Progressive Agenda Undermined By New Limits On Local Debt
More Tools Must Be Included To Reduce Corporate Ripoffs
Yesterday, the Fulop Gubernatorial campaign released their plan to lower the cost of living in NJ, see: Affordability In New Jersey.
The Fulop campaign seems to be the only one that is focused on critical issues and is proposing substantive policy reforms. I strongly support that approach, as good public policy is almost always good politics.
The campaign held a virtual town hall last night to seek public input on the plan.
I was unable to participate, but sent the campaign a few thoughts and suggestions, based upon a rapid overview of the plan (warning: I am not an expert on local or state finance and budgets!)
The plan is comprehensive and has an openly progressive orientation.
The plan starts with an overview of Fulop’s leadership and reforms as Mayor of Jersey City. I liked the reduction in reliance on tax abatements (subsidies to developers), green financing, and participatory budgeting. These are all progressive policies that can be exported to State government.
An important focus of the Fulop plan that I also strongly support and do have experience with is what he calls NJ’s “corruption tax”:
New Jersey’s political structure is based on the power of County Chairs who install legislators and commissioners who answer to them. Many of these County Chairs are lobbyists whose clients have businesses that are counter to the interests of NJ residents. It’s the reason that we see massive subsidies to several large employees of the lobbyists from PSE&G to Horizon, and the consolidation of hospitals. As a result, NJ has created a corruption tax that every resident pays as a cost of business in NJ. This needs to change. As Governor, Fulop will enact stricter ethics reforms, which will inevitably drive down costs. You can find it at: stevenfulop.com/governmentreform
But Fulop needs to expand the policy agenda far beyond mere ethics reforms (I suggested 12 policy ideas below).
While I do not fully understand them, I do not support all the Municipal Finance Reforms of the Plan. The requirement for a referendum before issuing debt is troubling:
Municipalities will be required to pass a local referendum prior to the issuance of GO debt, which is backed by the full faith and credit of tax-payer property values. Currently, municipalities can issue GO debt within 30-40 days after introducing an ordinance and holding a hearing 2 weeks later. The municipal council members can vote to approve the bond deal despite objections raised at the hearing. Requiring an affirmative referendum or a more cumbersome approval process will alleviate debt issued for politicians’ pet projects and will reduce the corruption tax paid by NJ residents.
It’s unfair to imply that a lot of debt is issued for “politicians’ pet projects”. This kind of rhetoric is not only misleading, it feeds the rampant anti-government sentiments and further undermines public trust in government.
More importantly, it also could have serious unintended consequences – similar to the disastrous results of California’s Proposition 13. I served on a local School Board and understand how difficult it is to garner public support for school budgets that impact local property taxes.
I urged the campaign to reconsider the implications of a mandatory referendum, especially at a time when MORE public spending is required, due to historical neglect in investment and maintenance of public assets, from parks to housing and water and sewer systems – and the new costs of the climate emergency.
Also think the Unfunded Mandate policy is misguided and should be reframed to reverse the trend of State government abdicating State responsibilities and delegating what are State responsibilities and programs to local government. We still recall Governor Christie’s failed Executive Order #4 on “unfunded mandates” and how it was used to undermine DEP regulations.
I loved the Plan’s proposal for reforms of NJ’s income tax!:
To address the issues of income disparity, tax fairness, and fiscal responsibility, as Governor, Fulop would revise the state income tax to add brackets for higher-income residents, including new rates on earners over $2 million, $5 million, and $10 million in income. These new tax brackets will provide much needed revenue for public investments – including New Jersey Transit – and make New Jersey more affordable.
Ditto the Graduated Mansion Tax:
New Jersey’s 1% “mansion tax” is a transfer tax paid on real estate purchases over $1million. To help make New Jersey more affordable for low-income and middle-class residents and increase funding for public schools, Fulop would graduate the “mansion tax” upwards.
The Plan engages several other complex and controversial issues, for which I applaud the Fulop campaign, including housing supply, regionalization, property revaluation, and improving cost effectiveness and efficiencies.
If Fulop really wants to reduce costs and take on PSE&G, which he targeted in the “corruption tax” proposal, he should consider the following energy policies. The high and increasing costs of energy are significant household budget items:
- Repeal the Whitman Energy Deregulation law and create a new State Public Power Agency, while providing new authority for local government controlled publicly owned distributed renewable energy and energy efficiency and demand reduction programs.
2. Repeal BPU imposed “capacity payments” – I think they come from PJM mandates as “incentives” to locate new capacity in deficit regions. The program is a total failure with incumbent utilities taking g pure profits. Over $1 billion per year last time I looked.
3. Reform the BPU “BGS Power Auction” – The auction process is exactly the OPPOSITE of what people understand as an “auction”:The price of power is set based on the HIGHEST COST GENERATION SOURCE
When I first read about the PJM power auction, it was so absurd that I was sure that I was misunderstanding how the auction set the [wholesale] “market” price of power.
I don’t think the public has a clue about how the so called deregulated “free market” in energy actually works or how the so called competitive “BGS power auction” actually works. … In a must read story, David Kay Johnston exposes how the auction markets are rigged by industry fraud.
4. Eliminate energy subsidies: There are many other PSEG and corporate subsidies in the BPU price of energy (e.g. cleanup of old contaminated coal gas sites, modernization of gas pipelines, et al).
5. Collect market based lease values for State lands – particularly pipelines and energy infrastructure. (OLS has conducted two State audits with negative findings).
6. End the privatization of public water and sewer infrastructure.
7. Adopt regulations to enforce and implement the DEP’s Natural Resource Damage program, which provides huge subsidies to toxic polluters through pennies on the dollar “settlements” – recall the Christie administration’s $8.9 BILLION Exxon sweetheart deal settled for $225 million.
8. Make polluters pay for the costs of wastewater (sewers) and drinking water systems required to remove their pollution.
9. Shift more of the costs of climate resilience and disaster response to the private sector.
Make Big Oil and fossil polluters pay for the damage resulting from the climate emergency – that can be a source of funding of DEP’s toothless and unfunded Climate Resilience plans. Support the pending Climate Superfund bill (with amendments) and be sure DEP adopts regulatory cost methods and enforces it!
10. Make developers pay for off site impacts that result from development via comprehensive impact fees, including roads, water, sewer, and stormwater infrastructure, as well as additional public service costs (police, fire, schools, etc).
11. Put teeth in the State Development And Redevelopment Plan. (dust off the Rutgers cost benefit analysis of the Plan, which showed huge savings in infrastructure and service costs).
12. Create a local food program, by integrating NJ farms with schools, farmers markets, restaurants, and supermarkets.