Tuesday, December 27, 2016

Connecticut's Crisis Continues OR How America's Richest State Became a Failed State


When Phil Murphy is asked how he will deal with New Jersey's enormous debts, pay for his agenda, and even stabilize property taxes, his answer is a vague "you prioritize" and then a statement that New Jersey can fund its needs by growing the economy.  Murphy's argument is that his platform of increased taxes on the rich, increased investment, STEM-focused education, a $15 / hour minimum wage, and a state-owned bank is what New Jersey needs to get its economy moving again.

Here's an example:

Question: What's he going to do about our sky-high property taxes?
Answer: "There's no signing ceremony on the deck of the battleship to solve this," Murphy said. "But the biggest step we can take is to grow our economy. If we can grow the economy aggressively, we can get our revenues the right way," and property taxes start to "melt away," at least, a bit.
In the same interview, Murphy said economic growth (and cutting hedge fund investments) would fully fund the pensions:

How to fund such payments? Murphy said a combination of economic growth and reassessing whether the hefty fees New Jersey pays hedge funds to manage its retirement funds will be the solution.

Murphy always says "I'm an optimist," and points to Jerry Brown in California as a beacon of fiscal turnaround:

Jerry Brown inherited a state five years ago with a $25 billion deficit; this year? And $8 billion surplus.  It can be done. 
A Democratic governor. Progressive values. Can get a state turned around.

But I am extremely doubtful that Phil Murphy (or any of the Republican candidates either) can turn
New Jersey's economy around.  Even a president's control over the national economy is very limited and a governor's is more limited still.

Although Chris Christie's economic-budgetary management has been very bad, the fact that Connecticut has continued to flounder under a Democratic governor with progressive policies makes me skeptical that Phil Murphy can produce a genuine "Jersey Comeback" either.

Connecticut is Our Peer

Like New Jersey, Connecticut has very high average income and one of the country's most uneven distributions of wealth. Compared to a national average of "only" $389,436 per year to be in the top 1%, in Connecticut you would need $659,979 per year; in New Jersey you would need $547,737 per year. . In both New Jersey and Connecticut the top 1% captured all of the income gains in the rebound from the Great Recession from 2009-2013.

Neither Connecticut nor New Jersey has a large, dynamic city, but both have populous suburban belts where towns range from incredibly wealthy to indistinguishable from decayed industrial cities.  Both New Jersey and Connecticut are in the orbit of New York City and are affected by New York's successes and failures.  Both Connecticut and New Jersey have very high spending and very high performing public schools.  State school aid is very progressively distributed as well -- each state gives the majority of its state school aid to just 30 districts.  Each state has one ultra-prestigious Ivy League university.

Like New Jersey, Connecticut is extremely indebted.  Mercatus lists Connecticut as the country's most fiscally distressed state:

On the basis of its fiscal solvency in five separate categories, Connecticut ranks 50th among the US states and Puerto Rico for its fiscal health. Connecticut’s fiscal position is poor across all categories. With between only 0.46 and 1.19 times the cash needed to cover short-term liabilities, Connecticut’s revenues matched only 94 percent of expenses, producing a deficit of $505 per capita. The state is heavily reliant on debt to finance its spending. With a negative net asset ratio of −0.88 and liabilities exceeding assets by 34 percent, per capita debt is $9,077. Total debt is $20.88 billion. Unfunded pensions are $83.31 billion on a guaranteed-to-be-paid basis, and other postemployment benefits (OPEB) are $19.53 billion. Total liabilities are equal to 53 percent of total state personal income.

 According to Pew, Connecticut's debts equal 30.2% of personal income, whereas New Jersey's debts are 31.2% of personal income.  According to Pew, of states in the Lower 48, only Illinois is more indebted.


Like New Jersey, Connecticut has a highly-progressive income tax structure to go along with that extremely unequal distribution of wealth. The consequence of these facts is that Connecticut and New Jersey are highly dependent on a few hundred ultra-wealthy people to finance their state governments.   In New Jersey, 0.5% of the population pays a third of state income taxes, or 400 families pay $1.4 billion. In Connecticut, in 2011, the top 357 households accounted for 11.7 percent of the state's income tax.

Due to this reliance on the ultra-wealthy for tax revenue, when the ultra-wealthy have any dip in income, each state's revenues crash.  Whereas the national average for state revenue loss during the Great Recession was only 12.9%, Connecticut's revenues fell by 19.8% and New Jersey's revenues fell by 18.9%.

I'm not saying that it is morally wrong to tax the super-rich at high rates, but the dependence on high-earners exposes a state to higher volatility than a state that is less income-tax dependent or does not have a progressive income tax structure.

Yet, Connecticut and New Jersey have a major difference in that Connecticut's governor, Dannel Malloy, is a progressive whereas our Chris Christie is a conservative.  

Chris Christie refused to renew NJ's high-income tax surcharge in 2010, but Dannel Malloy has increased taxes twice.  In 2011 Malloy increased taxes by $1.5 billion on dozens of items and in 2015 Malloy increased taxes by another $1.5 billion.  The 2011 tax increase affected the middle class and made Malloy the country's most unpopular Democratic governor. The 2015 tax increases contributed to GE's decision to leave Connecticut for Boston.

Other major progressive victories in Connecticut that have no equivalent in NJ are Malloy's increase Connecticut's minimum wage to $10.10 and his $100 billion, 30 year infrastructure plan.  Malloy has implemented mandatory paid sick leave.

Other than not creating a state-owned bank and not wanting to legalize marijuana, Malloy's agenda for Connecticut is extremely similar to what Phil Murphy says he wants to do for New Jersey.

Well Murphy-backers, so with all that money to pay down debt, that higher minimum wage, new "investment" Connecticut is doing well, right?

NO.

Whereas New Jersey has slowly (and barely) recovered the number of jobs it lost in the Great Recession, Connecticut has only recovered 72% of the jobs it lost in the Recession.


As bad as New Jersey's economic "recovery" is, Connecticut's "recovery" is significantly worse.
The job market in Connecticut is struggling, with more jobs cut than created for three consecutive months, and just 5,000 jobs created over nine months....
According to the Connecticut Department of Labor report released Thursday, government layoffs and private sector layoffs both hit hard in September. State government employment fell by 2,900 and private sector employment fell by 2,700. First-time filers for unemployment claims in September increased by nearly 4 percent compared to August, and were up more than 8 percent compared to a year ago. 
By contrast, national first-time claims for the last half of September and the first two weeks of October were the lowest in 42 years. 
Pete Gioia, vice president and economist at the Connecticut Business and Industry Association, said, "You can't look at a report like this and not feel some sadness." 
In comparison, he said, Massachusetts has not only gained back all the jobs it lost during the recession, but it's added twice again that many in recent years. It recovered all the lost jobs by September 2012. Connecticut has 28,300 fewer jobs now than it did in February 2008. 
"Probably the biggest anecdote I've got from this was when we went around to our board of directors in September," Gioia said. The board of directors is heavy on mid-sized local manufacturers, but also includes international giants like United Technologies, Travelers, Boehringer Ingelheim and PricewaterhouseCoopers. 
"Company after company company was doing OK," Gioia said. "But they're all saying, 'We're growing in Massachusetts, we're growing globally, but we're pretty flat in Connecticut.' They were doing better elsewhere than they were in Connecticut. 
"They just don't see the activity and they don't see the imperative to invest when they see better opportunities to invest elsewhere." 

Even Stamford is "suffering," with a 30% office vacancy rate!

Malloy's two tax increases have pushed Connecticut's revenue (barely) above its pre-Recession peak, but Connecticut's revenues peaked in the winter of 2014, despite the 2015 tax increase.

States that have cut taxes dramatically, like Wisconsin and even Kansas, have had better revenue performances than Connecticut.

Source: Pew Fiscal 50
http://www.pewtrusts.org/en/multimedia/data-visualizations/2014/fiscal-50#ind0

Due to revenue coming in lower than expected, Connecticut finished FY2017 in deficit and had to use its emergency funds to cover that deficit.

Now, for FY2018 things are looking worse, as Connecticut faces yet another $1.5 billion deficit.

Aside from its stagnant economy, Connecticut's deficit is due to declining incomes of Connecticut's superrich.
[Legislative budget chief Neil Ayers] noted that the state's top 50 individual taxpayers had $2.9 billion less in combined income in 2015 – meaning that they earned an average of $60 million less per tax filer. As a result, they paid $217 million less in state taxes – helping to cause the deficit. 
"Fifty people represented almost a quarter of the problem," Ayers said, referring to the size of the previous deficit.
It also appears that Connecticut is losing its ultra-rich to other states, just as New Jersey has lost David Tepper and Leon Cooperman. Former Connecticut billionaires Edward Lampert, Thalius Hechsher, Thomas Peterffy, and C. Dean Metropoulos all moved to Florida, the latter two were worth over $10 billion each.

"I know for a fact that it's about taxes and it's about the state of the fiscal house in Connecticut," [State Senator Scott] Frantz said, referring to the unfunded pension liability. 
Peterffy, who made headlines in 2012 by personally funding political ads for Republicans, told Greenwich First Selectman Peter Tesei in late 2014 that he "had pretty much given up on the state of Connecticut," Tesei said Wednesday. 
"He was holding out that there would perhaps be a change in direction, and when that didn't materialize, he took the position that he was out of here," Tesei said. 
Six months after that conversation, Connecticut's tax on the highest earners rose from 6.7 percent to 6.99 percent, up from 4.5 percent just a few years ago. Florida has no income tax, and more importantly, Connecticut taxes estates when wealth transfers between generations; Florida does not.

"Mother Aetna" Almost Out the Door

GE left Connecticut in 2015 and now Aetna has one foot out the door.

Aetna's CEO refuses to promise to stay in Hartford and Aetna has continued its long-term trend of reducing Connecticut employment.  Since 2012, Aetna has reduced Connecticut staffing from 6,700 to 6,000, during a time it expanded its staffing nationally.  During the period when Aetna's merger with Humana looked likely, Aetna's CEO spoke very favorably of Louisville, Kentucky (where Humana was headquartered) and said that all its government-related work would be done in Louisville.

It's Not All Dan Malloy's Fault, But Connecticut is Getting Worse

I'm not trying to say that Connecticut's intractable problems are all Dan Malloy's fault.  It is not Malloy's fault that CT put virtually nothing into its pension funds from the 1930s-1980s and Connecticut's job growth has been very poor for decades too.

It isn't Malloy's fault that Connecticut is so dependent on hedge fund millionaires for tax revenue either.

Malloy is also doing more to face up to Connecticut's debt crisis than Chris Christie is.  If Christie were willing to actually balance New Jersey's books, we would need to be taxing more/spending less to a tune of $4 billion a year.

But Malloy's progressive policies haven't ignited growth either and Malloy has resisted pension reform.

But this brings me back to Phil Murphy.

Phil Murphy cannot even fund NJ's pensions with a "Millionaire's Tax" (which would bring in $600 million per year) and a marijuana excise tax ($300 million per year), let alone the rest of his agenda. Given the intractable budgetary-economic crisis in Connecticut, I fail to see any reason why anyone in New Jersey would be optimistic about New Jersey under very similar policies.  Murphy's beacon is California, but New Jersey and California are nothing alike.  New Jersey and Connecticut are quite alike.

There are, of course, parts of New Jersey that are doing very well, eg, Hudson County and train-line suburbs such as South Orange-Maplewood, Millburn, Summit, Montclair, and Madison.  Ironically, Phil Murphy's vision of public-transit centered-growth, seems like it would (unintentionally), if anything, further benefit the "haves" of the NJ economy.

And the likelihood that New Jersey will be in for another four years of budgetary pain underscores the need to think pragmatically about state aid (which Murphy does not do), and how we need to have achievable funding targets for high-FRL (i.e., Abbott) districts, and the need to redistribute state aid.



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See Also:
And:  "Connecticut and New Jersey: Rich States, Poor Economies"


Tuesday, December 13, 2016

Education Spending and NJ Taxes

If you are a glutton for pain, the following is just how insane NJ property taxes actually are.

Source:
http://www.thefiscaltimes.com/2015/08/14/10-Worst-States-Property-Taxes
Our taxes are even more extreme if you look at absolute dollars paid per household and not tax rate.

Source: https://wallethub.com/edu/states-with-the-highest-and-lowest-property-taxes/11585/
(These data are out of date.)  

Why are our taxes so high?

It's the (School) Spending!

NJ's municipal and county spending are high too, but education taxes are greater than municipal and county government combined, so when it comes to NJ's tax levels, school spending cannot be ignored.

These data are more recent than the state-by-state comparisons used above, hence
the higher median property tax bill.


What's rarely definitively discussed in the same context of NJ's excessive taxes is that our education spending is among the country's highest, with only New York State and Alaska outspending us.

Highest Spending States, 2013-14

  1. New York, $20,610
  2. Alaska, $18,416
  3. New Jersey, $17,907
  4. Connecticut, $17,745
  5. Vermont, $16,988
  6. Wyoming, $15,797
  7. Massachusetts, $15,087
  8. Rhode Island, $14,767
  9. New Hampshire, $14,335
  10. Maryland, $14,003
  11. Pennsylvania, $13,961
NJ's exceptionally high spending is even more of a factor in our tax burden when you consider that other states have a higher percentage of school money deriving from non-residential taxpayers.

Alaska has oil revenue and New York State gets billions per year in income taxes paid by commuters who work in New York State but live elsewhere, usually New Jersey.  New Jersey has no equivalent outside source of revenue. Due to a unique bistate tax treaty that is disadvantageous to New Jersey, Pennsylvania residents who work in New Jersey actually pay income taxes to Pennsylvania.

Alaska, Vermont, Wyoming, Rhode Island, and New Hampshire are all small states that receive much larger amounts of federal education aid per student than New Jersey due to the Small-State Minimum in federal aid formulas.  (Indeed, NJ is in DEAD-LAST for the percentage of education spending coming from the federal government, getting only 4.1% of its education spending from the feds, compared to a national average of 9.1%.)

If New Jersey spent as much on K-12 education per pupil as
other high-wealth states, our taxes would be substantially lower.

  • If New Jersey spent as much as Connecticut per student we would $221,839,398 less.
  • If New Jersey spent as much as Massachusetts per student we would spend $3,861,648,780 less.
  • If New Jersey spent as much as Maryland per student we would spend $5,346,055,616 less.
  • If New Jersey spent as much as Pennsylvania per student we would spend $5,403,569,534 less.


    (Since NJ had 1,369,379 public school students in 2013, I just multiplied the difference in per pupil spending by 1,369,379.)

    It's simple but it's ignored:


    New Jersey's Taxes are High Because We Spend A Lot. 

    Mostly on Schools.  

    Some accounts that recognize that NJ's taxes are high because our spending is high attribute the spending to the seemingly large number of school districts and municipalities in New Jersey, implying that if it weren't for so many districts, Boards of Education, and superintendents our spending and taxes would be normal.

    For instance, this NJSpotlight piece titled "Why Property Taxes are So High" by Collean O'Dea blamed the multiplicity of school districts and said that the balance of local funding/state funding for schools was the problem:

    Why are taxes so high?
    New Jersey relies heavily on the property tax to fund local governments and schools. The tax pays for municipal services -- police, roads and the like. It pays for local and, sometimes, regional public schools. And it pays for county government -- roads, parks, elections and more. Depending on the municipality, there may also be open space, library or fire service taxes. 
    Last year, local governments levied more than $27 billion in local property taxes. The bill is so high, in part, because New Jersey is a high-cost state. 
    The state has 565 separate municipalities and even more school districts, nearly all of them led by their own administrators and support staff – who are often doing similar jobs in very close proximity. Officials say state mandates add to municipal costs, as well. 
    At the same time, exclusive of federal aid, the amount of assistance the state gave to municipalities to defray their expenses represented just 15 percent of total spending,. What’s more, only about one-third of school spending is covered by state aid.

    The New Jersey Policy Perspective recently said that NJ's municipal abundance caused NJ's high taxes.
    There are many explanations for New Jersey’s historically high property taxes such as its population density, the excessive number of municipalities and school districts and its traditions of local control. 

    Although I agree that there is some explanatory power in NJ's municipal fragmentation, this frequently-made argument that New Jersey's multiplicity of governmental units causes us to have high taxes is demolished in this Rutgers University Report "Size May Not be the Issue."

    First, on a per capita basis, New Jersey is just average for governmental units.

    Asking the question about having too many governments from a different perspective may yield an entirely different conclusion. How many “general governments” does New Jersey have on a per capita basis? The answer is: surprisingly few. In fact, New Jersey ranks 34th in the number of general governments per capita. When all “special districts” (fire, water, sewer, and so on) are also considered,New Jersey ranks 36th of the 50 states.
    Second, on the NJ municipal level at least, there is no correlation between the size of a locality and its per resident spending.  On the municipal level, the lowest spending towns are actually ones with 3,601- 5,150 residents.

    Source: http://assets.njspotlight.com/assets/14/1116/2244, page 25
    Note: Jersey Shore resort communities are excluded.

    If having fewer and larger localities led to economies of scale, then New Jersey's largest municipalities would have low taxes, but New Jersey's largest suburban towns do not have low taxes (as a general rule).

    New Jersey's average equalized all-in tax rate for 2016 is 2.333, but
    • Woodbridge's tax rate is 2.685.  
    • Edison's is 2.193.  
    • Clifton's is 2.984.  
    • Lakewood's is 2.109.  
    • Hamilton's is 2.643.  
    • Cherry Hill's tax rate is 3.384.  
    • Brick, whose schools are overaided and where school spending is below-average, is 2.022.  
    Of NJ's largest non-urban towns, only Toms River has significantly below-average taxes, but Toms River's rate is still 1.846, which still very high by US standards.

    Yet Toms River is the exception the proves the rule of school spending being central to our high taxes, since Toms River only spends $15,587 per student  (counting pensions + FICA), which is about $3,500 per student below NJ's average.  Toms River's school taxes are only 76% of Local Fair Share.

    General Administrative Spending in NJ is 2% of Spending

    The theory is that NJ's (seemingly) large number of school districts leading to high taxes is that having a small number of districts leads to inefficient central office administration.

    Insofar as New Jersey might have more administrators than states with fewer and larger districts, this theory fails to account for very much of NJ's exceptional tax burden since "General Administration" is such a tiny portion (2% in NJ) of district spending.

    The US government actually keeps track of administrative spending and the additional spending in New Jersey in the Administration category is not that high.

    NJ's administrative spending per student was $367 for general administration in 2013-14.  The national average for general administration was $210.

    So NJ is only $157 per student above the national average.  Yet our taxes are more than $5,000 per household above the national average and literally double the national average in terms of tax rate.

    If you compare New Jersey's average district spending to national numbers, it's obvious that New Jersey school districts spend more on every category, including the categories that are independent of district size, like "Instructional Salaries" and "Instructional Benefits," ie, "teachers."

    Source:
    http://www.governing.com/gov-data/education-data/state-education-spending-per-pupil-data.html


    Given how low Maryland's administrative spending is ($125 per student), I think there is some truth to the "too many districts, too many administrators" theory, but it is a minor cause of NJ's tax burden.

    Not every explanatory article about NJ's obscene property taxes is as bad as that NJSpotlight piece or the New Jersey Policy Perspective's claim.

    This piece from the Asbury Park Press, titled "Why are our taxes so high?," has a lot of invaluable information and gets the cause of the property tax crisis partly right, but even it misses the centrality of education spending in NJ's outsize tax burden:

    It's no secret that New Jersey is a high-tax state. But few stop to think about the precise reasons why, other than the vague and altogether accurate notion that public employee salaries and benefits are too generous, and that there are too many government workers collecting them. Or that there are two many towns and school districts. Or that the high cost of living here explains why government is so costly....
    On the revenue side, the problem lies less with layers of government and excessive numbers of government workers providing services than with the generous salaries and benefits of those who are on the public payroll. Average state worker salaries: highest in the nation. Average teacher salaries: third highest. Public employee health benefit costs: second highest in the nation. 
    Yes, the cost of living in New Jersey is high. That is necessarily reflected in public employee salaries and benefits. But New Jersey, which ranks first or second in so many tax and spending categories, has the fourth-highest cost of living in the U.S., behind New York, Hawaii and Alaska. Other states with far lower tax burdens have similarly high costs of living.
    Although it's worth pointing out where there exists inefficiency and superfluousness in municipal and county spending (like police officers making $200,000), the fact is that over half of New Jersey's property tax levy - $14.5 billion out of $27.7 billion - is for schools, so inefficiency and superflousness in schools is really what drives New Jersey's extraordinary property taxes.

    The Income Tax Reallocation Distraction

    Another theory I often see that avoids discussion of spending is that NJ's property taxes are so high because income taxes are too low.  This notion then becomes the premise for an argument for reallocating taxation, where income taxes would rise and property taxes would fall.

    Indeed, there are some seemingly cogent arguments for this.

    The property tax in New Jersey brings in twice as much revenue as the income tax, so mathematically, reallocation would lower property taxes in the short term. While New Jersey's top bracket, 8.97% on income above $1 million, is the fifth highest in the US for 2017, on low-income earners, NJ rates are low and on middle-income earners NJ rates are only average.

    (CA, OR, MN, and IA now have higher top brackets than NJ. Maine was going to have a higher to have a higher bracket through "Question 2," but that was repealed by the legislature and Maine's top bracket is lower than NJ's.)

    The problem with this approach is that it isn't a net help for New Jerseyans if they exchange the country's highest property taxes for the country's highest income taxes.  If just half of the $27.7 billion in property taxes were shifted to income taxes, New Jersey's income tax levy would literally double (in FY2016 NJ's income tax brought in $13.8 billion).

    If all-in taxes were to drop for middle-income and lower-income New Jerseyans, more money would have to come from the wealthy.

    This is an idea I support, but raising the $1,000,000 bracket from 8.97% to 10.75% would only bring in $615 million.  Raising taxes on incomes above $500,000 per year to 10.25% would bring in $155 million.

    Combining the two upper-income tax increases would bring in $770 million, which is only 2.7% of NJ's $27.7 billion property tax bill.

    Could New Jersey increase taxes exceed 10.75% for $1 million+ incomes in order to produce real property tax relief?  In theory yes, but if the top rate were increased by only 50%, NJ's top bracket would exceed California's 13.3%.  If NJ's top rate were increased by only 10%, we would have the country's third highest top rate.

    More importantly, our top rate would easily exceed New York State's 8.82%, Connecticut's 6.99%, and Pennsylvania's 3.07%.  The combined New York State+New York City top bracket is 12.4%, also within reach if NJ attempted a massive property tax/income tax reallocation.

    I don't feel sorry for the rich, but the departure of only a small percentage of ultra-high-income individuals is a permanent fiscal risk for New Jersey since the ultra-rich pay so much in NJ income taxes:

    One half of one percent of New Jersey taxpayers account for almost a third of income tax revenues, and only 600 filers - many of whom may already have second homes outside of New Jersey - account for about $1.4 billion in income tax payments.
    The New Jersey Policy Perspective often points out that despite NJ's income taxes already being very high, the number of high-income filers in New Jersey constantly increases, so, they argue, NJ should not base policy on fears of outmigration.

    Ok, point taken, but the New Jersey Policy Perspective does not attempt to evaluate the counterfactual; ie, what New Jersey's population of millionaires would be if our taxes were more moderate.

    Also, although NJ's number of high-income filers may constantly increase, New Jersey's top-bracket is barely higher than New York State's.  If the NJ top-bracket were to become substantially higher than New York State's, the constant growth of the millionaire population may slow down or reverse.

    Finally, there are two practical problems with relying on income taxes:
    • income tax collections are volatile.
    • income taxes can be evaded and avoided more easily than property taxes.
    Tax Reform in New Jersey Can't Ignore the Spending Side

    School district/municipal consolidation and shifting more taxation to income taxes are good things on their own merits, but these approaches neglect the real cause of NJ's tax crisis, which is our extraordinarily high spending, particularly on education.

    Over the years, NJ has repeatedly tried to supplant property taxes with income tax-derived state aid , but most state aid has always gone to poor towns & districts - leaving the non-poor without much state support. Indeed, the state's attempt to give income tax money to middle-class and affluent districts was ruled unconstitutional by the NJ Supreme Court in 1990 in Abbott II as "counterequalizing."

    Not all explanations for why NJ has such high taxes are as bad as the ones that kick off my blog post.

    Andrew Sidamon-Eristoff eruditely pins the causation where it belongs here:

    At the risk of gross oversimplification, the sum and substance is this: Given New Jersey’s relatively high state and local spending (the latest census figures) suggest that New Jersey’s state and local unit direct spending is approximately 11 percent higher than the national average), the limited revenue-generating capacity of our income tax base, the relative lack of federal revenue supporting local spending, and the fact that fiscal redistribution will always be a higher legal if not political priority, it is highly unlikely that New Jersey’s state government will ever have the discretionary fiscal capacity to meet the rising cost of education and local government, let alone offset the related heavy reliance on property taxes, on anything other than a temporary and unsustainable basis. 
    Why does this matter? The systemic overselling of “property tax relief” distorts the public policy debate. We dissipate too much of our political energy arguing over funding levels for local aid and popular direct-benefit programs that have no real impact on property taxes as such, leaving our long-suffering taxpaying public disillusioned and cynical. After decades of hackneyed bipartisan dogma, perhaps it’s time to focus on the only thing that will actually make a real difference to property taxes over time: controlling the cost of education and local government in New Jersey.

    This post of mine has clearly targeted spending itself - chiefly for education - as the cause of NJ's extraordinary tax burden, but, IT'S OUR OWN FAULT.

    If New Jerseyans really wanted lower taxes, they would vote in anti-tax politicians, but New Jerseyans almost never do this, hence Democratic domination of the legislature, many town councils, and their ability to periodically elect governors.

    If the majority of New Jerseyans wanted lower taxes, they would vote for politicians who want that too.

    New Jersey is a democracy and at a certain point the voters themselves are accountable.


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    Update, New Jersey's school spending is also the second highest in the United States as a percentage of state GDP:

    Source: Education Law Center/Rutgers Graduate School of Education
    https://drive.google.com/file/d/0BxtYmwryVI00VDhjRGlDOUh3VE0/view