PACKET EDITORIAL, May 20
By: Packet Editorial
With just six weeks to go before the start of a new fiscal year, Gov. James E. McGreevey and members of the New Jersey Legislature are understandably getting more than a little panicky. Actual state revenues for the current year are dismal. Projected revenues for the coming year are even worse. Expenditures are being cut to the bone and still the prospective budget is not only way out of whack; it has every interest group from college students to senior citizens screaming in pain.
Last week it was the arts community that descended on Trenton en masse, demanding restoration of money to support everything from regional theaters to community orchestras to neighborhood arts centers. The week before it was the AARP, protesting cuts in pharmaceutical assistance for the aged. Before that it was undergraduates from Rutgers, NJIT and the state colleges, pushing for more higher-education funding in an effort to keep tuition hikes next year from reaching double digits.
Despite the constant clamor for more money, Gov. McGreevey has steadfastly resisted the suggestion that he consider raising taxes. Though it is still possible, if enough legislators are willing to stick their necks out in support of the so-called "millionaire’s tax," that the governor could be dragged, kicking and screaming, to sign a modest increase affecting those in the highest income-tax bracket, the far likelier scenario is a final budget deal that is heavy on slashing spending and light on increasing revenue.
The governor, whose popularity (despite his anti-tax position) is lower than ever, might be tempted to follow the lead of President George W. Bush, whose popularity (despite the dismal national economy) is as high as ever. Not having another country, or even a neighboring state, that he can justify invading, Gov. McGreevey’s best bet might be to adopt another of the president’s favorite political strategies: tax cuts.
Just think of the possibilities:
Cut the sales tax from 6 to 5 percent: Everybody knows a high sales tax discourages consumer spending. Cutting the sales tax will renew consumer confidence, leading to a statewide shopping spree that will pour money back into retail cash registers, creating jobs and boosting revenue for the state.
Cut the income tax for people earning more than $1 million: Everybody knows high-paid executives choose where they live based on how much they’re going to be taxed. Cutting the income tax for people earning more than $1 million will attract more wealth into the state where, of course, it will be spent purchasing goods at the bargain sales-tax rate of 5 percent.
Roll back last year’s corporate tax hikes: Everybody knows businesses decide where to locate based on the corporate tax structure. Cutting business taxes will entice more companies to relocate in New Jersey, which will create more jobs, which will produce more income (especially in the lower brackets, where it will still be taxed as much as ever), which will make the Garden State’s blossoming economy the envy of the nation.
We know what you’re thinking: All this tax cutting, if it doesn’t really stimulate the economy like the president er, governor says it will, could lead to deficit spending. But who cares? Government can just borrow the difference, right?
Wrong. Washington may be able to pass the cost of an unbalanced budget along to the next generation of taxpayers; that’s why Mr. Bush can get away with what his father aptly termed "voodoo economics." But Trenton can’t; our state constitution prohibits deficit spending which means the governor, unlike the president, is obliged to rely on something more substantive than smoke and mirrors when preparing next year’s spending plan.
Crafting a budget can be hard work at any level of government. But as Gov. McGreevey and the New Jersey Legislature will surely attest, the job is a lot tougher when the numbers really do have to add up.

