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10-5-09 Gannett: Editorial & Recommendations re: Gubernatorial Campaign Issues '09
"If you haven't read all of our eight-part "Tax Crush" series, which concludes today, the entire package is available online at mycentraljersey.com and at app.com (Asbury Park Press). As a follow-up to it, we will be outlining a 20-point plan for easing the tax burden that will appear on the Monday and Tuesday editorial pages. It will address four basic areas: reining in public employee salaries and benefits; making the tax system more equitable; putting controls in place that will make it more difficult for lawmakers to spend money they don't have; and improving government efficiency."

October 4, 2009

Give voice to your outrage and make our politicians act

This is, simply put, an appeal to you, the residents of New Jersey.

You need to start holding your public officials accountable. And you need to take personal responsibility for generating the grassroots pressure needed to get them to finally fix our tax system and make New Jersey affordable again

The cynics say nothing will change, that there is no hope for bringing taxes in New Jersey under control.

That's a copout, one that has allowed politicians who have turned a deaf ear to constituents' concerns to remain in office. It's time to make them deliver. Citizens who organize, who stand up for what's right and for what's fair, and who demand accountability on the part of their elected officials, ultimately will prevail. Merely complaining about it, year after year, is self-defeating.

Almost ironically, we've seen and heard the white-hot anger lately over federal spending. It's been evident in the huge crowds that have turned out in many towns over the past few months to protest the Obama administration's spending. It's been there in the opposition at the congressional "town forums" to a health care plan that has yet to be approved, let alone funded. And it's been there in the "tea parties" that have been held all over the state, protesting runaway spending in Washington.

The anger is real and deeply felt. But it also begs the question: Why hasn't any of that anger been directed toward our state and local officials? Why have we allowed them to get away with it? We need to tell them that the days of doing nothing to deal with the state's most pressing problem are over. Over the past eight days, the Courier News/Gannett New Jersey newspaper series illuminating how badly the state's tax system is broken has made one thing abundantly clear: There is a lot of lip service when it comes to tax reform. It's time to insist that our elected representatives take action.

Haven't you grown weary of reading how New Jersey once again had the highest property taxes in the nation this year? And if that weren't bad enough, that our median real estate tax bill was more than triple the national average and 37 percent higher than runner-up Connecticut?

Aren't you disgusted that New Jersey was again deemed to have the worst tax climate for businesses — a toxic climate that impedes the growth needed to expand the tax base and relieve the pressure on residential and other taxes?

Weren't you sickened to read that average property tax bills continue to rise even though property values have fallen about 20 percent and median household income fell 10 percent between 2006-2008?

Weren't you shocked by the power of the unions to extract the kinds of salaries and benefits enjoyed by public employees in many of our towns — big and small?

Weren't you saddened reading about how the state's heavy reliance on property taxes has punished the poor and middle class, and the newly jobless? And angered at how the state refuses to phase in property tax increases arising from property revaluations that in some cases have doubled and tripled tax bills?

If you haven't read all of our eight-part "Tax Crush" series, which concludes today, the entire package is available online at mycentraljersey.com. As a follow-up to it, we will be outlining a 20-point plan for easing the tax burden that will appear on the Monday and Tuesday editorial pages. It will address four basic areas: reining in public employee salaries and benefits; making the tax system more equitable; putting controls in place that will make it more difficult for lawmakers to spend money they don't have; and improving government efficiency.

Our 20 points are far from all-inclusive. But they are an essential starting point if New Jersey is to dig itself out of its financial hole.

One thing is for certain: Unless you join together with friends and neighbors, organize, mount protests and demand fiscal accountability from Trenton and your local governments, nothing will change. The effort must begin now and not cease until public officials right the state's listing ship.

Make your representatives listen, but, most importantly, make them act!



October 5, 2009

A 20-point plan to ease the Tax Crush

Public employee salaries account for about 60 percent of government expenditures in New Jersey. If you add in the cost of the generous health and pension benefits for the state's 470,000 public employees, payroll costs account for at least 70 percent of government expenditures.

The first 10 points of our 20-point plan, which is broken into four sections — reining in public salaries and benefits, reforming the tax system to make it more equitable, operating government more efficiently and capping public spending — underscore the reality that no appreciable headway can be made in reducing taxes without tackling public employee benefits and salaries.

REIN IN PUBLIC SALARIES, BENEFITS

&bull No. 1: Require all public employees to make contributions to health insurance premiums in line with those in the private-sector.

Despite a 2006 recommendation from the Joint Legislative Committee on Public Employee Benefits Reform to require all public employees to pay at least some portion of health insurance premiums, it was never acted upon.

Most police employees contribute nothing toward their health insurance premiums. Most municipal and county employees contribute nothing or very little. Teachers in only 14 percent of the state's school districts make any contribution toward their health insurance premiums.

The 2007 contract settlement with state unions required workers to contribute just 1.5 percent of their salary toward health insurance — a giveback so modest that the state's largest employee union trumpeted it as a major victory. Gov. Jon Corzine later reversed an original stipulation in the contract that would have required retired state employees to contribute 1.5 percent of their pension toward their health insurance premiums. So today, they contribute nothing, putting them on an equal footing with retired teachers and school administrators, and most police and municipal workers.

Government-funded costs for covering state workers in the current fiscal year have been projected at $1.78 billion ? $1.37 billion for active workers and $410 million for retirees.

The price tag for school employees enrolled in the state plan is projected at $1.84 billion — $1.1 billion for current employees and $740 million for retirees. About 90 percent of school employees' bill is borne by taxpayers.

And things are getting worse: The State Health Benefits Commission in July approved health care premium increases of 11 percent for state workers and 23 percent for school employees. Guess who will be picking up most of the tab?

&bull No. 2: Establish uniform "use-it-or-lose it" rules for unused sick and vacation time.

The joint legislative committee cited above recommended that sick leave compensation payable upon retirement be limited to $15,000 for all local government and board of education
employees. It also recommended limiting the carry-over of accumulated vacation time to one year for all local government and board of education employees. Neither of the recommendations were approved by the Legislature.

Rules on how many of those days can be accumulated and cashed in typically are left to the discretion of towns, school boards and other governmental entities. Some towns establish caps on payouts for unused sick and vacation days, but most do not. Caps that do exist rarely are less than $10,000.

Legislation that would have capped payouts for unused sick and vacation time of school administrators at $15,000 remains bogged down in the Legislature. The bill was spurred by the obscene $740,000 severance package awarded Keansburg schools Superintendent Barbara Trzeszkowski, which included $184,586 for 235 unused sick days and 20 vacation days.

&bull No. 3: Enact measures to control growth of public employee salaries.

There is no hope of bringing property taxes, or any other kind of tax, down without striking at the heart of the matter -- public employee salaries. They account for about 60 percent of all spending at the local, county and state level. Payroll costs continue to climb at a time when incomes of all workers are declining and the Consumer Price Index is actually in negative territory.

In the midst of the worst economic downturn since the Great Depression and a deflationary environment, teachers, police and many other public employees continue to exact generous raises. The average salary increase for teachers this year is 4.31 percent. Police typically are getting 4 percent increases in the salary guide, plus step increases that often result in total wage hikes of 10 percent or more a year for officers who have to yet to reach the top of the guide.

To address the problem, the Legislature should require a two-tier salary system — one for current employees and another for new hires that establishes lower starting salaries and expands the number of steps required to reach the top of the guide. In some towns, it takes police just five years after they have graduated from the police academy to reach the top of the salary guide. Seven steps is more common. To pay officers with that level of experience $90,000 and up in base pay alone throws the whole system out of whack. Total pay package increases should not be allowed to exceed inflation.

&bull No. 4: Establish ceiling of 10 paid holidays for all public employees.

Until last year, state workers were entitled to 14 paid holidays, including Black Friday, the day after Thanksgiving, which was routinely granted at the discretion of the governor. Most local and county governments followed the state's lead. Corzine last year said employees could have Black Friday off if they traded it in either for Lincoln's Birthday or President's Day. Now they get 13 holidays. That's still too many. It's three more days than federal employees get and at least two more than government employees in other states get. And it's nearly double what the average private-sector worker receives.

The Legislature has refused to even study reducing the number of paid holidays, as recommended by the legislative committee.

&bull No. 5: Eliminate health and pension benefits for part-time public employees, elected officials and professionals who contract with government.

In 2008, the law was changed to limit eligibility for benefits to part-time employees who made $7,500 a year or more, up from $1,500. But it only pertained to new hires.

The state commission studying property tax reforms in 2006 had recommended eliminating benefits for all part timers, but Corzine refused to act. The savings here, not only in reduced health benefits, but for pensions would be enormous over time.

It also would help weed out those thousands of elected and appointed public officials who enter public life primarily to secure health insurance coverage.

&bull No. 6: Limit public pensions to one job per person.

So-called "double-dippers," politicians who hold two or more public positions and draw on more than one pension program, pull down an estimated $200 million in salaries. Others accumulate large pension benefits by having two or more part-time positions.

Most of the cost savings here would be indirect. It would discourage multiple job holding, which often leads to conflicts of interest and allows irresponsible public officials to get paid for giving short-shrift to each of their jobs, some of which may involve little or no work. Double-dipping also helps perpetuate the belief that many government officials are in public service for the wrong reason — their own financial well-being.

&bull No. 7: Require fact-finders and arbitrators to make cost-of-living the most important factor in consideration of binding arbitration cases.

The cost of living is one of several factors arbitrators are asked to take into account in settling contract disputes between management and police and fire unions. But it is clear from the pattern of judgments that one factor takes precedence — whether they are in line with settlements in neighboring towns. That makes it virtually impossible to reduce the salary increase rates quickly enough to reflect changing economic conditions.

Arbitrators also should be required to consider the total cost of the compensation package — salary guide plus step increases — in measuring it against the cost of living. Both must be
written into law, and arbitrators must be held accountable for abiding by it.

&bull No. 8: Rewrite civil service laws and allow towns to withdraw from civil service.

Corzine has said civil service reform is essential to any discussion about property tax reform. There has been some discussion but no significant action.

Onerous civil service rules make a mockery of efficient government. They make it difficult for towns to hire the best employees in a timely manner and even more difficult to lay off employees during tight economic times or transfer them to jobs where there is a greater need. It can take six months or longer to lay off employees once a plan has been submitted to the Department of Personnel, which must sign off on it.

Civil service rules — some of which date back nearly a century — also have been a major impediment to consolidation of municipalities, police and fire departments, and other government entities: If one entity in a consolidation is governed by civil service, all employees in the newly merged entity must be covered by civil service.

Civil service governs most state employees, 20 of 21 counties and 193 municipalities, including most of the larger ones. Once towns or counties opt to become civil service towns — something that must be done by referendum — there is no way out.

The most important of 60 recommendations in a 1997 report by the Property Tax Commission, which was charged with finding ways to reduce property taxes, was to allow government entities to withdraw from the civil service system. That and most of its other worthy recommendations were, and continue to be, ignored.

&bull No. 9: Negotiate a unified state contract for all police, teacher and fire unions.

There are several good reasons for doing this. Among them:

It would eliminate the tens of millions of dollars wasted annually on contract negotiations by hundreds of bargaining units. Some counties have to deal with 20 or more unions. Large cities often must negotiate with 10 or more.

It could eliminate the bad blood that often stems from contentious negotiations between management and the unions, and would provide uniformity of benefits packages.

It would eliminate the huge advantage the state's most powerful unions have over small-town and small district administrators, who often lack the expertise, resources and stamina to fight to the finish.

It would remove from the negotiations any disincentives management negotiators have to get the best deal — staying on good terms with the unions, and recognizing that typically the better the salary and benefits for the union, the better the benefits for managers.

The 1997 Property Tax Commission recommended that laws be enacted that would allow collective bargaining for public employees on a county, regional or statewide basis. Again, no action was taken.

&bull No. 10: Bring employee pensions under control.

The Joint Legislative Committee on Public Employee Benefits Reforms made 21 recommendations on pension reforms alone in December 2006. Only a handful were adopted in full accordance with the recommendations.

The state's next governor and the new Legislature won't have to look very hard for ideas on how to address the state's ballooning unfunded pension liability. Many good ones are to be found in that 2006 report. At the time, the state's unfunded pension liability was $18 billion. Today, it's $23 billion and rising.

Unless any of the state's pension systems go bankrupt — an unlikely scenario despite the stresses on them — the enrollees in the state's traditional pensions can't be shifted over to less-costly 401(k)-type plans.

The state has, however, started enrolling new hires in what it calls a pension contribution plan, similar to a 401(k). But it will be a long while before the full financial impact of it is felt. In the meantime, employee contributions to the traditional pension plans should be increased, the age at which employees are entitled to full pension benefits should be raised and the cost-living increases in the pension plans should be at least temporarily halted.