The Times, Trenton

Showing Him The Money

The Times, Trenton — Thursday, March 27, 2003


As the Legislature and the public come to fully understand the impact of Gov. James E. McGreevey's proposed spending cuts, some are taking seriously his challenge to those who want to spend more: "Show me the money." Others should do the same.

Yesterday, a coalition of 75 groups called the Fairness Alliance called for a temporary increase in the state income tax for families making more than $400,000 a year and individuals who earn more than $250,000. Those who earn more would pay a higher tax rate. The increase would be in effect for three years and bring in an estimated $972 million annually, the Alliance said. Gov. McGreevey has rejected the idea of any hike in income, sales or corporate taxes - his spokesman did so again yesterday - but that's an arbitrary and foolish stand to take.

In a budgetary crisis, the only justification (other than political faintheartedness) for not raising taxes on those who can afford it is the belief that higher rates would cause the well-to-do to leave the state and discourage others from moving in. However, a study of Internal Revenue Service data by New Jersey Policy Perspective, one of the Alliance groups, shows no evidence of increased movement out of a state by any income cohort when income taxes go up, or of decreased outward movement when taxes go down.

A three-year upward bump in the income tax would allow the Legislature to moderate some of the worst consequences of the governor's budget. It could avoid the cuts he proposes in FamilyCare health insurance for low-income adults, Medicaid coverage for the poor and prescription drug help for low-income senior citizens. It could lessen his higher-education cuts that threaten to lead to substantial tuition hikes. It could forestall the fast shuffle his administration plans to give school districts - pushing the final school aid payment of the current budget year from June into July, effectively depriving the districts of a month's worth of aid funds - in order to pay Medicaid nursing home bills that the federal government refuses to cover.

Another organization that has shown the governor the money is New Jersey Breathes, the coalition of health groups dedicated to reducing smoking and the health havoc it causes. New Jersey Breathes opposes the planned diversion of money from the state's settlement with the tobacco companies that was supposed to pay for smoking cessation programs. To offset it, the group has proposed adding 10 cents to the cigarette tax, repealing last year's ill-advised reductions in taxes on other tobacco products and increasing the renewal fee for tobacco licenses by $100. It's a fair and responsible solution.

Meanwhile, other interest groups have done little more than demand that their funding be left intact. Cultural leaders, for example, have offered few if any alternative ways to come up with money for the Council on the Arts, the Historical Commission and the Cultural Trust, all of which would get zero under the budget. (The governor has since backed off on this one, promising to restore half the arts funding.) Instead, these leaders should be putting forth some ideas. For example: How about imposing a modest tax on tickets to cultural events to pay for cultural subsidies? How about looking at staffing cuts at the agencies that parcel out the state grants? By the same token, those who deplore the elimination of the $409,000 budget for the state Motion Picture and Television Commission, contending that the commission brings the state millions of dollars in business, might suggest imposing a small tax on movie tickets to keep the operation running.

In other words, don't just complain. Show him the money.

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