1987 - Budget Message Rebuttal

The. Welcome now to the Democratic response to the governor's budget message we will have two guests tonight. Our first guest is the assembly minority leader Ellen Karcher. We will be joined a little later by the Senate president John Russo recently Karcher First of all what is your reaction to both the governor's budget message and the budget itself. Well I think first we have to put it in perspective. And I brought with me a chart which we can show that indicated the governor's budget message but the message he had called for spending about five point six billion dollars and here we are six very short years later and the governor is calling for ten point six billion that's increased drastically spending in a way that the governor today after

vetoing over the last few years he vetoed a cap a cap of state spending. And yet today again after Democrats have been pushing for it now that he's on his way out of office perhaps he thinks that that's a pretty good idea. During that time of the capital he had not veto the bills we would instead of doubling state spending in the last six years with a very substantial tax payers would be having much less of their money spent in those years that the governor vetoed some of the just to take a note from the governor's budget. He says it contains no new taxes seven departments have had budget cuts and the majority of the departments that have had budget increases. Have had increases of less than 5 percent I'm sure that the administration's position is that's a pretty frugal budget.

Larry the numbers don't lie. There is nothing to the NIE the fact that six years ago Brennan Byrne's budget was 5.6 billion six years later the governors are recommending ten point six billion. Those numbers are refutable there's been an awful lot of spending by the kana ministration being spent in the wrong places because when he calls and says that there is no new state taxes called for that might be accurate but that's a half truth. What this budget calls for is enormous increases of property taxes because at the same time he's had all this additional state spending. The amount of money coming into Trenton and then going back by way of state aid to municipalities and counties and Board of Education has been drastically cut in that five point six billion dollars of Brendan Byrne has 60 cents out of every dollar. That came to transit went back to the towns in the cities and the Board of Education. This budget the governor recommend only 50 cents will go back. So what we've seen is the building during his administration of this huge state bureaucracy this dynasty where the state keeps gobbling up more money for its own purposes and less and less money for state

for state aid to municipalities. The only inexorable result. Of that is a property taxes will probably rise this year and a greater proportion and greater amount than we've ever seen in the history of the state we're going to be in for the largest property tax increase and that's on top of the fact that we are already the highest property tax state in the entire nation. All right where would you cut or where would you change this budget. I think what we really have to do is get back to basics the way Tom King differs from the his three predecessors is that he is had been the governor doing relatively good economic times. Nobody can deny that. Democrats when they controlled the legislature were very cooperative with them in his first term when they needed additional revenue and we gave it too. But the governor lacks is a sense of tax fairness Tax Justice. It's a question that what we have in this state is people in the middle income brackets and lower income brackets paying a disproportionate amount of money where the wealthy are really getting a free ride. So we don't have tax justice we don't have tax

fairness. If the if the rich in this state and when I say Rich I'm talking about people with incomes of $100000 or more if they pay their fair share if they paid at the same level as people in the middle income brackets did we'd have enough money to address all of our needs. Will be able to help the cities are in such desperate shape would be able not only to stabilize property taxes would be able to lower property taxes if we had tax justice in the state just made the wealthy pay their what they should be they should be pulling their full weight. There is no reason why we should have a system where the rich get the privilege of the benefit they already have the privilege of being rich. But then they get tax breaks on top of that and the disproportionately low amount. Of the cost the state government municipal government. That's really and reason the governor every governor before him before time came for to change that system to have a more progressive income tax or to have some sense of fairness and justice. Regrettably is on his way out of office now in his second term and hasn't taken up that. And I just wish you would.

You're talking about taxes one of the points that the governor did make today was to call for the repeal of the Ford tax relief plan the one time property tax relief bill which has been criticized and it was a Democratic initiative from the assembly that is being too generous to the governor in some ways a schizo phrenic some things he does that I like very much that I don't like at all. He said of course very boastfully he had been able to cut taxes in one of the things he referred to directly. One of the reasons he had we had reduced taxes over the last few years the level of taxation is because of the more lenient for Bill. It was a tax cut a very substantial tax cut a hundred fifty million dollars or more. Maybe it was in the wrong place and I agree with the government. The program of the governor has recently recommended what he said today again. I commend him for that he that's really right thinking in the governor. Sometimes I say once a year or more he minds me. I have to remind myself that he's a Republican not a Democrat because what he's

recommended for the Ford bill and the repeal this time so much better than a year ago. It calls for permanent relief of property taxes and permanent programs to help the cities and to eliminate taxes for the need for people under $10000 in gross income to even file a return. Now that's a wonderful program I support that absolutely wholeheartedly. But when he announced it I commended him today I was one of the people clapping loudly when he called for again today that program as far as it go is actually. While I wish my heart of hearts. And I've told the governor wanted to go the extra steps Why don't you use your popularity to bring about real tax reform to bring about tax justice in the state. He has the popularity he knows he should do it and he has the ability that he could do it. And I just don't know why he doesn't take that final step and really leave a legacy for himself. One of your initiatives is to increase the taxes on people in the state who make over 100000 a year.

I have called for various changes to have a more progressive income tax we have one of the most regressive if that's what you would describe it tax is a very narrow tax structure running from 2 percent of the lowest bracket to three and a half percent. That's really kind of a strange tax structure for the income tax. It would be much better in the government taking a step in the right direction by saying that people under 10000 should be exempt altogether. But then let's change it at the upper end. Let's make the rich pay their fair share. Rich I don't think anybody would disagree with me what with you only making $100000 or more have to be considered in our society as well as well off. And they do not pay they pay the same tax rate as people making 50000. That right there should be the progressivity almost every other state has a much more progressive system than we do. You have as a result is that people in the lower income brackets when you take into account that they're paying the sales tax not paying guest as much when they're paying property tax they pay a much more larger proportion of their household income to run state and county municipal government than the wealthy do the wealthy even after they pay their maximum three and a half

percent and then their property tax. It's a very very small proportion of their percentage of their of their total household income. That goes for state and county municipal services where the poor people in the middle income people or the vast bulk of the taxpayer a disproportionately larger percentage of their household income. The disposable income for taxes. We are at a level that we want to reform that we want to bring about Tax Justice one of the first things and now we have this crisis in the urban areas that's facing us and we could solve that. All we have to do is say let's make the wealthy pay a little bit more. Speaking of the urban aid program what was your response to the governor's proposal today in terms of urban aid. Well the governor's urban aid program tied in with the with what he recommended a week or so ago with repeal of the more affordable. I support wholeheartedly. I think we want to do a lot more when the government talks about the things we should be proud of the Giants and he talked about Whitney Houston winning an award. There's a lot of things that we have to be ashamed of. We have towns in the state that our tax rates are the

highest in the entire United States the highest that you could search out every one of the other four nights. No town would have tax rates anything remotely resembling what we have we're we're the champions in an exorbitant obscenely high property taxes. When you take the state as a whole our level of property taxation which everybody agrees an unfair regressive tax on highest in the entire nation. It's wonderful to get up on the stage and brag about what's great about New Jersey and there's so many wonderful things by the same token let's tell the whole truth there's lots of things that are bad that ought to be corrected that we ought to reform. And the governor has the popularity and has the prestige and the credibility that if he would just get on the same side that Brendan Byrne was on and the Republican governor was on and Richard Hughes resign and take up the take up the challenge and try to bring about tax reform this is a governor who has that kind of credibility and the momentum with him that he probably could bring it off. So let's not just talk about the great things with and try to kind of sweep under the rug the things we would be embarrassed about the thing we would be most embarrassed about is

that we do have these obscenely high property tax rates in this budget that he announced today is going to probably push up property taxes across the state by 10 or 15 or maybe 18 percent. People in the cities particularly everywhere in the state in just the cities and suburban areas are paying property taxes that are just simply too high. We want to correct that and we can if we if we just did the right thing. Well there is a special tax study group that's meeting right now that will come out with this report next year that's not soon enough. We have commissions and we have committees. We don't need commissions and committees. We need courage we need to do the right thing we just have to. Everybody knows what needs to be done. We have property taxes are too high or too high. And rich people who get literally a free ride on our on our very very narrow income tax and don't pay their fair share everybody knows that that's what this commission's going to recommend a year from now. Why don't we face up to reality when we behave mature early and say we know that's the right thing to do. Let's do it now. The same thing the governor recommended today

that we take care of. We have a homeless problem. I say we have a budget surplus that's in the hundreds of millions of dollars people and the homeless problem is not going to be critical next July 1 when this budget goes into effect. It's critical now. Let's take care of our homeless problem right now let's make sure people aren't freezing this winter. You can't to lay that kind of thing. We have the surplus money to do it. There is this continual tendency to put things off to the future. We know what needs to be done we should have the courage people sent us down here not to be cowards. They set a standard to be leaders and we all know you want to take the initiative and show some leadership and do the right thing. We have just about two minutes left here. Where is this budget going to change where what is your best guess about where this budget may undergo any drastic change. Let me suggest to you that I think this budget is going to be better received by Democrats and by Republicans. Governor I was the last one to be critical of what he recommended today with regard to human services. Maybe what I

just said that we should not postpone until July. But his concern that he expressed today for welfare mothers and for the homeless and for the hungry and for the. That's good that's wonderful things need to be commended for it maybe doesn't go as far as some people my party would like to see him go. But it goes in the right direction. He's going to have a warm reception for those kind of programs. Among Democrats it's not going to be that this budget is going to be changed so much in the fact that there might be some shifting of priorities within it. But I think we're going to see absolutely necessarily an increase in money from this budget. And overall going back to the towns otherwise you're going to have some of our urban areas literally in bankruptcy. And so you're going to see an increase in that and there's other areas that are regrettable but they're necessary. Back in 1978 when the Democrats passed the penal code we told people that was going to fill the prisons and they said no we want Republican said no it won't work well. We were right. And and of course we have to pay the price. And people

said then you're going to pay a price our prison population has doubled. And you can't criticize the governor for saying we need the money to pay for the prison. People want to know though it's a very expensive item. We keep filling and convicting people. It's a very very expensive item I'd like to see the day come about we're spending more money on education and less on prisons. Regrettably the governor today cut back on aid to education. Well he had to spend the money on prisons. That's something about our society. And on that note I'm afraid we'll have to wrap it up for this portion of the program assembly minority leader Ellen Karcher thank you for being with us tonight. We back in a moment with Senate president John Russo. Stay with us. Welcome back joining us now for the Democratic response to the governor's budget message. Is the Senate

president John Russo. Senator Russo What did you think. Well what do you think of both the message and the actual budget itself. Well I can't say too much about the actual budget Larry because I've seen it yet unfortunately and it's a real disappointment to me. But in spite of the fact that I've worked so closely and so well with the governor even though we are of opposite parties for the past year in the Senate in general has I never got a copy that the budget. The Republican leadership was briefed on I think Friday I learned about it then I never received anything Saturday Sunday in fact today when he gave the address I still hadn't seen the budget. The last thing I heard was of the truck that was bringing our copies broke down but the my Republican counterparts all had apparently all had copies. It was a disappointment to me because I felt we deserved better than that especially Larry Weiss the chairman of the Appropriations Committee and myself who worked closely with the governor but. And I don't think the governor himself personally anything to do with it I think it was stiff work

but unfortunately that's what's happened so I can't comment too much on the budget itself. This is a sour taste in your mouth to play hardball now in this budget. Oh absolutely not. Absolutely not I would hope I would not ever do that. I'm expressing my disappointment and frustration. But you know I've heard all along that the governor the speaker and myself should put party politics aside even though it's an election year. Let's have the kind of year we had last year where we get things done. I'm going to keep arguing that and I'm not going to accomplish anything in that effort. If I play hardball just because I'm offended that the governor didn't treat me right on the particular problem we're talking about. No I've got my disappointment over with it's done it's in the past. I'm going to still try to get things done and starting with the budget try to do what's right for New Jersey and the people in New Jersey. And I'm hopeful and confident that the governor and the speaker will do the same. This particular budget as the governor points out in his message is well seven departments have actual budget cuts and the other departments I believe have

budget increases of 5 percent or less. Isn't that a pretty tight budget. Well it's hard to come to that conclusion when the budget is up nine point six percent about three times the rate of inflation. That concerns me that budget is up eight hundred and ninety million dollars over the last budget. You know may well be that it's all justified. But before I come to that conclusion I'm going to take a good hard look at that Larry. To have a budget increase of almost 10 percent. A budget that could not have gone up that much if we still had a state capital or if the governor had not vetoed this they gabble all three different times. It could not have gone up this much. I'm going to need some convincing before I can support a an increase in state spending of almost 10 percent. That's that's three times the rate of inflation. And that doesn't consider what's not in the budget. The governor's proposal to increase taxes by some 450 million dollars. What do you get that figure. Well the repeal of the tax cut is about one hundred and sixty million. The gas tax is another

200 million. And the realty transfer fee tax that the governor supports is another 50 million or so. So we're in the neighborhood of about 450 million dollars in tax increases. That's not reflected in this budget. That's entirely apart from the budget. Before I saddle the people of this state with those kind of financial burdens I want to be convinced beyond any question so I'm going to take a hard look at this budget if I ever get a copy of it. OK you haven't had a good chance to really look at the budget but one of the calls that comes out is the repeal of the forward tax bill and that money would then go to the municipalities based on what the governor said in his message today. Is that something that's going to happen now or only only a portion of that goes to dimiss apologetically quoting the governor's plan correct about half of it. So I'm not sure I like that kind of spending formula. You know I was willing to go along with the repeal of the Ford bill even though it was sponsored by Marlene Lynch Ford my

colleague in the assembly from Ocean County. If it was necessary as I thought it was back in June whether or not we support that now depends on where those funds go. I don't want to leave any political grab bag there available to anyone. We're going to have to know where that money is going and we're going to have to have some kind of commitment even if only moral that it's going to be permanent. I don't want to take this tax cut away from the people of this state this year to use it for things that are desperately needed and then have the people not get the benefit of it next year because it's used for other purposes too I didn't come to mind that he talked about in his message was the taking over of the local welfare costs and of. Picking up the tab for court costs. Oh no he did. Well no he didn't. You didn't read that carefully Larry with all due respect the governor did something that was I think very misleading. He said if we repealed the Ford Bill we could do various things. He didn't say he would support doing that.

He said we could hire 6000 more policeman but of course you know you may have had the benefit of seeing Capito budget which I haven't but as I read that speech and followed him he was throwing out these things to appeal to people's emotions. He was not saying that that's what we're going to do with the money. In fact he said he has said that what he wants to do with the money is to aid additional funds for cities which we support the community distressed communities and to give a tax reductions of those making under $10000. He never said we would use this money to take over core course our welfare. Apparently he's misled a lot of people including you Larry. Well let's I don't understand what he said. That's not what he what he. I think there is in the budget there are some different plans out there you had a plan as a matter of fact I think you called on the assembly today to pass your plan which would give 67 million dollars to the cities. Did the governor really say in this message oh that's not what he wants he wants to spend the budget this way because well sure his way.

No question about it. What's interesting is when I first propose using this additional surplus money you see what this is as it turns out that the revenues for this past year were some one hundred five million dollars higher than the governor anticipated revenues from taxes. So we suggested well let's use 67 million dollars of this to return this federal revenue sharing a loss to every every municipality in the state. This would help the local property tax payer. Now the governor responded that no he won't support that why. He said because we were going to be facing a 200 million dollar deficit next year that's the year of this budget. It turns out that not only is that not true but he's increased spending in this state by eight hundred and ninety million dollars and still leaves himself more than the 200 million dollar surplus that deficit that he used as the excuse for not supporting what we're trying to do isn't there. Rather he's increased spending almost 10 percent now less one misunderstand I'm not criticizing

him for the increased spending. What I'm criticizing him for is not supporting our effort to return this money to the property tax payer and using the basis or the excuse that we're going to have a deficit. We did not have one at that time. I think he knew it. I think it was all a case of it was our idea not his. I think if we had gone damn far as and did it jointly he would have supported it. One of the items that some Republican members were expressing concern about today was the fact that he's cutting the budget a little tight. He's anticipating I believe it's an extra 200 million dollars in revenue revenues. Is that something that concerns you also. I don't know. And so I say until I see what's in that budget and what he projects it's hard for me to comment on you know Senator Larry Weiss is our chairman of our appropriations committee and he's probably one of the best in the country on that topic and that issue so he's going to take a look and he'll give me his good advice and by then I'll have read the budget till it's this is not a conservative budget at all.

This budget dramatically increases spending far greater than we could have increased had we had a state kept law which he vetoed. But aren't there some items in there. Meals on Wheels increased security for senior citizens things for making the quality of life better that are going to be very difficult for Democrats to oppose. Sure there's something for everybody in this budget. There's a lot of spending in it. For example you mentioned the Meals on Wheels what was my bill so I can hardly oppose that. You have to understand Larry I'm not suggesting to you that this is a bad budget. I'm not criticizing it. But the only thing is I'm criticizing the governor for today or for not giving me the courtesy and Senator Weiss to have a copy of the budget so we could respond to your questions tonight and also for misleading in the budget things such as we talked about hiring more policemen by repealing the Ford bill which is not what he proposes. And then also in

his budget. You know I've always been a proponent of the cap laws. I sponsored the first one in the country the spending limit law. We don't have a state capitol today. We don't have a because when his time came up for renewal I put the bill into Reno with the same way it's been ever since we started the same way Governor Brian lived down there in the same way Governor Kaine lived down there for the first several years of his administration and he vetoed it because he wanted to exempt from the cap law cuts in federal aid things that I thought would have kept law and dramatically increase spending in this state. Three times we passed that bipartisan Republicans and Democrats three times the governor vetoed it. Finally the fourth occasion I said Well Governor you and I both believe in Initiative and Referendum. Let's let the public decide whether they like it your way or my way. And he was opposed to that as a result state spending increased significantly over what it could have been if we had had a cap. Taxes have gone up because of that. Now today as the governor comes out and

calls for a state capitol law and I understand that he said he wanted to cover all state spending including state aid that holds down our property tax state aid to education. I think there's a little bit of of trickery in that. This is the same governor who would not. Either support signing the cap law in this day or putting it on a ballot for the public to decide. So other than that there's a lot of good in this budget. A lot of things in the budget that I'd like to support and may well support. It's not something that I would give overall criticism to but I'm concerned that it increases spending in this state far more than we should be. Almost a billion dollar increase in spending. Why wasn't too long ago that we didn't have budgets that big. Why are you talking now about looking at this budget through the Senate Appropriations Committee with a cleaver rather than a scalpel. It's hard to say until we get into it. I don't want to be unfair to the governor by saying we should look at it with a cleaver when I haven't even had a chance to study it yet. I may find out it's a

lot better budget than I think I may find now that this dramatic increase in state spending even with the new taxes the governor proposes is justified. I want to wait and see though I'm not one as you know over the years to leap into increased spending to leap into new taxes. I want to be sure it's necessary. It might be that I have to wait till I study to document and then come to that conclusion and I'm going to be reluctant to do so unless I have to. Ultimately do you think can you give a ballpark figure would you like to see it reduced by a certain percentage. Well I'd like to see it reduced at least by the amount that it would have had to be reduced if we had a state capital. But you know what's going to be very interesting here is to see what the assembly does with this budget. Now they're in a real spot. I know Speaker Hardwick and Assemblyman Vilain the chairman of that committee. I've always known them to be fairly prudent fiscally. Now they're coming into an election year. I don't know that they're going to be able to defend this budget this budget increases spending dramatically in this state. I'm not

sure the governor's going to have too much support from his own party in the assembly. It's going to be interesting to see what the two houses the majorities of the two houses do. I'd be surprised if the governor gets any enthusiastic support from speaker Hardwick in a cell in the lane for this dramatic increase in spending and on top of the tax increase proposals that the governor has made. I don't think they're going to be too sympathetic to it on that note we'll have to wrap it up Senate president John Russo I'm afraid we're out of time. You've been watching the Democratic response to the governor's budget message. I'm Larry stupid. Thank you for joining us. Good night.