Wednesday, April 28, 2010

The Interests of Special Interests - What Greed? Not in New Jersey


For those of you who pay attention you might have noticed that greed is not limited Wall Street and the politicians in Washington, it is penetrating throughout society. Let me give you yet another manifestation of greed in America.

Before telling you, let me first say I am a strong supporter of teachers but believe the education system is broken. I worked for eight years for the Governor of New Jersey. A couple of years I spent as the Assistant State Treasurer. While there I got to know the other side of the education industry and the power of special interests.

Since we left office in Jersey, leaving behind a substantial budget surplus, the subsequent Democratic governors have driven the tax rates in Jersey to the highest in the nation. The state teachers union is one of the strongest in the nation. No doubt they provided for the teachers as well as themselves. But what is the result?

Taxes are so high in Jersey that two decades of inward migration to Jersey were reversed in the past decade and people, mainly high income, are fleeing the state. In revolt, the people of Jersey stunned the political pundits and elected a Republican governor last November after almost 30 years of Democrats in control.

The incumbent governor, a Democrat and former CEO of Goldman Sachs, had pushed the liberal agenda which includes coddling the special interests too far. He was bounced from office. Faced with a deficit he inherited of $11 billion the new governor outline an ambitious recovery program.

Many people don't realize that by law states cannot have a deficit, unlike the federal government that lives off the future taxes of our kids. The budget has to be balanced. So the new governor rolled up his sleeves and went to work. New Governor Chris Christie faced a huge problem. According to writer Mark Impomeni in a story on the Human events blog website this is what happened.

Christie proposed a cut in state aid to education, intended to generate $500 million in savings the first year and $800 million the second year. It was equal to the annual budget surpluses in the school district and would result in no lost teaching jobs nor reduction in services. The teacher's union, in control of the legislature, demanded a new tax on families with incomes over $400,000 to pay the cost, a reinstatement of an old temporary tax that was responsible for driving tens of thousands of jobs out of the state. In fact the previous Democratic governor and legislature had refused to extend the tax.

Christie was elected on a platform of no tax increases and a cut in excessive state spending. He said no and countered with a challenge to the teachers union tax increase proposal.: He called on teachers to voluntarily agree to a one-year wage freeze and a permanent 1.5% of their salary to go toward the cost of their health insurance. The governor said that doing so would save school districts across the state more than the $820 million he was proposing to cut, resulting in no net reductions for education.

You see, thanks to the strength of the teachers union and the weakness of the Democrats in New Jersey teachers do not pay a single cent for health care. Retired teachers also pay nothing for health care. The health care plan for teachers ranked as one of the most expensive in the nation and was so extravagant it was classified as a "Cadillac" program and almost subject to a luxury tax under the Obama plan.

When the NJEA balked at this proposal, Christie took his case to the people. The governor said that New Jersey voters should reject the budget in any school district in which teachers refused to accept the wage freeze and health plan contributions.

“I just don't see how citizens should want to support a budget where their teachers have not wanted to be part of the shared sacrifice,” Christie said.

The teachers’ union, the New Jersey Education Association (NJEA), mounted a massive public campaign against the cuts, airing ads on local television accusing the governor of “attacking teachers, school bus drivers, and lunch aides.”

Last Tuesday, voters in the state decided overwhelmingly in the governor’s favor.

In an average year, nearly 70% of school budgets in New Jersey are approved. But last Tuesday, almost six-in ten-school budgets went down to defeat, a stunning reversal. Now, school budgets that were rejected will go to town councils for mandatory spending cuts or approval over the will of the voters. It seems unlikely in the current political climate that many town councils will choose to substitute their judgment for that of the voters. It is nothing short of a huge political victory for the governor.

Reacting to the vote, Christie called the results, “an extraordinarily clear signal” and “a seismic change that reflects … a changed attitude in New Jersey.” Still, Christie sought to distance himself from any personal political benefits from the vote, casting himself as the people’s messenger.

“[The people have] had enough,” Christie said. “They want real, fundamental change. We didn't lead in that regard. We merely gave voice to what the people of New Jersey were already feeling.”

The NJEA issued no comment on the results.

Christie moved quickly to capitalize on the vote, calling on the legislature to approve an amendment to the state constitution limiting property tax increases to 2.5% a year, to cut pensions and benefits for public sector workers, and to change the collective bargaining process to help reign in expanding budgets at the state and local level.

“We must arm the municipal governments with the tools they need,” he said. “We need to give people the opportunity to control their own property taxes."

Christie has been gaining national attention for his strongly conservative approach to closing New Jersey’s huge budget deficit. Tuesday’s victory will only serve to increase his national profile. New York Republican gubernatorial candidate Rick Lazio said the school budget votes in New Jersey were “a national model for fundamental change” and pledged to follow Christie’s example in Albany if elected.
Christie will now seek to push his $29 billion budget through the legislature ahead of the June 30 deadline. Tuesday’s results make it far more likely that his spending cuts will make it through largely intact.

This victory at the local polls demonstrates the degree to which the people's revolt against past spending habits has penetrated the American political system. It should serve as a warning to the free spending liberals throughout the nation that the Tea Party is just beginning and Independents have become more determined than ever to stop the nonsense and get control of government at all levels.

I lived in Jersey for 16 years and this is one of the most positive signs I have seen that the state has finally seen the light and is ready to again become the powerhouse of the Northeast, a position it last occupied when I was working for Governor Tom Kean. It is great to see Governor Christie is a man of his word and that the people understand it. Welcome back Jersey.


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