Will Christie Act Responsibly or Turn Into a Deficit Peacock?

With Chris Christie's first budget address today, there is speculation that the brunt of Christie's plans to gut the state budget will fall on schools (particularly those in low-income neighborhoods), local government, higher education, and low-income residents.  He is also expected to push for a constitutional amendment to cap raises in property taxes.

ThinkProgress compiled a report a few weeks ago, taking a look at how other states around the country are fighting budget gaps due to the Wall-Street-induced recession.  Some states are taking the "defecit peacock" approach, cutting social spending while ruling out tax increases (or even cutting taxes) for the wealthy.  These states are refusing to act responsibly, not seriously looking at the revenue side of the equation, and severely harming their states' long-term infrastructure and ability to provide needed services:

VIRGINIA: Virginia faces a $2.2 billion budget shortfall over the next two years. In early January, during his first speech after being sworn in, Gov. Bob McDonnell (R-VA) stressed the need for “compromises” between Virginians of different political beliefs in order to deal with the state’s budget crisis, yet promised to veto any legislation that would raise taxes. As a result, McDonnell’s budget proposal amounts to a full-on assault on the state’s top domestic spending priorities. He has proposed cutting almost $730 million in K-12 education spending, freezing enrollment in the state’s health insurance program for low-income kids and pregnant women, and requiring state workers “to take as many as 10 unpaid days off and contribute more to their pensions.” These cuts would end the school breakfast program, lead to the layoffs of “thousands of teachers,” and close five major state parks.

MINNESOTA: Minnesota currently has to deal with a $1.2 billion budget deficit. Gov. Tim Pawlenty (R-MN) has unveiled a massive series of cuts that will gut the state’s social services. The governor “proposes cutting $347 million from health care and human services programs. Most significantly, he wants to limit the enrollment of single adults in MinnesotaCare to people earning less than 75 percent of the federal poverty level,” which would leave an additional 20,000 Minnesotans without health care coverage. He also has proposed cutting $250 million in aid to municipalities and $50 million in higher education aid. Yet at the same time, he has failed to propose ways to raise more revenue and has even called for a 20 percent cut in the corporate tax rate, effectively rewarding the most prosperous Minnesotans while punishing some of the poorest. Unfortunately, Pawlenty’s Democratic opposition has not shown much creativity in responding to his plans; Senate Majority Leader Larry Pogemiller (D-Minneapolis) has indicated that his party plans to “propose cutting at least as much as the governor from higher education and health care.”

CALIFORNIA: California is enduring the most extreme budget crisis in the nation, with a $20 billion budget shortfall in the current year. Gov. Arnold Schwarzenegger (R-CA), who has ruled out any sort of tax increases, has submitted $8.5 billion in budget cuts for 2010, which even he admits are “draconian.” Under just one of the cuts, taking aim at the state’s health care budget, more than 200,000 children would lose their eligibility for state health insurance. The governor has also proposed “permanently [lowering] state workforce salaries by 5% without returning to the bargaining table with public-sector unions.” These cuts come on top of $7.4 billion in cuts last year, which caused double-digit tuition increases at public universities and laid off thousands of teachers, increased class sizes, and slashed academic programs.” Due to Proposition 13, “which requires that a two-thirds majority of the state legislature approve any tax increase,” conservative legislators have repeatedly been able to block tax increases on the wealthiest Californians.

But that is not the only way.  Other states are acting responsibly, "asking their states’ most prosperous citizens to sacrifice a little so that spending on the most vital programs can be protected:"

NEW YORK: New York was expecting a $16.2 billion deficit for 2009. Despite hesitancy from Gov. David Paterson (D-NY), progressive legislators chose to raise taxes on its wealthiest citizens rather than simply punish its poorest. It boosted the state income tax rate from 6.85 percent to 8.97 percent for households with over $500,000 of taxable income, and raised the rate one percent for “those with taxable income below $500,000 but above $200,000 for single individuals, $250,000 for heads of households, and $300,000 for married couples filing joint returns,” raising more than $5 billion and staving off the need for deeper cuts in social services.

WISCONSIN: After approaching the “largest budget shortfall” in the state’s history, Wisconsin legislators under the leadership of Gov. Jim Doyle (D-WI) raised taxes on wealthy Wisconsonians to help blunt the need for budget cuts. The state “enacted a new 7.75 percent income tax bracket on all income over $300,000 for married couples and $225,000 for individuals and heads of households. And the exclusion for capital gains income was lowered to 30 percent from 60 percent.” Altogether, these measures generated an extra $280 million for fiscal year 2010. Thanks to these progressive steps, Wisconsin was able to limit cuts on public school funding to 2.5% (rather than the 6.1% without the tax increases) and actually increase funding for Wisconsin’s technical colleges and children’s health insurance programs.

OREGON: With a $2.5 billion projected budget shortfall between 2009 and 2011, Oregon was on the verge of having to make deep cuts to education spending, freeze public employee salaries, and end forest protection rules. Alongside support from Gov. Ted Kulongoski (D-OR), Oregon progressives organized and triumphed over a corporate-backed propaganda campaign to successfully convince voters to “handily” pass ballot measures that increased taxes on the wealthiest Oregonians and increased the corporate minimum tax rate from a paltry $10 a year while not raising taxes on 97.5% of taxpayers and 93% of businesses — protecting $1 billion in services.

Nation wide, budget shortfalls could lead to job cuts numbering nearly a million, which would devastate economic recovery efforts, prolonge the recession, and hurt all residents--not just those who are employed in the public sector. 

The issue of capping taxes is not new, either.  California amended its Constitution in the 1970s in a way similar to what Christie is proposing.  Fast forward 30 years, and California is facing cuts that amount to half of its budget, draconian cuts to basic services, and at one point was paying its obligations with IOUs.

And while California is an extreme case of how bad things can get with mandated hard caps that don't allow policymakers to have flexibility, it is not alone.  In 1992, Colorado enacted similar hard caps in tax revenue (although Colorado's law was broader in its scope, it was more flexible and allowed taxes to increase at inflation plus population growth instead of a hard 2.5% increase).  The result was that Colorado faced massive cuts to education, health care and services.  From April 2001 to October 2002, Colorado removed that requirement that children receive immunizations diphtheria, tetanus, and pertussis (whooping cough), because it could not afford to buy the vaccine.

The results were so disastrous that Colorado voters went to the polls to repeal the cap in 2005.

Apparently, this is the vision Chris Christie has for New Jersey.

The challenges facing New Jersey are not unique.  And there are quite clearly two paths.  One is a responsible way to protect jobs and services in a troubled economy.  The other is an ideological crusade that expects working people to sacrifice while the wealthiest among us prosper.

Here's to one final hope that Chris Christie chooses the first path.