New Jersey Tax Revolution Roundup: Taxing, Spending, Salaries, and Solar Energy Incentives

Some odds and ends for you to browse this evening.

From the Courier-Post Online:

The new head of Burlington County government has pledged to continue the tax-cutting policy of the county board of freeholders.

Freeholder-Director Bruce Garganio of Florence also said he was truly grateful for the opportunity to serve as director in his freshman year on the board....

"We owe this to the taxpayers of Burlington County," Bruce Garganio of Florence said of trimming the county property tax levy further during his state of the county speech at the yearly reorganization on New Year's Day in the Olde Burlington County Courthouse.

The Press of Atlantic City discusses how New Jersey's "incentives" (that's taxpayer money being funneled into selected businesses) are affecting the renewable energy market. Three highlights: Business owners with no experience, operators of solar facilities earning ten times the market value for energy (60 cents per kilowatt vs. 6 cents), and a lot of startups but no regulation.

The major attraction has been the state's financial incentives, which New York-based Global Solar Center called "the most generous incentives for solar power in the nation." The most notable one may be the Solar Renewable Energy Certificate, a credit-based system adjusted in 2006 to capitalize on the state Energy Master Plan's mandate that 20 percent of the state's energy come from renewable sources by 2020.

The use of the solar certificates has helped New Jersey grow its solar power industry in a hurry by making solar energy profitable.

Operators of solar energy sites, from large commercial facilities down to homeowners, can earn credits for every 1,000 kilowatt hours of electricity they produce. The credits can be sold to other energy companies seeking to meet their renewable energy goals.

With a solar certificate, an operator of a solar facility can earn 60 cents per kilowatt hour, said Joe Isabella, director of the Vineland Municipal Electric Utility. In the traditional wholesale energy market, a kilowatt is worth about 6 cents.

In another sign of local fiscal pressure's ability to roll back entitlements that have gone too far, The Daily Journal reports that Millville is preparing to renegotiate its union contracts. It's pretty clear why:

Millville reached a contract with its firefighters in September 2008. The five-year deal gave firefighters a 3.6 percent raise the first year and 3.8 percent annual raises for the remainder of the contract....

Council 18 members -- who include maintenance workers, police dispatchers, parks and recreation employees, public works employees, utility workers and other City Hall employees -- received 3.6 percent annual raises for three years. The administrators received a five-year contract with 3.4 percent raise each year.

Let's do the math: The median annual salary for a firefighter is about $44,000, according to salary.com. If we started with that salary in September 2008 (it may have been slightly lower, but this is just an illustration of the numbers) then the salaries would be:

Year	Salary
2008	44,000
2009	45,584
2010	47,316
2011	49,114
2012	50,981
2013	52,918

For those of you playing the home game, that's an increase of 20% (((52,918-44,000)/44,000)*100) over the course of five years. Council 18 members see an 11% increase over three years, and administrators see an 18% increase over five years.

The Washington Post tells us that "State and local pensions plans are on path to failure":

Even if pension funds do manage to achieve that magical 8 percent average rate of return over the next 15 years, they will only have an average of 45 percent of the money they need to pay benefits, according to an analysis by state pension expert Kim Nicholl of PricewaterhouseCoopers. The picture for health benefits, which states are generally paying out of current revenue, is even worse.

It's worth reading the whole thing.

The Star-Ledger Editorial Board discusses a plan to tax students at local colleges and universities, highlighting why it's a misguided thought:

In fact, it’s an awful idea that burdens students and lets town officials delay tough spending cuts. It also frays the relationship between universities and towns, which should be collaborating on solutions instead of pointing fingers....

The resolution estimated the average municipality loses about 13 percent of the taxes it could collect "if all property within its borders were taxed." ... But taxing all property within a town’s borders would mean hitting up hospitals, churches and many other charitable and nonprofit institutions. Why should colleges be singled out?

There's more, too: Did you know that Seton Hall, although it's tax-exempt, pays "payments in lieu of taxes" and full taxes on its off-campus property? That adds up to $364,000 -- on top of which, it "contributed $500,000 toward a sports field for the South Orange-Maplewood community." This is a great editorial, not terribly long but very impactful, and also well worth reading.

---

Ingle at AC Party: Time for Corzine to step aside?

Bob Ingle just wrote an interesting article based on his recent visit to the League of Municipalities Annual conference in Atlantic City.

Some Democrats are privately asking if it wouldn't be in the best interest of the party if Gov. Jon S. Corzine moved on instead of seeking another term. That mirrors what a recent poll showed — more than half the voters think Corzine doesn't deserve re-election.

The scuttlebutt is apparently that NJ politicians have had enough with a Governor that brought a resume heavy with Wall Street business experience and then applied none of it to the problems of the state. Although, with all candor, the Wall Street resume doesn't exactly bring much confidence to anyone these days and maybe New Jersey just got a sneak preview of how pathetic management of these firms truly has been.

I had a disturbing thought when reading the following section of the article:

It's clear those unnamed Democrats who claimed in published reports Corzine's name was on a short list of possible Treasury secretary nominees were not exactly informed sources. Maybe something like an ambassadorship to Chad will surface or something less hefty than the Cabinet he can use to save face. If so, who would the Democrats put up to succeed him?

Go back to the NJLM meeting for a clue. Two potential candidates, Senate President Richard Codey and Senate Majority Leader Steve Sweeney, had huge parties — at the same time but different places. Unlike in past such soirees when he sat around and chatted with the party faithful, Codey was making the rounds, glad-handing folks.

Sweeney's party was better attended. Sweeney greeted arrivals and said goodbye to the departing. At the door, they were collecting names and e-mail addresses.

Why is there another government party going on in Atlantic City? While the league performs an admirable job providing information to members of municipal governments, I wonder about the wisdom of "partying in AC" while we are in the midst of the worst financial crisis in 30 years. And this is while New Jersey is readying itself to go cup in hand to Washington to bail it out. Yes, the same people partying with Codey are the same ones who put New Jersey in this mess to begin with. And I bet you they didn't miss their tee times.

Read the entire article here.

---