New Jersey’s Leading Export: Bad Government Policy

By Steven Lonegan

I had the unfortunate opportunity of co-authoring the following article that appeared in Illinois' Peoria Journal-Star last week. It is apparent that those National Governor’s Association meetings are forums for exchanging ideas on how to stick it to taxpayers or creative new ways to circumvent state constitutions. Take New Jersey’s failed school funding mandate.

Class and taxes: How should Illinois fund education? Part II
Lawmakers should learn from New Jersey's mistakes

Sunday, May 13, 2007By Steven Lonegan and Joe Calomino

After Illinois Gov. Rod Blagojevich announced plans for a gross receipts tax, he took to the airwaves with an ad based on a simple, though tragically incorrect, premise. The governor said higher statewide taxes are needed to provide property tax relief.

Many members of his own party oppose the governor's gross receipts tax but they agree with this basic premise. They back a competing plan, long touted by Sen. James Meeks, that would substantially hike the state's income tax on the theory that this would lower property taxes. The reality, however, is that higher statewide taxes for education aid are, absent structural reform, unlikely to lead long term to lower property taxes or to better educational outcomes.

Before Illinois goes down this expensive, misguided path, it should learn from New Jersey, which already has done what we are considering.

In that state, the income tax was enacted for the specific purpose of providing property tax relief through school aid. New Jersey's constitution prohibits using income tax revenue for any other purpose. In practice, this has meant more centralized control and a lot more money being spent, and wasted, in avast, bureaucratic, underperforming education system. New Jersey now has the sixth-highest income tax rate in the country, and still has the highest property taxes in the country, with no real relief in sight.

Illinois should reject the facile notion that state aid for education leads to lower property taxes in the long run. Until meaningful choice is introduced - through vouchers or tax credits, which empower parents to choose schools and force schools to compete for students and funding - there is no incentiveto control costs or improve quality. Schools will, therefore, spend the newly available state funds in addition to - not instead of - local property tax receipts. And this will happen without any better educational outcomes.

We must empower parents, not bureaucrats. Interestingly, Illinois' budget process itself is opaque, with legislators themselves rarely knowing what the state is spending money on, let alone ordinary taxpayers. The budget process must be overhauled for transparency and accountability before taxpayers can entrust the state with any more of their money.

New Jersey has taken control of children's learning out of the hands of parents and teachers and put it into the hands of bureaucrats. That's not a model Illinois should follow. Real improvements do not involve simply throwing money at the existing system. The government has a monopoly on education, and consumers never benefit from a monopoly.

Joe Calomino is the Illinois director of Americans for Prosperity, a Washington, D.C.-based taxpayer advocacy group. Steven Lonegan is the group's New JerseyExecutive director.

Steve Lonegan is the Mayor of Bogota, NJ, and Executive Director of Americans for Prosperity - New Jersey. Americans for Prosperity (AFP) and Americans for Prosperity Foundation (AFP Foundation) are committed to educating citizens about economic policy and mobilizing those citizens as advocates in the public policy process. He is a prolific writer, having been published in newspapers and blogs. He currently has a book in pre-publication on the impact of New Jersey state government on the well being of the taxpayers of the state, where he offers solid and workable solutions.