Star-Ledger Editorial Today

In today's Star-Ledger editorial page:

Jersey Governor Chris Christie makes his first budget address to a joint session of the New Jersey Legislature. Now, finally, New Jersey will have the debate it has avoided for too long because Gov. Chris Christie is showing us what New Jersey would really look like with smaller state government.

State tax increases would be held in check, a huge relief.

But there is a trade-off. Classrooms would be more crowded, working families would lose health care, college tuitions would increase, and cops and firefighters would be laid off. Our staggering pension debt would deepen as Christie punts on a scheduled $3 billion payment.

As the debate begins, we offer two thoughts. First, the governor can’t possibly justify deep tax cuts for the state’s wealthiest families while he’s imposing these spending cuts. He even increases taxes on the working poor by scaling back the earned income tax credit. This is not shared sacrifice. It is class warfare.

If Democrats fold on this, then why are they taking up space in the capital? They might as well step aside and let Republicans take over formally.

Second, Christie’s plan to cap increases in the property tax at 2.5 percent is a promising approach. It has worked reasonably well in Massachusetts. And because local voters can override the cap with a simple majority, it has spared their public schools from serious harm.

On the tax cut, let’s first talk semantics. The surtax on incomes over $400,000 was imposed last year as a one-year fix. It expired at the end of 2009, so some argue that Christie is not really cutting taxes on the wealthy, he is just choosing not to increase them.

Call it what you want. But under Christie’s budget, these families will pay less in 2010 than they did in 2009. We call that a tax cut.

The Department of Treasury earlier this year estimated the lost annual revenue at just under $1 billion. For a sense of scale, that would be enough to restore all the education cuts in this budget.

The governor argues that lowering the tax rate on wealthy families will create jobs. Maybe. But that’s what President George W. Bush said, and it didn’t work. The recent decade was the first since the Great Depression in which America experienced a net loss of jobs. In the 1990s, when top tax rates increased under President Bill Clinton, the economy boomed.

Creating jobs, really, is not as simple as cutting taxes. Building good public schools and universities helps as well, as does a good transit system and a high quality of life. To pin so much on tax rates for the wealthy is Republican orthodoxy. To make this move now, in the midst of a fiscal crisis, is an embrace of ideology over pragmatism.

A constitutional amendment to restrain property taxes is a necessity, given the failure of schools and towns to contain spending. We have the highest paid police and firefighters in the nation, and teachers are not far behind. Worse, their salary increases continue to grow faster than inflation and their benefits are way out of line when measured against the average taxpayer’s. How much longer can we be expected to pay a retiring police officer $200,000 in unused sick time?

Middle-class families are getting crushed by this. A tax cap gives them a fighting chance to push back.

California showed us how to do this wrong back in 1978. Its Proposition 13 imposed a concrete cap on increases that created overcrowded classrooms and decaying local services.

Massachusetts built a smarter system two years later, allowing for an override by local voters. Its property taxes had been among the nation’s highest, 76 percent above the average. They are now only slightly higher than average.

The Legislature should take a careful look at the experience in Massachusetts. Towns there often vote to exceed the cap to avoid the harshest spending cuts. But a study by the respected Center on Budget and Policy Priorities found the cap landed harder on less wealthy towns that are more dependent on state aid and more reluctant to vote for higher taxes. The Legislature should explore ways of using state aid to ensure that the sacrifice is shared.

New Jersey’s existing 4 percent cap is weak and porous. And local referendums on school spending today are mostly advisory, given that they can be overruled by town councils or the state. Christie offers a stronger and more elegant solution.