Changes in tax policy, benefits are needed
Sunday, May 17, 2009

From: The Courier-Post, by Kathleen Davis

As New Jersey's budget picture grows bleaker because of dwindling tax revenue, there is more talk in Trenton about increasing taxes. During this time of a deep economic recession increasing taxes, especially on businesses, is the wrong move.

The governor has proposed three business tax increases: a hefty increase in the unemployment insurance tax (up to $100 per employee), extending a 4 percent corporate tax surcharge that was due to expire this year, and increasing (again) the "half-millionaire's" income tax (90 percent of businesses pay their taxes through the income tax).

A 2009 study conducted by the American Legislative Exchange Council (ALEC) ranks New Jersey 48th in terms of our economic outlook largely because of our taxation policies and the high cost of doing business in the state. Our state's tax policies also put us at the bottom of the Tax Foundation's 2009 Business Tax Climate Index, and the Small Business & Entrepreneurship Council's Business Tax Index of 2008. More tax increases today will harm our ability to recover at the end of the recession.

So, what should our policymakers do? Reduce spending! Now is the time, during this crisis, to make much needed, long overdue changes to the benefits received by public workers, as well as the work rules that govern them -- that is, the Civil Service system. We are at the crisis point where the excesses of the past are bearing down and demanding solutions and action.

The growth in the size of the state government work force and the benefits afforded public employees at all levels of government has become seriously unsustainable and out of sync with those received in the private sector.

State employee benefit costs have more than doubled since 2002, and total about $4.3 billion in the fiscal year 2010 budget.

Here are the Chamber of Commerce of Southern New Jersey's recommendations to save taxpayer dollars:

Tie employee contributions to health insurance to a percentage of the premium rather than a percentage of salary.

Suspend civil service work rules to allow for the more efficient deployment of the state labor force.

While some changes will not yield immediate savings, they will in the future. If nothing is done to rein in these costs today, taxpayers can be certain that they will have to pay more and more to feed the ever increasing appetite of public employee benefits.

Besides employee related costs, the governor and Legislature should work, in a bipartisan manner, to determine the absolute necessity of programs and provide financial support for them only, while suspending others that are "nice to have." Taxpayers and business owners do this every day.