Saturday, April 10, 2010

NJ's Municipal Welfare State Meltdown

The New Jersey Star-Ledger is calling for municipalities to "save money by sharing services and maybe even (yes, we’re going to dream and use the M-word) merge (N.J. towns must explore merging, sharing). They cite examples of towns attempting to do just that.

"Maybe broke and broken taxpayers have reached their tipping point. Maybe they’re willing to consider radical changes they have rejected for years. And maybe courageous leaders, at the local and county levels, finally will emerge", write the Editors.

Gee. Governor Chris Christie's modest cutbacks in state aid to municipalities is causing towns across New Jersey to take a hard look for solutions to their sudden fiscal woes. They must now take a crack at living within their means.

So, how about this solution: end state aid altogether, coupled with an end to the income taxes that fund it. Just look at the frantic scrambling for budget savings that is going on across NJ as a result of these mere cutbacks. Imagine what no state aid will accomplish. The entire aid scheme is about redistribution of wealth from those who earned it to those who didn't, anyway. So state municipal aid is immoral to begin with.

Leave taxpayers with their own money, and the responsibility to pay for their own town's funding, including their schools. The drug of free money from the state has done what all redistributionist schemes do - foster fiscal irresponsibility. Why look for ways to cut costs, when you can just lobby the state capital for a little more of the loot?

Randolph Township is one of the towns approvingly cited by the Editors. Its mayor, Jay Alpert, declared that "We can’t have 566 fiefdoms in the state anymore." But it was state aid that supported them to begin with. It enabled the state's municipalities to ignore reality for decades. The shrinkage of the number of "fiefdoms" from the current 566 and the general streamlining of municipal services would have occurred gradually, steadily and naturally over the years if not for the state municipal aid honeypot.

No town has an inherent right to exist. If the residents can not or will not support their own town, let them solve their own town's fiscal problems. I'll bet solutions will flow freely once each town's residents must face reality - and once they lose the right to pick the pockets of the next town's taxpayers.

There is no way of knowing where the municipal restructuring wave that would result from ending state aid will lead. But one thing is for sure. Since more than half of the state's budget is aid to municipalities, New Jersey's fiscal condition will improve dramatically. Town political leaders will be a lot wiser about how they spend the taxpayers' dollars, because it will be their own town's taxpayers, and only their own town's taxpayers, that will be footing the bill. And the taxpayers may be a lot more frugal about demanding services, since they themselves will be responsible for footing the entire bill.

Discipline will return due to another aspect. A taxpayer has no control over how his tax dollars are spent when it is another town spending it. But that same taxpayer can confront his own town's leaders, when those tax dollars stay in his own town, rather than thrown around the state under municipal aid.

New Jersey is a poster child for failed policies. In this case, its municipal welfare state. It began with the advent of the income tax in 1977, instituted under cover of the need for a court-ordered "thorough and efficient" public educational establishment. This started the mad dash to Trenton as towns sought to cash in on the jackpot. As is always the case with any kind of resdistributionist government scheme, the taxes that fund it grew steadily but the aid grew faster as politicians courted municipal special interests in search of votes. And, as should be expected, municipalities, hooked on the drug of free state money, spent like spoiled teenagers. Said the governor in his budget address:

"State spending grew 59 percent from 2001 to 2008, before the current recession forced us to make do with less.

"That is bad enough, but as you know, more than half of what the State spends every year is sent to local governments, in the form of aid for municipal government and school districts. And local government has exercised even less control. Spending at the local government level has risen 69 percent since 2001."

New Jersey's municipal welfare state has been tried and has failed. The Star-Ledger blames "home rule", which should "be overruled by common sense". But what's really needed is to return to home rule - the real thing, where people take fiscal responsibility for their own town, not be made responsible for the next guy's town.

My proposal is not a panacea. Government is too big and too controlling. But at least we'll have less expensive government services, including education, when taxpayer dollars stay close to home. This would mean less expensive government, which would mean lower taxes and thus a better economy. Sounds good to me.

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