A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
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New Jerseys Bad Government Blues
The states residents have little to show for their crushing tax burden.
5 March 2008
When New Jersey governor Jon Corzine announced his slimmed-down budget last week, he said that the state could no longer afford the government that it now has. What he didnt say is that this government is not merely expensive, its also disastrously mismanaged and ineffective. Paying some of the highest taxes in the country, Jerseys residents, in fact, are getting one of the countrys worst governments, according to Governing magazine.
In a new study, Governing ranks New Jersey the third worst-managed state in the country, not only because of the shambles that its finances are in, but also because of its lack of investment in infrastructure, its poor employee training and development, and a failure to apply technology and data to manage public services well. Talk about a quadruple whammy for the states residents, who ought to be asking exactly what the heck the state has been doing with all their money.
One thing that Jerseys patronage-ridden government has been doing is hiring workers at a rapid rate, far faster than most other states. Last week, when Corzine proposed cutting $500 million in spending out of the state government, he pledged to trim the states workforce by 3,000 employees, which drew a howl from public-sector unions, as well as warnings from some editorialists that the cuts might hurt services. Corzine might have noted that from 2000 to 2006after the meltdown of technology stocks on Wall Street and the economic fallout from September 11a succession of New Jersey governors added 10,000 workers to the states executive workforce, a 17 percent gain, even as the states population grew by only 4 percent.
The hiring spree didnt stop there. Agencies and authorities subsidized by state government but not directly controlled by the governor were rapidly boosting their own payrolls, adding approximately 13,000 more full-time (or full-time-equivalent) workers to the states payrolls, according to U.S. Census Bureau statistics. Only a few other states increased their public payrolls as quickly; all were far larger than New Jersey and had more rapidly growing populations. By contrast, even New York State was a model of efficiency, growing its workforce by less than 1 percent during the same period.
Propelled by the hiring, as well as higher-than-average government salaries and fat benefits packages for workers, New Jersey increased state spending by almost 6 percent a year from 2000 through 2008, nearly double the inflation rate. To support those increases, the states politicians rapidly ramped up taxes.
Though he lasted in office for just three years before resigning in disgrace, former governor James McGreevey hiked taxes and fees 33 times. Corzines first year in office featured a whopping $1.2 billion sales-tax hike, with half of the money going into property-tax relief and the rest into a bulging state budget.
The taxing and spending has transformed New Jersey into one of the nations most inhospitable places to do business. Once a low-tax state (a study in the early 1960s placed it 40th among the states in tax burden), Jersey is now ranked the second-worst business-tax environment in the country by the Tax Foundation. Other surveys of state business climates consistently rank Jersey among the worst places to operate, one reason why the states economy, which for years outperformed the national average, has lagged since 2000.
But New Jersey residents and businesses have gotten little in return for this spending, taxing, and hiring. In an age when states and cities are moving to performance-based systems that accurately measure their work, for instance, Jerseys agencies do not have goals or performance measures, which will make it difficult to achieve Corzines budget reductions, Governing said.
Given that Jerseys population is one of the most educated in the country and its private-sector workforce one of the best trained, theres no excuse for this kind of performance. The truth is that the state government has yet to emerge from decades during which patronage, not sensible management, governed its hiring.
While Jerseys taxpayers have had plenty of fiscal pain to endure in recent years, and little to show for it in the way of better government, theyre still bearing part of the burden of Corzines new budget. Though the budget has no new tax increases, it sharply cuts a rebate program used for years to offset municipal property taxes, which are among the highest in the country. Ill-conceived and often used by state pols as an election-year goody for voters, the program was nonetheless about the only good news the states taxpayers could count on in recent years. Cutting it is a reminder that even under a governor newly preaching fiscal prudence, the states taxpayers always end up the losers.
Steven Malanga is senior editor of City Journal and a senior fellow at the Manhattan Institute. He is a coauthor of The Immigration Solution.