Cut, Cap and Contribute (3C) Plan

Our Cut, Cap, Contribute (3C) plan starts with the understanding that the people of New Jersey are already the highest taxed in the nation.  When one adds up all the taxes, fees, surcharges and tolls that the people of New Jersey pay, there is no question that we are already overtaxed.

In order to wean ourselves off our over-dependence on property taxes, we need to accomplish a number of goals going forward.  First, we need to dig ourselves out of the huge budget hole that our current governor and legislative leadership have dug us into.  Over the past few budget cycles we have over-spent and over-borrowed to the point that we now face a budget deficit next year of over $8 billion and an ongoing, structural deficit of over $6 billion.  That is unconscionable, but is the reality.

We must also accept that there is no magic bullet answer to the issues we face.  We have no choice at this point other than to fight a multi-front battle to win back our financial health.  We must work to relieve local governments and school districts of costly mandates and give them the tools they need to control their costs going forward.  We must facilitate the sharing of services and the merging of districts and municipalities where practical and prudent.  We must make New Jersey’s tax and business climate attractive again and spur growth.  In this section we talk about our plan to control State spending and solve our over-dependence on property taxes.

Our 3C plan is both the answer to our State’s structural deficit and an essential component of a comprehensive solution to our high property tax issue as well.  Here’s how it will work:

Cut State Spending – Over the past few years Republicans have put forth $ billions in State budget cuts that have been rejected by the governor and legislative leadership.  We

must redouble our efforts on this front and force, as best we can, our leadership to accept reality and make cuts wherever feasible.  We’ll need to find even more cuts to solve next year’s budget.  Hopefully we’ll have a governor who is willing to devote the substantial resources of his office, and his line-item veto power, to cutting our bloated government, rather than finding ways to avoid making these tough, but essential and responsible decisions.

Cap State Spending Growth – Our legislative leaders and our governor can be found frequently patting themselves on their backs touting the fact that they have placed spending and taxing caps on municipal and school budgets.  Their dirty little secret is that they are complete hypocrites since they have failed to place a cap on the branch of government over which they preside – and they regularly exceed the caps they place on other levels of government.  If you include increases in our debt load, the level of irresponsibility and hypocrisy becomes dramatic.  Over the past 10 years our State spending has increased 50% and our outstanding debt has grown by 200%.  Governor Corzine increased spending 20% his first two years in office.  If we had kept the rate of increase of our State budget to the rate of inflation over the past ten years, our budget would be approximately $5 billion lower than it is today. Our plan would cap state spending at the rate of inflation, with some flexibility to accommodate extenuating circumstances.

Contribute – Once we get ourselves out of our present budget hole, we must commit the savings from our budget cuts, and the ongoing savings from our capping of State spending, to weaning ourselves away from our over-reliance on property taxes.  Any revenues received over the budget estimate – both anticipated and unanticipated - must be constitutionally dedicated toward property tax relief.  (Save for the last two years, revenues nearly always exceed the amount anticipated in the budget.) Over time this will effectively, gradually, shift our tax burden from the property tax to more broad-based State taxes.

As we mentioned in our opening, restructuring the State budget, and solving our property tax issues, will take time and there is no magic bullet.  Quite simply, we will have to do everything we can to fix the problems we currently face.  A quick word about the Chris Daggett proposal to increase sales taxes to in turn cut property taxes.  We are leery of such proposals since we’ve heard them before.  The State income tax was created to offset property taxes but was politically perverted to the point where most New Jersey taxpayers now simply pay the income tax – and get nothing in return.  Additionally the Daggett plan does nothing to control State spending.  The money raised by the increase in the tax will have to pass through the sieve of the State government bureaucracy and you can bet that the amount will be smaller when it comes out the other side.  Some form of tax restructuring such as this may be a reasonable component of future reform as revenue sources change over time.  But the Daggett plan isn’t the answer to the problems facing us today.  The answer is government spending restraint, the promotion of economic growth and commitment to dedicating revenues to tax relief, to help beleaguered taxpayers before they are driven out of their homes, and out of our State.