Republicans and Democrats both agreed to double the NJ gasoline tax in November. That is why they will not talk about it–until after the elections.
Every week, Warren Buffett’s “Press of Atlantic City” and other daily newspapers falsely blame NJ’s bad roads on our low gasoline tax. They rarely mention that NJ has the highest business, income, sales, property, and electricity taxes in the country.
They say we have no choice. They say that that unless we double the gasoline tax, there will be no money to fix our roads and bridges for the next 30 years. But this is a lie. There is another choice.
But first, it is important to understand that this gasoline tax “crisis” is a small part of a much bigger problem. During the past 30 years, New Jersey politicians, Republicans and Democrats, borrowed money and promised to pay back that money together with public employee pensions in the total amount of $183 billion– $183,000,000,000. They did not make any plan on how they would come up with that money. Roughly $17 billion of this money was borrowed by New Jersey’s “Transportation Trust Fund Authority”.
Every year, New Jersey collects tolls and gasoline taxes of roughly $1.6 billion. This money is more than enough to build and fix every road and bridge in the state. But during the past 30 years, Republicans and Democrats in Trenton “leveraged” that money. They borrowed $17 billion so they could spend billions on politically connected projects that had nothing to do with roads and bridges–like the train between Camden and Trenton. The Authority promised to repay that loan with every dollar of tolls and gasoline tax collected for the next 30 years. That leaves almost no money to fix any road or bridge in NJ for the next years–unless we double the gasoline tax. Or unless we “repudiate”, that is refuse to pay that unconstitutional debt.
However, the same people who “leveraged” the $1.6 billion gasoline tax we already have are already planning to “leverage” future collections of the new tax. They are also promising expensive and unnecessary projects to reward the people who support the tax hike and get them re-elected. Doubling the gasoline tax will do nothing but postpone the day of reckoning.
All this is done in violation of our NJ State Constitution and common sense. Our State Constitution requires a balanced budget every year. It specifically does NOT permit state government to promise to pay any money in future years unless voters approve in a November statewide referendum. Any promise made without such voter approval is NOT legally binding on future Legislatures, and can be “repudiated” or rejected at any time.
This was also done without common sense. New Jersey has roughly three million taxpayers. We already pay some of the highest sales, income, property, business, and gas and electric taxes in the nation. These high taxes give state government roughly $30 billion each year. We cannot afford to pay an additional $183 billion on top of all those other taxes we pay. We would need to double all tax rates for six years, or seize $67,000 of property from each taxpayer.
This ban on state government borrowing without voter approval first became part of our State Constitution in 1844. Because that provision was written some 171 years ago, many judges and politicians claimed it was too old-fashioned and out-dated to enforce.
However, that part of our Constitution was written at a time when state government was as corrupt, irresponsible, and broke as it is today. Back then, massive state borrowing, and “systematic” corruption caused the “Panic of 1837” bank failures followed by a seven year economic depression.
That 1844 State Constitution quickly got NJ state government out of that debt and depression. For the next 120 years, New Jersey state government had no debt, no sales tax, no lottery, few tolls, and no income tax. Yet New Jersey had more prosperity, better roads, better schools, and less crime than most other states.
All that changed starting in 1968, nearly 50 years ago. That was when Republican and Democrat politicians, lawyers, and judges invented and approved loopholes that allowed “independent” government authorities to incur “unenforceable” debts without voter approval. This made a mockery of our State Constitution and caused the explosion in corruption, debt, and taxes that plague us today.
There is one quick, simple, and legal way to undo this damage, We must shut down the flow of easy, borrowed money. We must repudiate–refuse to pay–any debt not approved by voters as required by New Jersey Constitutions since 1844.
If we do that, Republican Governor Christie and the Democratic majorities in the State Senate and Assembly will have all $1.6 billion from our gasoline taxes to immediately start building and fixing every road and bridge in New Jersey.
Article 8, Section 2 of the NJ Constitution clearly states that those debts are not, and cannot be a legal obligation of NJ taxpayers because they were never approved by voters. The New Jersey Supreme Court has repeatedly stated this.
The public offering statements of all New Jersey bonds issued without voter approval clearly warn investors of this risk in big, bold letters. That is why these investors get high, tax-free income from them.
Wall Street bankers, Democrats and Republicans say that refusing to pay debts is a radical and disruptive act. We agree. But is there any other way to stop this lawless conduct by our elected officials and judges?
In 2000, many of us who later formed www.libertyandprosperity.org worked with Bogota mayor Steve Lonegan and StoptheDebt.com. We took his case against unconstitutional debt all the way to the State Supreme Court.
But when it appeared that the court would vote 4-3 to stop state government debt without voter approval, Chief Justice Poritz (appointed by Republican Christine Todd Whitman) delayed the court’s decision until Justice Stein, a conservative Republican, reached mandatory retirement age. When Justice Stein retired, Chief Justice Poritz delayed the case again until Democratic Governor Jim McGreevey took office and appointed “progressive” Democrat Barry Albin. Once that was done, the NJ Supreme Court flipped, and voted 4-3 to permit independent authorities to issued more “unenforceable” debt without voter approval.
That decision caused even more debt, taxes, and corruption. The hotel-motel tax was doubled from 6% to 12%. There were big hikes in tolls, real estate transfer taxes, and the income tax. The sales tax was hiked from 6% to 7%. And yet state government borrowed itself even deeper into debt.
In 2008, Democrat Governor Jon Corzine warned in his State of the State Address that this enormous debt was smothering the state’s economy. However, his “solution” was to put the state even deeper into debt by “monetizing” (selling or borrowing against) the NJ Turnpike, the Garden State Parkway, and Atlantic City Expressway and doubling the tolls.
Corzine was voted out of office and replaced with Republican Chris Christie in 2009. During the past six years, Christie did not say or do anything to reduce the state’s debt. His appointees to state authorities instead borrowed billions more. NJ state government and its “independent” authorities now owe roughly $183 billion of debts and pension obligations that were never approved by voters. (Taxpayers have a legal obligation to pay only the $3 billion of bonds that were approved by voters).
For the past 12 years we did everything we could to persuade our officials to comply with our State Constitution and not borrow money without voter approval. But they ignored us. Now we have no other choice. We must repudiate to save our state.