A cap at 2 percent, but exemptions

It is interesting that the governor is agreeing to a 2 percent cap with exemptions for health and pension costs. Why?
Well, his entire so-called tool kit is designed to allow towns and school districts a better chance to control costs. What is needed is pension reform and pressure on towns and school districts to force unions to accept co-pay for health costs. I do not think exempting those costs from the cap does that.

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About fsnowflack
Fred Snowflack was editorial page editor and a political columnist for the Daily Record of Morristown for almost 12 years. He has won numerous awards for editorial and column writing from the New Jersey Press Association and has written a blog on county and state politics for the last three years. He lives in Ledgewood in Morris County.

38 Responses to A cap at 2 percent, but exemptions

  1. Ed Ramirez says:

    Fred

    There is only so much the Governor can do and he has performed some fantastic thing in a short time. Just maybe if the people of NJ have the foresight to give him a majority in both houses next year you will see what he is truly all about. I sellout him for his efforts so far and look forward to greater thing to come.

  2. Kevin Nedd says:

    This cap has more holes than a slice of Swiss cheese.

  3. P says:

    The legislature must pass the tool kit items related to capping salary increases and municipalities/school districts’ financial responsibility of covering 100% of any increase in the Cadillac health care plans enjoyed by their employees. Only then will the NJEA, PBA and CWA come to the table to help find more cost effective ways of providing employees with health insurance.

  4. Ken Bank says:

    “There is only so much the Governor can do and he has performed some fantastic thing in a short time.”

    Fantastic things? Like what? Taking away property tax rebates from seniors and middle-class homeowners? Increasing the cost of public transit by 25% (obviously you’re not riding any trains or buses). Making my kids walk two miles to get to school, even in the snow, so by they time they get there they’re too exhausted to learn anything?

    Wait until all you Christie fans find out what “fantastic” really means. With the elimination of courtesy busing throughout the state residents will be forced to shovel their sidewalks sooner so kids can get to school, and now cops will have to strictly enforce those laws. Since Morris County gets more snow than most of the state it will be disproportionately impacted. Just remember when you all get up at 5am on a school day to shovel your sidewalks what a “fantastic” job Christie is doing, and with the tax cut he gave himself and his millionaire pals he can afford to hire someone to do his digging for him.

  5. P says:

    Nedd – Dream on. Given your “expertise” on budgets, what’s the most you would expect to see as a tax increase (%) with a 2% cap and the three real exceptions?? It isn’t the ideal cap, but it’s a hell of a lot better than what exists today. Add the tool kit, and your tax increase “record” as a CM will soon be eclipsed by every committee from here on.

  6. Ted says:

    In August 1971 Nixon imposed wage/price controls by December 1974 there was double-digit inflation and we learned monetary policy is the better approach. Now Christie can’t adjust interest rates but he can cut state aid forcing municipalities and schools to either cut costs or raise property taxes. Then it’s up to voters to change municipal governments and vote down school budgets. Be it a 2.5% hard cap, a 2.9% statutory cap or the current 2% bipartisan agreement they are pathways to disaster.

    Another example of attempts at artificial cost/price control is the Hunt brothers. They attempted to manipulate the price of silver by cornering the market. The 1973 price was under $2 per once and it rose to a 1979 peak of $54. But it all fell apart when people began to melt down grandmas silver flatware and tea set. As I recall there was a one-day price drop of about 50% in 1980. By 1987, the Hunts filed for bankruptcy.

    Nature and the free market always find ways to self-correct. Christie closed the spigot. Let the system run its course.

  7. Kevin Nedd says:

    P,

    I have no doubt the new cap will be met as it should. It would have been great if the GOP had the courage to live up to it’s word and do it without a state mandate. When I first proposed the notion of a cap back in 2005, our current mayor said it was a bad idea and not necessary. This despite raising taxes by over 11% in that same year. Maybe if the GOP walked the talk as opposed to talking the talk, people would have more confidence in their ability to control tax growth.

  8. Ed Ramirez says:

    Ken

    Come back to reality a Republican Governor is getting huge concisions from Democratic Legislators. If you don’t that that is fantastic than you are to naive to be educated at this juncture of your life.

  9. Ted says:

    Kevin, caps don’t work. Never have and never will. Merkt rightfully said caps “are window-dressing…a way for politicians to do nothing while appearing to do something.”

    No matter how you view things, an informed, active electorate is the only answer

    And Ed, concessions only prove Christie’s debate strengh. He’s still gotta do the right thing; complete the journey he started. You and the rest of the GOP are forcing the overnor into making political decisions that you think will get him re elected.

    Christie won the statehouse being a maverick. Change him and he’ll be a one term guy.

  10. Kevin Nedd says:

    Ken,

    If the goal of a cap is to control tax levy growth, they do work. While you are entitled to your “opinion”, here are the “facts” that prove my case:

    http://wtpolitics.blogspot.com/2009/10/case-for-corzine.html

    My problem with using Christie touting “caps” is that they will do nothing to deliver on the promise he made, which was to “LOWER” property taxes! I am still waiting for the Governor to put a plan on the table that backs up what he promised in his campaign.

  11. Kevin Nedd says:

    Ted,

    My last comment was directed towards you.

    Sorry Ken.

  12. Ted says:

    It’s interesting that tax growth was between 5 and 7% during the Corzine years WITH a 4% cap…when inflation was around zero. And you want more?

    One might argue that the 4% cap became an entitlement for education rather than an upper limit. As a result, people and businesses fled the state or appealed oppressive prop tax. If the cap lowered taxes, it did so by forcing many to appeal against oppressive tax rates and win.

    By reclaiming school surplus Christie bridged the state’s budget gap. He also informed voters of a few realities. In Rockaway Township for example, voters were empowered to REDUCE a certain7.5% property tax increase to 4%…and all that was done in 6 months. I just wish Christie hadn’t veered off course with this cap thing. History shows they don’t work…even iN NJ

  13. Kevin Nedd says:

    Ted,

    You really are dense! The cap went into effect in 2007. Between 2006 and 2008, tax levy growth DECLINED by over 200 basis points. Do you think this occured naturally? Or could it have occured due to the CAP! The 4% cap drove this downward trend.

    As for inflation between 2006 and 2008, it wasn’t zero. Annual inflation during this period averaged about 3%.

    http://inflationdata.com/inflation/inflation_rate/CurrentInflation.asp

    Please get your facts together before you reply.

  14. Ted says:

    The point of your comments was the Corzine years, which did operate under the 4% cap for 4 budget submissions…and 3% inflation is a lot closer to zero than the 5-7% tax growth attributed to Corzine. Incidentally the consumer price index is all encompassing. Ask around, many in private industry received no pay increase between 2006-2008 (that’s pretty much 0%) but teachers and municipal employees did well; wages are a driving force for property taxes

    My argument is still valid. The 4% cap was seen as an entitlement rather than an upper limit and there were many loopholes as your graph shows. Now think ahead to what might happen with a 2% cap when municipal ratable is shrinking and property values are in decline.

  15. Kevin Nedd says:

    Ted,

    Corzine was elected in 2005 and assumed office in 2006.

    The 4% cap was passed in 2007 and took effect for school districts in the 2007-2008 school year. It did not become effective for municipalities until the full 2008 budget year. The decline in tax growth between 2007 and 2009 from 7% to 5% is entirely attributable to the tax levy cap.

    Want more proof? Here is another study, that includes data for 2009, which clearly shows the impact of the tax levy cap that proves my point. Look at pages 10 and 11:

    http://www.njea.org/pdfs/TaxCapPrimer.pdf

    Looking forward to your next excuse.

  16. Ted says:

    The cap artificially reduced tax growth…but clearly not to 4%, which eventually led to the bursting bubble Christie inherited…Nixon’s wage price controls led to the double digit inflation that Ford and Carter inherited. The Hunt brothers artificially manipulated silver prices from $2 to $54/ounce and when that bubble burst they went bankrupt.

    Now think ahead to what might happen with a 2% cap when municipal ratable is shrinking and property values are in decline. Even If costs stagnate tax rates grow. What happens as cost increases, prop values are low and ratable shrinks?

    Explain how a cap will help then. Did the 4% cap stop residents and businesses from leaving the state? Do you believe a 2% cap will bring them back? Caps don’t work. Never have and never will.

  17. Kevin Nedd says:

    Ted,

    You keep saying “caps don’t work”? While I have produced clear evidence they played a strong role in reducing tax growth, perhaps you are simply disappointed in that they don’t cure cancer or eliminate world hunger.

    While caps do prevent a return to 11% tax increases like the one the GOP imposed in my township back in 2005, I would much rather see the Governor focus on the changes that are necessary to LOWER our taxes, like forcing the consolidation of many of our services to the county level to ensure better efficiencies, such as police and schools.

  18. P says:

    Ted – Apples and Oranges. You can’t compare wage and price controls on the private sector to public sector caps. because government can and will tax us for whatever it needs to pay for promises it’s made to constituent groups, especially labor unions, there is no natural break on its ability to spend, unlike the laws of supply and demand, as well as competition, that exist in the private sector. So please top beating that Dead Horse.

    Nedd – Your Taxes are Never Going Down. Repeat that three times daily. As far as going after Christie for “breaking his promise,” good luck with that. Again, stop wasting our time with the flogging of that Dead Horse.

    And as to who looks weak, as long as he’s standing next to Sweeney/Oliver/Cryan, Christie will look like Superman (TM).

  19. Kevin Nedd says:

    So, if my “taxes are never going down”, then why did Christie stand before voters last fall and tell us he had a plan to “LOWER” taxes? Did he just tell voters what he thought it would take to get elected? Voters are not as stupid as you might think.

    Keep thinking Christie won’t be held into account for his failure to live up to his main campaign promise. Time will tell.

  20. P says:

    Selective indignation is Nedd’s strong suit. Haven’t seen him complaining about Obama’s inability to deliver on his promise to shut Guantanamo within a year. 18 months and counting Mr. President.

    As far a “Voters are not as stupid as you might think,” I guess you’re right. After all. they voted for a certain committeeman in LV once, didn’t they?

  21. P says:

    P.S. I said “your” taxes are never going down. I didn’t say mine won’t. 😉

  22. P says:

    P.P.S. Re:Your Corzine cap post – It’s “Rein in.” not “Reign.” Rain/Reign/Rein – http://homepage.smc.edu/quizzes/cheney_joyce/rainreignrein.html

    Although your bud Tom “proves how dangerous a dictionary can be in the hands of the ignorant,” you prove how “dangerous” someone who is ignorant of a dictionary can be!

  23. Ted says:

    History is replete with examples proving that artificial controls don’t work. I even explained how they didn’t work for Corzine. He set an upward limit and it became the norm, regardless of economic realities. Then the “norm” was exceeded…until the bubble burst. Okay, I’ll stipulate that Corzine slowed property tax growth in your town but at a very high cost to the state

    Christie started down a path of fiscal constraint by not spending what he didn’t have and actually cutting prop tax growth to 4% in my town…that’s a lot better than anything Corzine did (I’m ashamed to say).

    But he’s now settling for a 2% cap…. except for a whole laundry list of exceptions…the kind of exceptions that created the bubble that swept him into office. Christie is creating a bubble that will sweep him out. Caps don’t work and we’ll have wasted another 4 years.

    P, you make my point that controls don’t work. To paraphrase Rick Merkt, politicians will make it seem they’re controlling cost just as long as they don’t really have to and can tax you when they don’t . BTW artificial controls are artificial in either the private or public sector and don’t work in either case.

  24. Kevin Nedd says:

    P,

    LV voters who supported me in my first election got what they were promised. A significant decline in the growth of their local taxes from the GOP’s 11% to the 2% increase in my final year. Maybe that’s why I received more than a 500 vote increase in my second election and outperformed the party demographics of my township. My loss surely can’t be attributed to breaking any campaign promise as this didn’t happen.

  25. Kevin Nedd says:

    P,

    As for the President, I am sure it it were solely up to him Gitmo would be closed. But as usual, the party of no is doing all it can to block the President. By the way, notice how I call the place Gitmo? Those of us who have served and been there refer to it as Gitmo. I guess the fact you use the full name tells us something.

  26. P says:

    Sorry, but the Prez didn’t keep his promise, and he made it worse by making a big deal of signing an “order” on Day 1 – http://www.cnn.com/2009/POLITICS/01/22/guantanamo.order/index.html.

    When you couple that with the fact that he had a filibuster proof majority in the Senate that year, you can hardly jump up and down on Christie without doing the same to Obama . . unless, of course, you’re the county’s biggest hypocrite . . which you are.

    And please spare us the “I served” bull that you pull out every time you’ve lost an argument. It’s become the Nedd version of the White Flag.

  27. P says:

    Oh, and the Dow’s broken 10000 again so it must be time for one of your famous “How Ya Like Me Now” posts.

  28. Kevin Nedd says:

    P,

    What argument have I lost? The President wants to close Gitmo and his administration is taking positive steps to make it happen like negotiating with other nations to take prisoners who are scheduled for release. I also recall the government seeking transfer remaining detainees to the Thomson Correctional Center, but Congress isn’t playing along. It’s simply taking a lot longer than he anticipated, but unlike you I give him full credit for doing what he can to make it happen. Can the same be said of Christie and his promise to “LOWER” property taxes? Please name one thing Christie he has done that will insure both our property tax bills are actually lower by the end of his first term? That’s right…you can’t name a single thing!

    As for your frequent visits to my website, thanks! You are in good company with Greg Jones.

  29. P says:

    Ted – What is a “natural” or non-artificial cap or control??

    Caps are a form of budget decision, and you’re right, they tend to provide local governments with a budget target to shoot at. And that’s why they are coming down again from 4 to 2%. The only thing worse than a cap, is no cap, as the pre-Four Percent cap days prove (see Nedd’s Corzine chart link above).

    And if you’re so hot on opposing caps/controls/rationing, I’d suggest you call President Obama and demand that he reverse his decision on his new head of CMS, Donald Berwick. Take a gander at an interview from a year ago – http://www.biotechnologyhealthcare.com/journal/fulltext//6/2/BH0602035.pdf

    Q: Critics of CER have said that it will lead to the rationing of health care.
    A:
    We can make a sensible social decision and say, “Well, at this point, to have access to a particular additional benefit [new drug or medical intervention] is so expensive that our taxpayers have better use for those funds.” We make those decisions all the time. The decision is not whether or not we will ration care — the decision is whether we will ration with our eyes open. And right now, we are doing it blindly.

    P.S. Medicare is America’s biggest example of price & care controls. Do you think that price controls on doctors, hospitals and other providers should be removed. Can you say “bankruptcy”.

  30. Kevin Nedd says:

    P,

    The points in your last post were excellent!

  31. Ted says:

    Talk about apples and oranges. Comparative effectiveness is nothing like a cap. Caps seek to limit over all cost growth; a buckshot shotgun blast, which causes mostly collateral damage.

    Comparative effectiveness or cost benefit analysis as it is more commonly known seeks to eliminate costs that are ineffective; a rifle shot.

    While your referenced article is interesting, it’s just a feeble attempt at redirecting the conversation to healthcare.

    The fact remains that nowhere in history have caps worked. My best example is Corzine’s 4% cap with loopholes. As P will tell you, it almost bankrupt the state explain how a 2% cap with loopholes will do better…Of course you could close every loophole and make it a constitutional amendment but that would strangle the state.

  32. Patsy from 23rd Street says:

    32 comments. Is that a record.

  33. P says:

    Explain how Corzine’s cap “almost bankrupted the state.” There are a lot of reasosn why NJ is in the toilet financially, but not a one was caused by the 4% cap.

    As for “Comparative Effectiveness”, nice dodge, but I only linked to the article so you could see the source of the quote, which directly addressed rationing, which you, of course, ignored, because it completely rebutted your arguement about caps and rationing.

    Inevitably we will have more and more of both, because, as anyone who’s had to study economics knows – resources are scare and choises have to be made.

    P.S. It’s interesting to note that you were a big Corzine guy last fall. Not sure why you were so eager to see a guy who almost bankrupt the state get re-elected!

    P.P.S. Also saw that you decided to turn your post #6 into a letter to the editor. I’d suggest you stick to hammering the RTBOE, at least there you have some knowledge and experience. The only thing funnier than your initial letter was your follow-up comment – “Do you realize that caps don’t influence spending of any kind?” Not sure how you can say that if I reduce the amount of money you raise via the taxpayer it won’t also reduce the amount of money you spend??!!

    Also find it interesting that a guy who spent the last year claiming that the only way to deal with the unions was via Trenton, not local BOEs growing a pair, would suddenly reverse course and now reject the assistance that Trenton is finally providing and tell BOEs that they’re on their own. No Caps needed here!

  34. Ted says:

    P, it was your contention that Corzine didn’t cut spending, not mine. But it was Corzine who initiated the 4%cap, with loopholes, which didn’t cut spending, that YOU say nearly bankrupt the state.
    Now Christie abandons his spending cuts (which you once applauded) in favor of a rehash of a Corzine policy (the guy you hated). Christie proposes another tax cap (a Corzine idea that you now approve of), complete with loopholes that will undoubtedly be expanded in the Assembly. Pbrain, be consistent.

    Once again, comparative effectiveness has nothing too do with Caps and one man’s misguided opinion that such techniques lead to rationing doesn’t change that fact…and is nowhere close to rebuttal.

    Trenton was the only way to deal with unions and once elected, Christie took action. He cut spending forced school boards to open contract talks to seriously look at concessions. The payoff will be when new contracts a negotiated. I said it, was right, and it got done.

  35. P says:

    Unfortunately, it looks like Ted has hit the doughnut hole and can’t afford his meds. If anyone out there can decipher the gibberish he posted above, please provide a translation.

    As far as the number of posts required to set a record, it is well above 100. Back in the day, when Fred didn’t have to approve every submission and Ted was more active several threads went over 100. Ah, the Good Old Days.

  36. Ted says:

    Again P makes my point. Thanks. Your (Pbrain’s) blather is illogical and quite difficult to follow.

    P dislikes Corzine’s 4% spending cap with loopholes but thinks a Christie spending cap, complete with loopholes isnew, bold leadership.

    Pbrain, the first step in recovery is admitting your addiction to conservative ideology. I guess he isn’t t there yet

  37. Kevin Nedd says:

    P (aka Robert Gregory Jones):

    Just so you know, based on the subject/time stamp of entry #22 and the logging of a hit on my website 2 minutes prior by Robert Gregory Jones, your cover has pretty much been blown.

    Your prior “obsession” with the fine detail of my corporate health plan a while back was a dead giveaway as well.

    I hope you enjoyed your “moniker” while it lasted.

    Are you going to call Fred and ask him to remove all the comments in this thread as well?

  38. P says:

    Last year Ted thought I was a plant for the DR, and now Nedd believes (or should I say, is CERTAIN), that I’m some loser from LV that he loves to tourture. Unfortunately, WRONG again, as usual.

    As for my knowledge of your corporate health care plan, as they teach doctors, when you hear hoofsbeats think horses, not zebras.

    P.S. Why would I ask Fred to remove all of your and Ted’s comments? It’s rare that one has the opportunity to expose both of you as the Know Nothings that your are in just one thead. Jackpot!

    P.P.S. Ted – Please stop embarassing yourself.

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