotted the Chamber’s annual train ride to Washington, D.C., an event which Governors past attended regularly. And Christie made it known to business leaders throughout the State that that he was unwilling to cooperate with the Chamber so long as Verplanck remained President. A post the 64 year old Verplanck has held for the past 15 years.

And so, yesterday, Verplanck announced her resignation.

State Senator Joseph Kyrillos, former chairman of Chris Christie’s gubernatorial campaign and now a key Christie advisor, is quoted as saying:

“The various groups have gotten the message that they need to be full partners in making New Jersey competitive again. The Chamber and all business groups in this State need to re-brand and reinvent themselves.”

So forcing the resignation of the long-standing President of the New Jersey Chamber of Commerce was done to send a message. It’s not enough to agree with, support and promote the Governor’s agenda. You have to be a “full partner.”

When it comes to Chris Christie, either you’re in or you’re out. As George W. Bush once said, “Either you’re with us or agin us.” And that’s how Chris Christie treats his allies.

As I write this, certain Republicans in the Senate and Assembly are deciding whether or not to support the compromise budget the Governor and the Democrats have reached. Republican Senator Michael Warren has said he does not support the budget. Republican Assemblyman Patrick Carroll and Republican Assemblywoman Alison Little McHose have announced plans to vote against the budget. And the Governor needs every Republican legislator to vote for the budget in order for it to pass.

Those three Republicans may be joining Joan Verplanck at some local Trenton watering hole in the very near future ruing the day they ever dared cross Chris Christie.

Got the message?

Budget Nuggets

I’ve come across two interesting facts while reviewing the compromise budget now working its way through the State legislature.

First, the Governor has agreed to refrain from cutting the budget of the State Commission of Investigation.

According to the web site for the SCI:

"The State Commission of Investigation was established in 1968 as an independent fact-finding agency. Its mission is to identify and investigate organized crime, corruption and waste, fraud and abuse of taxpayers' dollars. The SCI is required by law to pursue these investigations beyond the sphere of political influence or favoritism. The law also requires the SCI's findings to be made public through written reports and/or public hearings."

The Governor had wanted to merge the SCI with the State Comptroller, the only government watchdog working under the jurisdiction of the executive branch. The Governor had also wanted to merge the Inspector General and the Medicaid Inspector General with the State Comptroller, effectively bringing all of the State’s investigative powers under one roof – his roof.

None of this should be surprising to those who have followed Chris Christie’s career. As a Federal prosecutor, Chris Christie served as an advisor to Attorney General Alberto Gonzalez. Christie was privy to, if not actively involved in, the politicization of the Justice Department. In fact, in the final months of the 2006 campaign, US Attorney Christie brought an indictment against an anti-poverty agency with ties to Senator Robert Menendez, who was in a tight re-election campaign against Tom Kean, Jr. To date, that investigation remains open, although no charges have been brought.

So the concept of the Governor holding the purse strings of the State’s investigative powers, and controlling the paychecks of the investigators, was disconcerting, at best. This is a Governor who believes in using any and all means available, even means arguably not within his powers, to push forward his personal agenda.

But, for now, SCI is safe. And that’s a good thing.

The second fact to emerge from the compromise budget is that New Jersey Network, the public television station in New Jersey, will lose its State funding after December.

NJN serves a unique function. As New Jersey falls within both the Philadelphia and New York media markets, a great deal of the public broadcast programming available is geared to those states. NJN has a nightly newscast and weekly public events shows, as well as other programming, all geared towards events in New Jersey.

Currently, the State owns NJN. The idea of spinning off NJN into a private not-for-profit corporation is not a new one. In fact, it was originally proposed in 2008 by the people who run NJN. They seem to think that NJN will do better as a stand-alone entity.

Details remain to be worked out as to how the spin-off will occur. The State owns the physical assets of NJN, including broadcasting equipment. And there certainly is a scramble on to find alternative financing in the 6 months or so before the State stops providing funds.

But now more than ever, it is important that New Jersey have an independent media outlet focused on New Jersey stories. Otherwise, it would not be long before this Governor found a way to use NJN to advance his own agenda.

Sunday, June 20, 2010

The Budget Debate Gets Unionized

Tomorrow, the State Assembly will attempt to override the Governor's veto of the so-called "Millionaires Tax." And the Democrats will lose that battle. But they are hoping that this will be a strategic loss in a larger war.

It seems that something akin to a Democratic party strategy is emerging. And while I'm thrilled that the majority party in the State legislature has elected to abandon its "deer-in-the-headlights" posture, I not quite sold on this new direction. Because it seems designed more to achieve political points than it is to serve the taxpayers.

So, all the Republicans in the Assembly will go on record as refusing to override the Governor's veto. From what I can make out, the idea is to tag each and every Republican with personal liability for refusing to extend the Millionaires Tax. And then to make it clear that the main objective of each plank in the Governor's platform is an anti-union one, thus turning those tags on Republicans in the Assembly into anti-union albatrosses. How will the Democrats do that?

1. The Democrats will not put the Governor's 2.5% property tax cap on the ballot this fall, and will not pass the Governor's 33 "tool kit" laws. That means that every municipality will be faced with intransigent public employee unions with no money to pay them and no new State laws to strengthen the municipalities' negotiating hands.

2. The Democrats will not move the Governor's school voucher plan forward. That means that all the extra money the Governor sent to failing public schools will stay in those public schools, and not be transferred to private schools. Which will be boon to the teachers' unions.

3. Finally, the Democrats will propose their own 2.9% cap property tax cap as an amendment to existing law, rather than a Constitutional amendment. Notably, this cap would retain the exemption for increased health care costs for public employees, to which the Governor has openly objected.

So, at the end of the day, the Democrats intend to let the Governor have his budget, but deny the Governor his victory over the unions. The Governor has been attempting to make a national name for himself as something of a union buster, and this strategy will make it more apparent to voters the extent to which Chris Christie's anti-union agenda is more important to him that is getting a vastly reduced budget.

But I can't help thinking that somehow the taxpayers are losing out here. It will be impossible to get real property tax reform unless the unions are brought to the bargaining table. The Governor's union bashing leaves the unions little option but to hunker down and wait for 2012. The Democrats' strategy allows the unions to do just that.

And the taxpayers? They just keep paying.

Wednesday, June 16, 2010

To Merge Or Not To Merge

In recent weeks, there's a topic that has been broached by sources which don't usually agree on much. That topic is the unusually high number of school districts in New Jersey and the effect that fragmentation has on the State's property taxes. By one count, the State has 566 towns and 588 school districts.

Tuesday's Wall Street Journal ran a front page story about the different ways school districts across the country are managing budget shortfalls. The article focuses on Downe Township, New Jersey. Downe Township has a school district for students from preschool through eighth grade. There are 236 students in the district. For high school, the students travel to nearby towns.

This year's budget cuts will hit certain students the hardest -- kids who are not eligible for special education but still need extra help to keep up. Downe Township had been running a very successful remedial program after school, which will have to be cut. Also being cut are basic skills classes.

In its report which recommends against Cap 2.5, the Center for Budget Policy and Priorities highlights the high number of New Jersey school districts as a significant contributor to the State's high property taxes. CBPP finds that New Jersey's small school districts suffer from duplication of services and administrative structures, and weak bargaining power with unions and health care providers. CBPP also cites the high cost of sending special needs students out of district as a significant factor contributing to high property taxes, a situation which might be improved if districts combined their special education programs, if they do not combine outright. Interestingly, the CPBB finds that teacher salaries are not the cause of high property taxes; state policies and inefficiencies are the culprits.

And in a recent address in Perth Amboy, Governor Christie noted that Cap 2.5 might encourage smaller school districts to combine. When these inefficient school districts no longer have the option of raising property taxes, reasons the Governor, the districts may finally choose to share administrative, superintendent and business services.

The advantages of merging small New Jersey school districts may be one of the few ideas that has supporters on the right and on the left. That being said, the idea was so soundly trounced when Governor Corzine floated it that no one is willing to shout it from the rooftops. Yet.

Monday, June 14, 2010

The Christie Brand

Monday's Wall Street Journal ran an interesting piece on Chris Christie. It seems our Governor is making a name for himself by being one of the most anti-union leaders in the nation. Apparently, the Governor's penchant for referring to "mindless, faceless union leaders" has not gone unnoticed.

Understanding that union-busting is the issue on which the Governor seeks to stake his reputation is key to any attempt to understand the Governor's actions and priorities. Just ask Bret Schundler, who dared to compromise with the New Jersey Education Association on merit pay and tenure.

Using this "union-buster" image as a lens, certain aspects of the Governor's proposed Constitutional amendment that would cap property tax increases at 2.5% annually, using Massachusetts as an example, leap to the foreground. First, let us pause to consider the irony of a conservative Republican using Massachusetts as an example for anything. Then, let us consider the statements of Governor Christie's detractors who say that in 1980, when Massachusetts adopted its cap, state unemployment was at 5.8%, nowhere near the current New Jersey rate of 9.8%. And that the Massachusetts economy was growing at the time. Finally, let's remember that the State recently passed a 4% cap on property tax increases which is beginning to show results.

The Governor acknowledges that Cap 2.5 will cause a lot of pain to municipalities across the State, especially so in light of the state of the economy. To soften the anticipated blow, the Governor has devised a "tool kit" for local governments. And a big piece of the tool kit is giving municipalities the ability to bust unions. The tool kit would restore the ability of municipalities to bind unions to a "last, best" offer in negotiations after all attempts at mediation have failed. And the tool kit allows municipalities to opt out of civil service laws.

So, while Cap 2.5 is aimed at reducing property taxes, the clear subtext is to undermine public employee unions. Because reducing the State budget without raising taxes is not enough to build a national reputation for Chris Christie. Any tea-party courting far right Governor can do that. The Governor needs to imprint the plan with his "brand" -- Chris Christie, union buster.

Oh, and the existing 4% property tax cap? Governor Christie says that that cap allows for too many exemptions. Like exemptions for money to provide public employees with better benefits.

And after all, the Governor has a reputation to keep.

Friday, June 11, 2010

Bret Schundler Gets Schooled

Anyone following any New Jersey news media in recent weeks has had to have learned of the clash between Governor Christie and Education Commissioner Bret Schundler over the State's application for Race To The Top funds.

By way of background, Bret Schundler is a former mayor of Jersey City and a former Republican gubernatorial candidate. He was a champion of New Jersey's charter school law, and is widely viewed as a conservative Republican. At least conservative for New Jersey.

Earlier this year, New Jersey submitted an application for a share of the first round of Federal funds available under the Race To The Top program started by President Obama. The State got no money from that application, largely because the State had not secured the cooperation of the New Jersey Education Association.

Commissioner Schundler, in preparing the State's application for a share of the second round of Race To The Top funds, sought to find a compromise with the NJEA that would entice the union to sign on to the State's application. Because Commissioner Schundler thinks that getting Federal funds for education would be a good thing. And the commissioner did find a compromise. However, that compromise included an agreement by the State to withdraw its plans to compensate teachers on the basis of merit and its objection to tenure for teachers with seniority.

In his public disavowment of the deal and of the Commissioner, the Governor said that he was standing up for what he believed in and what he had campaigned on. In his view, teachers were making self-preservation more important than the kids, and the NJEA was protecting its own members at the expense of the State.

The entire episode reminded me of David Gregory's recent interview with Tim Pawlenty, Governor of Minnesota and something of a front-runner for the 2012 Republican nomination for President. Minnesota had a $3 billion budget shortfall in its current budget cycle, and the state legislature wanted to plug part of that hole by allowing Minnesotans to enroll in Medicaid a few years earlier than they otherwise would have under current law.

But Tim Pawlenty said "no." The Governor explained to David Gregory that, since Pawlenty does not believe in big government, it would have been dishonest of him to take that Federal money. So he turned down Federal funds and cut $1.9 billion from the state education budget. And while this 2-year budget was balanced, the next 2 year budget for Minnesota faces a $5.8 billion dollar budget gap.

So, how could Bret Schundler have gone so wrong? By ever believing that there was a compromise with the NJEA that Chris Christie would approve. The Governor does not want Race To The Top funds. He does not want anything that will help the NJEA avoid layoffs for its members, and he does not want anything that makes it possible for the State to meet its school funding obligations under Abbott vs. Burke.

No, what the Governor wants is to use educational policy as a weapon. By that I mean that, just has he did as an advisor to Alberto Gonzalez, the Governor uses every arm of his administration, and sets every policy, towards one goal -- remaking this State into a place where government is not responsible for providing a level playing field, where business is free to function without having its gains redistributed to the less wealthy and where public schools are free to fail.

What Bret Schundler, and quite frankly the rest of us, have to grasp is that these Governors, Christie and Pawlenty, and their far right ilk want to bankrupt the states, to starve the beast of government so that it is incapable of interfering in the marketplace. These guys are playing to a national audience, and are courting voters who will never have to clean up the mess these men leave in their wakes.

And on the national stage, Bret Schundler is no conservative. Compared to Chris Christie and Tim Pawlenty, Bret Schundler is Nancy Pelosi.

Wednesday, June 9, 2010

Quotes Of Note: A Lost Generation Of Students

In the past few months, much has been written about a study released by the Manhattan Institute supporting Cap 2.5, the Governor's proposal to amend the State Constitution so that no municipality can increase property taxes above 2.5% without approval from the voters. The Manhattan Institute is a conservative, market-oriented think tank.

In a publication entitled "Do Property-Tax Caps Work: Lessons For New Jersey From Massachusetts," the Manhattan Institute's Josh Barro writes that Massachusetts’s experience with capping property tax increases at 2.5% annually could significantly restrain tax growth without hurting educational outcomes in New Jersey. While the rate of increase in Massachusetts' property taxes has slowed significantly since the implementation of the cap, current educational test scores are slightly better than those in New Jersey.

Governor Christie was happy to present this study to the public as proof that New Jersey can cap property taxes without sacrificing excellence in education. However, the Governor failed to highlight one key fact. In an endnote to his report, Mr. Barro writes:

"Readers may be interested to know: If high spending does not explain Massachusetts’ unparalleled educational success, what does? A full answer is beyond the scope of this paper. But policy experts have pointed to a series of curriculum and testing reforms in the 1990s that appear to have significantly improved performance."

So, to be clear, property taxes were capped in 1980, but Massachusetts' educational success stems from curriculum and testing reforms enacted over a decade later. So what happened between the time property taxes were capped and educational reforms were enacted?

The Center on Budget and Policy Priorities has reviewed the Manhattan Institute's report and provided an answer to this question.

"Schools suffered in Massachusetts between the adoption of the [property tax] cap in 1980 and the 1993 [state education policy] reform. In 1991, the state's Board of Education warned that there was "... a state of emergency created by grossly inadequate financial support of the public schools..." and that "[c]ertain classrooms simply warehoused children at this time, with no effective education being provided."

The CBPP goes on to find many flaws with the data and methodology of the Manhattan Institute. (To be fair, the CBPP is not without its critics on the right.) However, both reports seem to be indicating the same thing: the state policy reforms of 1993 are responsible for Massachusetts strong public education program, not the property tax cap of 1980.

But what is most devastating about both reports is the inescapable fact that from 1980 to 1993, public education was on a downward trajectory. So a Massachusetts student who entered the first grade in the fall of 1980 and graduated high school in the spring of 1993 spent his or her entire academic career in a failing public school system. That's an entire generation of students who have been poorly served.

Governor Christie wants to impost a property tax cap in New Jersey, but has yet to put forward a plan for maintaining the quality of education in our public schools in the face of a changed funding environment. In fact, all Governor Christie has put forward is a plan to send public school students and dollars to private schools.

So the outcome is clear. Cap 2.5, as currently proposed, will be a disaster for our schools.

Tuesday, June 8, 2010

Chris Christie Hates Judicial Independence

In a recent press conference, Governor Christie finally made clear why he decided to remove Justice John Wallace from the State Supreme Court. As reported by the Star Ledger, the Governor said the following last week in Robbinsville:

"If people wonder why I want to change the Supreme Court, it's because I don't have the flexibility to change the school funding formula."

What the Governor means is that he wants to get rid of the State education funding requirements imposed under Supreme Court decisions starting with Abbott vs. Burke.

Thus, the Governor has made clear that he does not value the independence of the judiciary, or agree that judges should be evaluated on their personal merits and not on the extent to which they agree with anyone's political priorities. Justice Wallace was removed for no other reason that to make room for someone who will overrule Abbott vs. Burke.

If there was any doubt about the Governor's antipathy towards an independent judiciary, he put it to rest when he said:

"They've taken the power out of the hands of the Legislature to make this judgment and out of the hands of the Governor, and the courts are making it. Well, that's wrong. If judges want to legislate, they should run for the Legislature. . . They're put there, and they believe they should stay there without any responsiveness to the people of the State."

In essence, the Governor is mocking judges for believing in both checks and balances and an independent judiciary. Which led the Star-Ledger to note that the Governor has revealed his hard-right agenda.

Sunday, June 6, 2010

It's The Checks and Balances, Stupid

In New Jersey, there are four State watchdogs.  The Inspector General is an independent agency; the State Comptroller is part of the executive branch; the State Commission of Investigation is part of the legislative branch; and the Medicaid Inspector General is an independent agency within the Inspector General's office.  Having independent investigators means that any branch of the government -- executive, legislative or judicial -- can be kept honest.

As part of his budget cutting program, Governor Christie wants to merge New Jersey's four watchdogs into one agency. And, not surprisingly, he wants all the inspectors combined with the State Comptroller in the executive branch.  Since the State Comptroller is appointed by the Governor for a 6 year term, the Governor's plan means that the one person in charge of State investigations, former Federal prosecutor Matthew Boxer, will be answerable to the Governor when his 6 year term ends in 2012.  Ask Justice Wallace -- I'm sorry, former Justice Wallace -- what that means for the future of checks and balances in State investigations.

For purposes of clarity, the Inspector General is also appointed by the Governor.  However, once appointed, the Inspector General serves for the Governor's entire term.  The current Inspector General, Mary Jane Cooper, has served in that capacity since originally appointed by acting Governor Codey.

Now, by operating of our State Constitution, New Jersey has the most powerful Governor in the nation.  Our Governor has a line item veto, which the President does not have.  But even the New Jersey Governor cannot eliminate the State Commission of Investigation.  That's how important the office is viewed within the context of our Constitution.  What the Governor CAN do is cut the funding to the State Commission of Investigation, which he has proposed doing.  He wants the agency's budget cut by about 75%.  There is no precedent for such a de-funding.

What makes this more than just a tale about cost-cutting and, perhaps, power-grabbing are certain facts from  Governor Christie's tenure as U.S  District Attorney.  As a federal prosecutor, Chris Christie was one of seventeen Federal prosecutors who served as advisers to former Attorney General Alberto Gonzalez.  The United States Attorney General is supposed to be an independent entity.  But under President Bush, advisor Karl Rove was charged with using every branch of government to further the political goals of the President and the Republican party.  And so, the Attorney General became a political partisan.

Lawyers interviewing for jobs as Federal prosecutors were vetted for their political views.  And Federal prosecutors were urged to bring indictments that would affect elections.  Some prosecutors were forced to resign after refusing to bring such political prosecutions.

As a respected member of the now-politicized office of the Attorney General, U.S. Attorney Chris Christie brought an indictment against a North Jersey anti-poverty agency with ties to Senator Robert Menendez.  At the time, Senator Menendez was in a close re-election battle against Republican Tom Keane, Jr., son of the popular former governor.  The indictment was announced a few months before the election; to date, the indictment has resulted in no charges, but the District Attorney's office continues to refuse to clear Menendez' name.

Now, there is no agency charged with investigating Federal prosecutors for bringing prosecutions for political purposes.  However, the Attorney General is answerable to Congress.  Ultimately, Alberto Gonzalez was forced to resign under threat of being indicted for lying to Congress.  Lying about firing federal prosecutors for not bringing political indictments.

Chris Christie was not an innocent bystander to the politicization of the United States Attorney General's office.  As an influential advisor to Alberto Gonzalez, he was one of the architects.  Against this backdrop, it's clear that his move to bring all State investigatory activities under the authority of the executive branch is part of a pattern, a long-standing pattern of harnessing investigative power for partisan purposes.

Governor Chris Christie has attacked the independence of the judiciary; he has superseded the legislature on a number of occasions, giving rise to several law suits; and now he seeks control of the State's investigatory powers.  How long will it be before employees of the State Comptroller, both current and prospective, are vetted for party affiliation?

You can call this a lot of things, but don't pretend this is about balancing the State budget.