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.

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Abbott funding: New Jersey's court needs a preschool education

I've got nothing more to add to this Paul Mulshine column. Here's a sample:

The great H. L. Mencken famously observed that "A judge is a law student who marks his own examination papers."

He seems to have anticipated the antics of the New Jersey judiciary. Consider the very first line in the decision issued last week by the Honorable Peter E. Doyne in the Abbott school-funding case:

"The New Jersey constitution mandates the children of this state are entitled to a 'thorough and efficient education.' N.J. Const. art. VIII, sec. 4."

No, it doesn't. The clause in question (full text below) prescribes a "thorough and efficient system" of schools. The framers of our 1947 constitution did not include the locution "thorough and efficient education."

And that's just the opener. Read the whole thing.

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Corzine: "We're going to fight to hold our education funding"

Thank you, Jon Corzine! Even when times are tough, we should avoid reducing our expenditures on education.

Except he's playing the typical bureaucratic trick: the fight to hold our education funding is actually a fight to expand it by a third of a billion dollars.

Budget troubles endanger $350M preschool plan
Delaying expansion of programs would be last resort, Corzine says
Thursday, October 30, 2008
BY DUNSTAN McNICHOL
Star-Ledger Staff

Mounting state budget troubles may force New Jersey to delay plans for a $350 million expansion of public preschool programs, but such a move would be a last resort, Gov. Jon Corzine told a convention of school board members yesterday.

"We're going to fight to hold our education funding," Corzine told about 500 delegates at the New Jersey School Boards Association's annual workshop in Atlantic City. "That doesn't mean there won't be any cuts. That doesn't mean there won't be any freezes. But it means it will be the last thing on the table."

This is just another example of the Nanny State -- literally, in this case -- expanding even in the face of catastrophic fiscal burdens in the state.

"But wait," you say, "I thought we had to fund pre-K programs for needy students."

You're right, we do, because of Abbot v. Burke. But this gluttonous expansion isn't part of that ruling:

Part of the new school funding formula enacted last year, Corzine's plan would be the state's biggest expansion of preschool for low-income students since the state Supreme Court's Abbott vs. Burke rulings, which ordered universal pre-kindergarten in 31 of the poorest districts.

The plan would take the court rulings a step further and order similar preschool for all low-income students, wherever they live. Depending on the numbers, districts would be required to establish the preschool themselves or contract with outside centers to provide the service for eligible students. The state would pay the tab and estimated 17,000 more students would be served as the program is phased in over six years at an eventual cost of $350 million. [Emphasis added.]

So this isn't court-mandated, it's a Corzine pet project.

Jon Corzine wants to add $350,000,000 in spending. Not expanding the budget will be the last thing on the table.

My jaw drops. It makes me wonder what it's like to be inside Corzine's head.

Well, let me try. He thinks that higher tolls will solve budgetary problems, right? So maybe I should think of it this way: It currently costs $6.45 to go from exit 18W to exit 1 on the Turnpike, so we're talking about 54,263,566 trips down the whole length of the Turnpike. Since we're already using all of the current money from the Turnpike, we'd have to increase the number of trips on the Turnpike by that much.

Somehow I don't feel better.

But I'm still not thinking enough like Corzine. After all, he wants to octuple our tolls. If he did that, each trip would cost $51.60, which would only be 6,782,946 trips.

Now that's a much smaller number. What a relief! And since he'd be forcing most people off of the Turnpike and Parkway, we'd see a massive improvement in our statewide carbon footprint, too! See? Win/win!

I'm trying, people, but I still don't see how he forces himself to ignore the fact that increasing the price of using the Turnpike will reduce peoples' willingness to use it. How does he ignore basic laws of supply and demand?

His mind must be the opposite of his budget: flexible, focused, and disciplined.

My own school superintendent gets mentioned in the piece, too:

Jerry Tarnoff, superintendent of West Orange schools, said he was encouraged that Corzine suggested the preschool funding would only be cut as a last resort. "I am pleased he would like to commit to full funding," said Tarnoff. "Anything less, if the program were to go forward, would make it extremely difficult for the local taxpayers."

Now, Jerry's a smooth politician, and I don't think he would say anything that would irritate Corzine unnecessarily. But look at what he's saying: if the program were to go forward, and the state didn't pay for it, it would be a serious burden for local taxpayers.

So there's the threat of an unfunded mandate to the towns that would increase taxes substantially, whether the towns like it or not.

And I have another question: if it would be a serious burden for local taxpayers to pay for this, who would be burdened if the state funded it?

Those rich guys in Mendham, I guess. To hell with them, though. If they can afford to live near Whitney Houston's birthplace, they should pay for the pre-K programs in West Orange and Edison and Camden. And I hear Neil Cavuto lives there! For Pete's sake, if a Fox News anchor lives in New Jersey, he should pay twice what the ordinary citizen does!

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