Published by
It's A Free Blog

Stucknation: Debt and Denial in New Jersey

Email a Friend

Fallout from the recession still haunts budget makers in more than 500 of New Jersey's local governments. Scores of communities are resorting to layoffs. School systems, county agencies and long-insulated public authorities are all feeling the squeeze. On January 1st, a state-mandated two percent cap on local property tax increases kicks in. But local officials say none of the key reforms designed to help them cut costs — like reforming the civil service law — have been enacted yet. Those are hung up in a partisan debate in Trenton.

Despite the cap, local property taxes are still likely to go up since the cap excludes increases in public employee insurance and pension costs, both of which have gone up by double digits this year.

Meanwhile, with declining property values and foreclosures, a growing number of New Jersey homeowners are appealing their property tax rates, further reducing local tax revenues. Add in hundreds of millions of dollars in state aid cuts to local governments and Bill Dressel with the League of Muncipalities says Draconian cuts in local services may be the only way out. 

And because this is New Jersey, we’re talking about a lot of local budgets that face cuts. The US Census of Local Governments shows the state now has 1,383 local governments, including 600 school districts and 566 municipal governments. The average town has about 15,000 residents. Teteboro, though, has just 17 people. There are three more with under 100 residents. 

Despite all the handwringing that has gone on for decades about consolidation, it appears to happen with with the frequency of Haley’s Comet. Back in 1997, the proud four adult residents of Pahaquarry Township along the Delaware River came to terms with the fact that only two of the residents left were qualified to hold municipal office. They merged with neighboring Hardwick Township. You'd have go back to the 1950's for another example.

Ironically, according to the late Speaker of the New Jersey Assembly Alan Karcher, one of the motivators for so much local government was the desire for accountability back in the 19th century.
"Property tax payers became more anxious to exercise closer scrutiny over how their taxes were being spent and resorted to the creation of new towns to insure a more direct influence over the use of their property tax payments" wrote Karcher in his seminal book
New Jersey's Multiple Municipal Madness.

But by the 20th century, taxpayers had to keep an eye on more than just town hall, the county seat, and Trenton. There was a proliferation of state, county and municipal authorities also spending (and borrowing against) public money. In 2005, during the Corzine Administration, a state panel calculated that the state authorities alone, like the New Jersey Sports And Exposition Authority, had racked up $20 billion in debt.

Consider the fate of the State's School Construction Authority, which borrowed nearly $9 billion but only produced one third of the school projects promised. The State Inspector General found that the program, primarily targeted to take care of New Jersey long neglected public schools, was plagued by mismanagement and waste.

And that's not all. There is yet another layer in the shadow realm of authorities. The Census also documents the existence of 250 Special District Governments like the Cape May County Bridge Authority, the Monmouth County Bayshore Outfall Authority and the notorious Passaic Valley Sewer Authority. (Earlier this year, Governor Chris Christie's administration documented that 82 Passaic Valley employees made in excess of $100,000 and the executive director was pulling down $313,000 a year.) Add on the 110 local and county Housing Authorities, dozens of local economic development authorities, and dozens of local parking authorities, which are so numerous they need a New Jersey Association of Parking Authorities.

How could a state that was said to take pride in self-reliant "home rule" now have so many masters?

Before New Jersey was a state and before America was a country, Jersey locals were in open rebellion over the imposition of a levy based on the land they had settled. Back then, colonial New Jersey was divided into East and West Proprietorships. During the land riots in the 1740s, settlers rejected paying tribute to the proprietors which were defined by the Crown.

When Samuel Baldwin was arrested, 150 men marched on the jail in Newark and liberated Baldwin. They reasoned that they didn’t need to pay the assessment when they themselves had bought the land from the indigenous native Americans.

What would Baldwin and his merry band think if they could see their 21st century counterparts bound by such debt and obligation?