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 high rollers.

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 king.

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 sadubato@aol.com.

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