Easier Said Than Done
Steve Adubato, Ph.D.
Governor James E. McGreevey is saying many of things he should
be saying in these most difficult times. McGreevey, and all of us,
face a $5 billion hole in the state budget. The Governor is committed
to closing the gap while minimizing the impact on average citizens.
While he has promised not raise income or sales taxes, the Governor
is proposing that New Jerseyans who earn more than $200,000 a year
no longer get a rebate from the state through the NJ SAVER program.
McGreevey says corporations should be paying more in taxes and he
wants to close tax loopholes and expand the number of businesses
currently paying corporate taxes. McGreevey also proposes that residents
of Pennsylvania who work in New Jersey pay more in taxes to our
state. Finally, the Governor says there should be a tax on casinos
that give out free rooms, meals and other "comps" for
Now comes the hard part. Tough rhetoric about closing the budget
gap is easy. Actually doing it will be extremely hard. Denying people
who earn $200,000 or more a $500 rebate is very doable. After all,
who is going to lobby for rich New Jerseyans? But going after businesses
is a whole different story. Numerous organizations are paid to protect
businesses and their profits. Art Maurice, Vice President of the
New Jersey Business and Industry Association didn't mince words
in blasting the McGreevey proposal to increase business taxes; "By
attacking businesses, the Governor has created a climate that really
would lead businesses to question why grow in New Jersey."
In addition, you can expect the Chamber of Commerce along with
lobbying groups for lawyers, doctors, developers and other professions,
who will have to pay more under the McGreevey plan, to raise holy
hell. One problem for the Governor is that many of the people fighting
him on this issue were big supporters of his in the campaign. They
gave big money that made a big difference. He isn't anxious to turn
those deep-pocketed friends into enemies. That's why I'm betting
the McGreevey proposal to make corporations pay more in taxes will
be significantly altered in the next two months.
We don't have to wait to see if the Governor compromises on his
plan to tax Pennsylvania residents who in work in New Jersey. South
Jersey Democratic legislators, particularly those in Camden, Cumberland
and Burlington counties made it clear that they didn't like the
proposal. Why? Because if Pennsylvania residents get whacked by
a McGreevey tax, you can bet Pennsylvania politicians will stick
it to South Jersey residents who work in Pennsylvania. Does the
word "reciprocal" mean anything to you? When South Jersey
Democrats went to McGreevey to let him know how they felt about
his proposal, the Governor made it clear he was willing to take
another look at the issue. That tax on Pennsylvanians working in
New Jersey was expected to bring in $75 million in much-needed revenue.
Saying casinos should pay more for "comping" high rollers
plays well with thousands of New Jersey residents who don't get
comped. But what happens when casino executives reach out to the
Governor and tell him that his plan will cause them to lay off casino
workers? They will also tell McGreevey that they need to comp high
rollers in order to compete with Las Vegas. That's probably true.
If the Governor ignores them, the casinos will go to the press and
say the Governor's proposal will hurt the casino industry, which
is a cornerstone of tourism in the state. They might even imply
the Governor is anti-tourism. So what does the Governor do? He at
least listens to the casino lobby. There is also a 50/50 chance
he compromises on this proposal. The bottom line? The tax revenue
he expected to help close the budget gap won't be coming in.
Here's the deal
No matter what you say, no matter how tough
your rhetoric, you can't close a $5 billion tax hole. In the end
it's what you do that matters. Like I said, Governor McGreevey is
saying all the right things. His heart and head seem to be in the
right place. What he actually does to balance the state budget is
anyone's guess. He will have to negotiate, compromise and rethink
some of his proposals. That doesn't make him bad, or even weak.
It just makes him the Governor, which is not the same as being the
Steve Adubato, Ph.D. is a commentator, lecturer and former state
legislator. Dr. Adubato is also an Emmy Award-winning television
anchor and syndicated columnist.
He can be reached by fax (973) 509-1659 or e-mail him at firstname.lastname@example.org.
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