Feed on Posts or Comments 07 September 2010

Fiscal Policy Richard Falknor on 02 Oct 2009 07:51 am

Will public-employee costs ‘crush’ us with property taxes?

UPDATE OCTOBER 2! Eileen Norcross and Frederic Sautet ask whether “New Jersey Can Reverse Course” here. Certainly Maryland sooner and Virginia later will have to face the same question.  The authors properly emphasize the TABOR approach. In view of the difficulty of amending state constitutions, however, we had earlier suggested a quicker initial step here along TABOR lines: “The principles of the Taxpayer Bill of Rights (TABOR) don’t need legislation or constitutional amendments to be followed. The General Assembly Republican Caucuses [or a fiscally conservative governor, or both] can simply agree to abide by the guidelines of TABOR by not voting for [or signing, in the case of the governor] any increase in the budget that exceeds growth in CPI and population.”

 Will public-employee costs ‘crush’ us with property taxes?

Eileen Norcross reports Tuesday in  “Crushed by Taxes,” a Neighborhood Effects post, that - -

“Gannett has done its homework — and the homework of New Jersey’s government(s). This week its New Jersey papers are running a week long series on the state’s property tax crisis.

Visit the Asbury Park Press‘ website and click on a municipality in any one of New Jersey’s 21 counties. Wave your cursor over the bar chart to get a tangible sense of how property taxes are crushing the state’s residents.

For example in Fort Lee, Bergen County, residents face an average tax burden of $8,510, up from $5,545 since 2000. Factor in the property tax rebates from Trenton — the average check sent out in 2008 amounted to $944 — and that’s a 41 percent increase in property taxes in eight years with the rebate. You can get property tax details for each of the state’s 566 municipalities.

Yesterday’s analysis (Day 2) featured a series on one of the major drivers of property taxes: salaries for public sector workers.

Binding arbitration rules mean that unions negotiate their benefits and salaries through a seven-member commission in Trenton with the costs passed on to localities. (For background on the evolution of public sector negotiations in New Jersey from 1968 to today, read, ‘PERC [PUBLIC EMPLOYMENT RELATIONS COMMISSION] After 40 Years.)”

Below is a quick-reference list of links from the Asbury Park Press website which Mercatus Senior Research Fellow Eileen Norcross made available.

  • http://php.app.com/taxcrush/US-Map.php - “Nationwide map of property taxes, showing NJ with the highest rates in the country. From the Census and the Tax Foundation.” [Check your county.]

Following Neighborhood Effects

Readers will find Neighborhood Effects, “a blog about American state and local economic policy and political economy issues . . . run by the Mercatus Center at George Mason University,” a useful resource. (H/T NRO’s Veronique de Rugy.)

Last Monday, we cited here an account of “shocking pay and benefits practices” in the local public sector –

The Free Enterprise Nation reports here (H/T NRO’s John Derbyshire) - - “As researchers for The Free Enterprise Nation began compiling information about the pay and benefits disparity that exists between government/public education and those who work in the private sector, we’d hear an occasional “OH, MY GOSH!” or “OH, MY!” as they found another reference to shocking pay and benefits practices in the public sector. It might have been the first time they saw a State of California pensioner retiring at $500,000 a year…or perhaps the Illinois driver’s training teacher earning $170,000 a year and retiring at $130,000 a year…or perhaps the New York City workers who amass more than $100,000 in overtime in their last year before retirement, triggering a pension benefit in excess of their salary.”

We also pointed to Steven Malanga’s “Unions vs. Taxpayers” here where he declared - -

“[T]he real power of the public sector is showing through in this economic crisis. Some five million private-sector workers have lost their jobs in the last year alone, and their unemployment rate is above 9% according to the BLS. By contrast, public-sector employment has grown in virtually every month of the recession,and the jobless rate for government workers is a mere 2.8%. For anyone who thinks such low unemployment numbers are good news, remember that the bulging public sector must be paid for with revenues that most governments don’t currently have.” (Underscoring Forum’s.)

Right-Sizing State and Local Public Employment

First of all, Maryland and Virginia need analyses like the Gannett expose of New Jersey’s tax crisis to illuminate the connection between public-employee growth and property taxes. 

Readers can visit Arthur Purves’ charts on the Fairfax County Taxpayers Alliance website to get a scent of the local problem in the mega-counties of the two states.

Taxpayer-advocate Purves declares “America’s biggest industry [is] state and local government.”

Don’t expect elected officials to step out in front to help with this one. Conservatives will have to push for union transparency. Hard facts must come first. 

Maryland conservatives should consider urging that proposed public-school-teacher contracts be put on line before they are final - - just as a start. The Evergreen Freedom Foundation in the state of Washington has done pioneering work in public-employee-union transparency.  Perhaps open-meeting laws could be crafted in Maryland to allow the public to observe collective-bargaining negotiations between state and local governments, and public-employee unions.

Virginia, unlike Maryland, does not allow public-employee collective bargaining. Virginians will have to contrive ways to focus public attention on the expansion of those local governments that are growing far faster than population or per-pupil growth and inflation. Stay tuned.

























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