Tricks of the Trade: The Trenton Tax Trap | Elias

From its inception, the senior tax credit plan introduced earlier this month by Democrats in the Legislature has been called several things, from reverse robin hood, to smoke and mirrors, election year politics at its worst, or simply nothing more than a trick to give Trenton lawmakers a victory lap in their districts as they recess for summer and campaign for reelection in November.

Reasonable minds can differ on whether the plan is good policy, but here is a question worth asking our representatives: is the plan even enforceable? Not at all.

The New Jersey Constitution limits the powers of the Governor and State Legislature to spend our tax dollars in two ways: The Appropriations Clause and the Debt Limitation Clause. The Appropriations Clause allows the Legislature to submit an appropriations bill to the Governor reflecting a “negotiated” budget for the upcoming fiscal year, with a balance of enough revenue to cover the wish list of expenses outlined in the bill. Our government cannot set aside a specific dollar amount for future budget years and tie the hands of future legislators who may find themselves dealing with unanticipated economic setbacks like a recession, or a pandemic.

The Debt Limitation Clause requires any newly proposed state debt amounting to more than 1% of the year’s budget to be submitted directly to the voters by referendum. By applying both of these principles to the Democrat StayNJ plan, specifically how the plan is supposed to be funded with annual increasing sums of hundreds of millions of dollars set aside in a “lockbox,” it is clear that the tax relief plan is nothing more than a pinky promise to set aside money “subject to” the State Treasurer’s approval and can be broken as early as next year’s budget season, well before the delayed start date of January 2026 as the next Governor is getting settled in at Drumthwacket.

This is the same reason why many state workers will never see their pensions, or at least as much of it as anticipated. In 1997, Governor Whitman suspended the State’s contribution to the pension funds in exchange for granting public employees a “non-forfeitable” right to their pensions, which was meaningless.

After Democrat Governors McGreevey, Codey and Corzine continued to suspend these payments with the blessing of a Democrat-controlled Legislature, Chapter 78 was enacted in 2011, phasing in the State’s obligation to fund the pensions for the first time in 15 years. While beach bum Chris Christie is often blamed for “screwing public workers” and taking more out of their pockets, voters should remember that it was the Democrat-controlled Legislature—the same folks promising senior tax relief—that voted to increase employee contributions in exchange for a “contractual right” to the State funding their pensions.

The New Jersey Supreme Court later ruled in 2015 that any such contract would violate both the Appropriations Clause and the Debt Limitation Clause and likewise amounts to another pinky promise by Democrats.

Herein lies the Trenton tax trap. Governor Murphy has followed through on that promise for the past six years. But for how long (if ever) can the State deliver on promises to our public employees AND our seniors? It is unsustainable, that is, without breaking another promise to the rest of New Jersey: more taxes.

It may be worthwhile to start considering whether the “Next New Jersey” needs the next New Jersey Constitutional Convention to overhaul the status quo. A Constitution that lays out protections for public employee pension benefits and/or senior property tax cuts, both of which can already be found in other states. A Constitution that restructures our State obligations and ties school funding to alternative, more equitable revenue sources like income taxes, as proposed every year for the past five years by Republican lawmakers. Most importantly, a Constitution that provides for a full-time legislature subject to reasonable term limits, spending its time wisely solving our State’s ever worsening problems rather than staving off retirement until the next pay raise.

In the meantime, with just four months left to go for an election with all 120 seats in the Legislature on the ballot, voters must give major consideration to a desperately needed overhaul of the Statehouse roster.

Adam J. Elias
About Adam J. Elias 1 Article
Adam J. Elias is a Candidate for the New Jersey General Assembly to represent the 14th Legislative District, which includes parts of Middlesex and Mercer counties. He is also an attorney, former prosecutor and small business owner.