New Jersey Assembly Budget Committee
FISCAL YEAR 2020 STATE BUDGET
Testimony of Rosemary Becchi, President of Jersey First
44 Main Street, Suite 3
Millburn, NJ 07041
Good day, Chairwoman Pintor Marin and members of the committee.
Thank you for allowing me to testify on the proposed Fiscal Year 2020 New Jersey State Budget.
My name is Rosemary Becchi, I am president of Jersey First, the group I started to advocate for better tax and fiscal policy here in New Jersey.
I am here today to urge you to examine Governor Murphy’s 2020 spending plan through the eyes of so many families in this state. I’m asking you to please consider the overwhelming evidence that New Jersey has become increasingly unaffordable for most of us.
This budget will make that problem much worse. A bad business and economic climate—high taxes, high cost of living, and stifling regulations—are costing New Jersey its future.
When I started Jersey First about a year ago, I was joined by a diverse group of civic and business leaders who shared a common goal of studying and developing policy recommendations on how to address the spiraling costs of living in our state to keep our jobs and kids from leaving.
Our independent research, while still preliminary, affirms what others have concluded – the cost of living in New Jersey is rising not only because of the fiscal discord in Trenton, but also due to mounting anti-business and anti-job policies that are stagnating our economy.
The Garden State has witnessed a plethora of new taxes since the 2019 spending plan was adopted. Now we are faced with a 2020 budget that continues to saddle the people of New Jersey with greater financial liabilities and expenses.
We all recognize our state government is neck-deep in a serious financial hole our leaders began digging well before many of you were elected. It resulted from decades of unchained spending, political pandering and the reckless mismanagement of our largest liability, the state’s government employee pension system.
Estimates have placed that liability at $100 billion dollars – or nearly three times the size of the current state budget.
There also is the related, stubborn adherence to paying for platinum level health care benefits and continuously expanding government positions and salaries without a serious merit system.
We fully appreciate the burden on you and many in the Legislature to maintain government services and prepare for new, unforeseen societal challenges all while straddling that ever-expanding financial hole.
What we do not understand is why the state fails year after year to confront the hard choices necessary to fix these crippling structural problems.
You have an opportunity right now, as the Governor asks you to review his 2020 spending plan, to take that action. The same tax and spend solutions of the past aren’t working. It’s time to try something new.
Let’s be clear. Governor Murphy’s proposed budget marks the largest spending plan in state history at $38.6 billion, beating last year’s record-spending scheme.
There are plenty of noble spending objectives in the budget, but it is void of the political courage and serious action New Jersey’s residents need from our leaders to tackle Trenton’s underlying financial crisis.
This spending plan has only one guarantee, it will FURTHER make New Jersey unaffordable and drive more businesses, jobs and families from our state.
Governor Murphy own treasury and outside ratings agencies have warned that revenue collections needed to support the current spending plan are far behind projections. We’re low on money, but we’re spending more anyway.
It appears the Governor is just crossing his fingers and praying. Maybe revenues will pick up during peak collection periods this month and next month.
I’m crossing my figures, too. The potential for disaster is very real. What are we going to do if the money doesn’t come in? Borrow? Make another sudden rush to enact new taxes?
Wishes and hopes are not a sound fiscal strategy.
This is serious. The underpinnings of those revenue warnings serve as an indicator that our economy may be faltering. The State Treasurer’s most recent revenue report, despite its tortured technical jargon, was not rosy. Her office revised downward the protections for traditionally reliable Gross Income Tax and Sales Tax collections.
Of course, the Treasury was pleased to announce that the losses should be offset by larger collections in Corporate Business Taxes, which the Governor convinced the Legislature to hike last year. But what does that tell us? Does it mean we move forward relying more heavily on taxing the very industries we rely on to boost our economy and at least maintain good jobs in New Jersey, if not grow more?
For the new fiscal year, the Governor hopes you will help support his spending plan by letting him impose a penalty tax – and that’s what it is – on people he calls the rich, anyone earning more than $1 million.
But many of those impacted would be our small business owners – those crucial businesses that employ most of New Jersey’s workers.
I understand the populist appeal of saying, “tax the rich” and talking about millionaires paying their fair share. But our high earners and successful business people are already paying a substantial share while supporting many jobs and industries in this state.
Taxing them more for crossing an arbitrary line of success has consequences.
The NJBIA’s outmigration report already demonstrates how those who can leave are doing so, and those who would think to come into New Jersey or invest more are not.
We are driving out the very people we need to pay for these ambitious state spending plans, creating an economic death spiral. The flight of qualified workers will hurt our businesses. Declining opportunity will encourage more people and more entrepreneurs to leave.
Fewer and fewer people will decide to invest in our state—whether via private investment or philanthropy.
We must implement and continue the fiscal controls that improve our fiscal state, and stop this reckless impulse of raising taxes that increasingly make New Jersey unaffordable.
The 2 percent cap on property taxes, enacted through bi-partisan efforts here in Trenton, has worked and continues to work. Last year we had a historic low in the rise in taxes.
Now, that sounds odd to the average person. Celebrating a 10 year low in how much your property taxes increased seems to be a strange measure of success.
But in New Jersey, we have to call that a win.
And let’s be honest with each other. That property tax cap, not the boost in state-aid to schools last year, is what held the property taxes down.
We also know that the 2 percent cap on fire and police arbitration awards, another hard-fought, bipartisan step toward fiscal responsibility welcomed by municipal leaders, was working until it was irresponsibly allowed to sunset over a year ago.
On behalf of Jersey First, and the people of New Jersey, I urge this committee to muster the political will that the administration lacks.
Make the necessary, tough decisions. Revive the arbitration cap, and move forward with the pension and benefit reforms recommended by non-partisan fiscal-policy experts and bi-partisan groups of this Legislature last summer.
Create a new retirement system, a modified 401k plan, for public workers, at least one addressing new employees and those not yet vested in the state pension system.
Let’s catch up with the private sector and other states by moving off the platinum health care package for public workers to at least a gold plan.
YES, these are not politically popular steps. But they are the right steps if we seriously want to address the rising cost of living in New Jersey.
We also should be engaging the many think tanks we have in New Jersey to find other ways to address problems such as storm water run-off and parking congestion in the state without resorting to new taxes on the residents and businesses.
It always seems like new taxes are the first solution of choice for every problem in this city.
But punishing our business community and residents with more taxes, fees and costly regulations is not a sustainable plan to fix problems or address the social disparities in our society. The new taxes and regulations pushed down on their operations over the past 18 months already has had measurable consequences.
The federal Bureau of Labor Statistics released its sobering, annual benchmark report earlier this month on New Jersey employment. We did not gain nearly as many jobs as we thought we did in 2018.
The new data based on tax records show job growth was 44 percent less than the survey data compiled throughout last year. It also demonstrated losses in the higher earning segments, such as financial services, and that our employment growth has slowed from previous years.
The data also affirmed an alarming trend. New Jersey’s worker participation rate throughout 2018, which measures how many working-age people are actually working or looking to work, dipped below the national rate on average for the first time in many, many years.
We again ranked below the national average in the latest preliminary report for February, which also showed a drop of 9,300 private sector jobs last month and a 31 percent downward revision in the job gains we thought we had in January.
Something is seriously wrong.
The well intentioned, yet misguided wave of increased minimum wages, expanded leave requirements for private companies, increasing the Corporate Business Tax and now vowing to boost a so-called millionaire tax are killing New Jersey’s economic potential.
Ladies and gentlemen of the committee, I come to you in earnest not only because I am a business person and taxpayer in New Jersey, but also because I am a wife and mother whose family very much wants to continue living in this state.
Like many young people within our state, I fully understand the challenges they face as they try to go to college, create a career and struggle to remain in a state that is becoming increasingly unaffordable. When I was in college, my family fell on hard times. It became clear that I had to go to work to pay for my continued education and it was not easy. But I managed to work my way through undergraduate school and law school, and I never forgot that experience.
Years later, when I worked at the U.S. Senate I had the opportunity to help create the Federal 529 college savings plans because I knew that good policy can change people’s lives. Now, when I talk to other mothers, at school or the grocery store, I hear stories about how their grown kids are leaving our state or worse, that whole families are leaving New Jersey or seniors are losing their homes because they can’t afford to live here.
That is why I created Jersey First—because I want to keep our friends and families here in New Jersey. I want to create good policy that will correct the course our state. We are at risk of losing the promise of the American dream. I want to ensure that my generation is not the last in New Jersey able to make the American dream a reality. We have an opportunity today, with this new budget, to turn our state around.
I urge you on behalf of all people in New Jersey to do the responsible thing – we need to use this budget process to force the Governor to address the structural reforms necessary for the pension and health care system and refuse to allow any additional taxes. Let’s fix the problem by trying new solutions, not just pass along our problems. Let’s try reducing the burden on New Jersey families and businesses so they will stay in the state.
Thank you, and I will gladly take any questions from the committee if you have any.