By Michael G. McGuinness
Our next governor and new Legislature best be laser-focused on two immediate priorities: investing and deploying critical resources into our transportation system and stimulating permanent property tax reductions through shared services and municipal consolidations. It’s maddening and depressing to see the never-ending public sector ignoring private-sector macroeconomic principles — supply and demand and the ability to pay. New Jersey’s businesses and households have had to continually cut back their expenses to afford remaining here. We don’t have the luxury to subsidize inefficiency anymore. It’s time that state and local government agencies face economic reality and do the same. Our elected officials work for all of the public, not just the public employees.
“Imagine a web woven by a spider on LSD and you might see a frightening similarity to the map showing the jurisdictional outlines of our 566 municipalities.” That statement is attributed to the late Alan Karcher, former Assembly speaker, who in 1999 published “New Jersey’s Multiple Municipal Madness.” We need a leader today to take us in a new direction that recognizes that, unless towns meet strict fiscal standards, they forfeit the right to operate. As Karcher observed, the constant theme of every election since the mid-1930s has been to generate funds for local use. This debate is a no-win, zerosum game — increase state taxes to lower local property taxes through increased state aid, or lower state taxes that causes an increase in local taxes due to decreasing state aid.
Property taxes and affordability will remain the No. 1 vexing issue until we deal with the fragmentation of local government. The 21st-century is a sharing economy that prioritizes access over ownership. Individuals, companies and organizations all over the world are exploring new ways to provide and gain access to goods and services by enabling the use of excess capacity while avoiding or minimizing many of the burdens (storage, maintenance and operating costs) associated with ownership. Ergo, local governments should follow suit. Consolidation is crucial to stopping the hemorrhage of scarce resources and will lead to a far better, modern and efficient way to deliver basic services to the public. It will also lead to: preserving the character of our communities (such as Ocean Grove in Neptune Township, Colonia in Woodbridge or Short Hills in Millburn), reducing redundant government, lowering property taxes and enhancing educational opportunities (for example, Princeton Township and Borough), enhancing services (Lake Como police protection), greater clout and access to grants, reduced debt and better regional and more unified planning.
It appears that the only real impediments to further municipal consolidation in our state are locally elected officials who don’t want to give up power (namely, control of our tax money). Another large source of opposition has been from the police unions who also don’t want to give up their control, entitlements and benefits. Is it rational to have six different police departments for a nine-square-mile area, each with their own cars and equipment and hierarchy (e.g., Long Beach Island with its six towns)? But these individuals can’t really argue with the financial results and level of enhanced services that would accrue to the vast majority of their businesses and residents. Of course, there will be staff reductions, including those from attrition and retirements, but that’s economic reality.
Our elected officials (policy makers) in Trenton must stay the course and maintain the law that imposes a 2 percent cap on annual property tax increases. Our current governor, together with the Democratic-controlled legislature, deserve much credit for having enacted this measure to provide some tax relief to the middle class and poor by reducing their annual crushing property tax burden. Similarly, our state officials must also reauthorize the 2 percent cap on the aggregate increase in base salary per year that can be provided in an interest (binding) arbitration award for police and fire labor contract disputes that is set to sunset at the end of this year. These two measures have greatly helped municipalities control costs and stay within the 2 percent property tax cap. Additionally, our Legislature must simplify the process to achieve consolidation and the resulting cost savings by providing meaningful financial incentives for completing the process. Care must be taken not to insert a poison pill provision into legislation that would discourage or prevent the consolidation from happening.
New Jersey could very readily set up a program modeled after the New York State Municipal Restructuring Fund, which makes payments in a series of phases that encourage towns to actually get through the study and implement the consolidation or shared service. New York’s program has been quite successful in getting towns and school districts moving in this direction. Grants are provided for initial study, project development, small-scale implementation and full-scale implementation. The greater the project savings, the greater the amount of the award. Significant grant money provides mayors and towns with the backbone and tools needed to confront unions and local citizens with a vested interest in the status quo, along with overcoming any objections with a rational response that documents all the benefits and financial savings to the residents of the affected communities. We also need an advisory commission appointed by the governor and working under the state Department of Community Affairs to serve the citizens’ commissions that have been formed to study consolidation, according to former Princeton Township Mayor Chad Goerner, who authored “A Tale of Two Tigers” about Princeton’s historic consolidation. As Gina Genovese, former mayor of Long Hill and current executive director of CourageToConnect NJ, has so aptly stated, “the only way to achieve savings, reduce the number of employees and bring innovative ideas on how to deliver local services more efficiently is through municipal consolidation.” These efforts must also include the consolidation of school districts. A sane and prudent steward of our limited resources can never justify the existence of 600 school districts for 1.37 million students, especially when neighboring New York City has only one school district to administer the operations for its 1.1 million students. From my perspective, municipal and school district consolidation would make New Jersey more affordable for the lower and middle class and more credible to investors determining where to put their capital and the jobs that would follow.
Local and state governments in New Jersey are way too stuck in a crisis management mode. It’s time to be grown-ups and look at our future in a much more constructive and strategic way. Push the reset button now!
(This article is based on a review of a number of reports, books, legislation and studies along with interviews with several legislators, state employees, mayors and other professionals in New York and New Jersey.)
Michael McGuinness is CEO of NAIOP New Jersey and has guided the commercial real estate development association’s progress since he joined the staff in 1997. In addition to overseeing daily operations, programs and staff, McGuinness directs the chapter’s legislative activities and manages the Developers Political Action Committee (DPAC).