Vincent Prieto has always stood firmly against any kind of fair, rational aid distribution that would hurt Steve Fulop and Jersey City, as well as annoy the New Jersey Education Association.
�Jack Ciattarelli should worry about where he�s coming from instead of talking about something he doesn�t know anything about,� the speaker said. �There is a difference between �underfunded� and �below adequacy�. The Jersey City School System is $80 million below adequacy, which is far more than Manville.
�It appears he doesn�t quite get it,� Prieto added. �Adequacy should be the bar for everybody. Manville� is below adequacy.�
Never mind that Prieto is openly making the argument that Jersey City must not lose state aid because it is below Adequacy, even though that sub-Adequacy spending is entirely Jersey City's own fault due to undertaxing.
Manville is a district of 1481 students. In 2016-17 it was $6,262,140 below Adequacy (due entirely to the state's underfunding by $8.5 million), or $4228 per student.
Jersey City is a district of 30,860 students. In 2016-17 it was $96,080,360 per student below Adequacy (due entirely to itself undertaxing by $224 million), or $3113 per student.
In that same interview Prieto made an offer to debate Jack Ciattarelli on school funding, �I am willing to debate anyone on this subject, anywhere, anytime,�
For years, Assemblyman Jack Ciattarelli (R-Somerset, Warren, Mercer) has made state aid
reform a priority and is among the prominent legislators calling to redistribute state aid away from the overaided to the underaided.
On the Republican side, Ciattarelli, along with Sen. Mike Doherty, has been among the boldest legislators condemning as totally unjust the privileges that Hoboken and Jersey City enjoy due to their towns' status as Abbott districts. Ciattarelli also condemns how the state allows towns like Jersey City and Asbury Park to conceal their true property wealth behind "PILOT" agreements in which developed land is "invisible" to the state's formula for Equalization Aid.
Yet unlike Mike Doherty (who demands equal aid per student, regardless of district wealth), Ciattarelli DOES favor a progressive aid distribution, in which poorer districts receive more aid than wealthy districts. Unlike Democrats such as Vincent Prieto, Ciattarelli wants that distribution to align with contemporary economic-demographic reality and be more fair to middle-class and working-class towns than is the status quo.
As the gubernatorial campaign gets more attention, Ciattarelli (who is a bona fide PUBLIC SCHOOL PARENT) is doing interviews where he discusses state aid, such as this interview with Jill Horner at Comcast Newsmakers.
It's hard to explain a topic as complex as state aid in only three minutes, but Ciattarelli clearly explains that he thinks the redistribution of state aid is necessary due to NJ's economic reality prohibiting an overall increase in state aid.
The strongest part of Ciattarelli's interview is where he condemns how the owners of an $800,000 house in Hoboken would pay less in property taxes than the owners of a $300,000 house in Parsippany in part because Hoboken gets $7 million more from the state than SFRA says it needs:
"That's not fair. And in my opinion, it violates the Equal Benefits Clause of our State Constitution. No community is supposed to benefit at the expense of another."
When Horner clarifies that Ciattarelli means to end the "hold harmless" provisions within the state aid law, Ciattarelli says "yes" and even uses the term "Adjustment Aid," which Phil Murphy has never done.
Ciattarelli was speaking extemporaneously - it is not literally true that the owner of an $800,000 townhouse in Hoboken would pay less in all-in taxes than the owner of a $300,000 house in Parsippany, but in school taxes alone, Parsippany's tax rate is literally five times Hoboken's - 1.528 versus 0.3155. This means that the owner of a Parsippany house valued at $300,000 and a Hoboken townhouse at $1.5 million would pay equal school taxes.
Ciattarelli also does not have the time to explain how very few poor districts actually get any Adjustment Aid, and of most of those that do, it's very little. If Adjustment Aid were eliminated and redistributed, the biggest gainers would be, in fact, would be poor non-Abbott districts like Atlantic City, Bound Brook, Freehold Boro, Bayonne, Clifton etc.
Ciattarelli's Budget Sketch
Ciattarelli does not talk about increasing education spending overall, citing forecasts for persistent slow growth, a claim that economists at Rutgers, including James Hughes, agree with.
Yet, Ciattarelli has ideas that would be highly beneficial to the state's overall budgetary condition and that could free up more money for school funding after the state reaches the full actuarial payments for pensions.
"It's busting out budget...It's causing a crowding out effect of epic proportions."
And continues:
One of the reasons the teachers fund isn�t fully funded. For every single retiree from the state and from school districts, we�re paying for their Medicare Gap insurance and their Medicare Part B for the rest of their lives, after they retire. It doesn�t work and it needs to be reformed.
[We're doing this] in a very reasonable and fair way� If your public pension plus your Social Security is more than $50,000. You�re going to be on your own for Medicare Gap Insurance and Medicare Part B. That�s for current retirees, not just future retirees.
"At that time we estimated the state could save over $2 billion in health benefits spending annually and use those savings to preserve pension benefits earned to date," the commission said in its report. "This report confirms the necessary savings can be achieved. Indeed, the new analysis shows this can be done with less impact to employees and retirees than envisioned in our 2015 report."
Those savings would be recycled to cover pension costs.
Jill Horner asks about current retirees can�t be cut. "Can changes actually be made?"
Ciattarelli uses a moral, economic argument in favor of cutting health benefits for current retirees:
"There's a reasonable argument to be made that things have changed.. These numbers just don't work anymore. My plan is very sympathetic to those who retired years ago and whose pension plus Social Security is less than $50,000 .... [For people making more than $50,000 per year] it's only fair to ask them to pay for their own [health insurance] so we can save their pension."
But Ciattarelli's plan would be perfectly legal because the 1997 law that made pension benefits a contractual right and made base pensions unimpairable clearly excluded health care benefits. It is basically undisputed that in New Jersey health benefits do not have the same legal protections that base pensions have. Even lawyer Charles Ouslander, who said that COLAs could not be cut, conceded that health insurance could be. In fact, Ouslander argued that since health insurance was specifically excluded from protection, it meant, ipso facto, that COLAs were protected.
'[Benefits program]' It's a very broad, encompassing phrase,.. They excluded only one thing in the universe of benefits: health care,� Ouslander said. �The very fact that they chose to exclude health care, which is their right, shows you how broad the phrase �benefits program� is.�
It's rarely pointed out, but NJ's state unfunded health care liability is actually LARGER than the unfunded liability for pensions themselves.
Original Source, Pew Fiscal 50, Proximate Source: http://www.njspotlight.com/stories/16/05/18/not-a-pretty-picture-new-jersey-third-most-indebted-state-in-the-union/
Cutting health insurance spending for workers and retirees, or reining in its growth, is critical for New Jersey because this expense is so rapidly increasing for us.
On top of the savings from health care reform, Ciattarelli also supports tax increases on high-income New Jerseyans - starting at $750,000 per year. He has not spelled out what the new brackets would be, but the new revenue that would come in from raising the top income tax bracket to 10.75% would bring in $600 million.
May 2017 Update: Jack Ciattarelli has clarified/emphasized that he intends to lower other taxes, so there would be no net increase in state revenue even while there are increase in rates.
Ciattarelli also favors legalizing marijuana, although it is unclear if he wants an excise tax or not.
The major tax cut Ciattarelli is proposing is a gradual elimination of the Corporation Business Tax over ten years, a move that would cost the state $2.471 billion if it were in effect for FY2017. He also supports some of the smaller tax cut deals that were made as part of the Christie-legislature tax cut package.
(NJ's corporate tax has been producing less and less revenue over the last few years, so the long-term annual loss might be less than $2.471 billion.). Ciattarelli Versus Murphy: Realism Versus Fantasy; Middle-Class Towns Versus the Gold Coast
The difference on state aid between Ciattarelli and Murphy isn't only on policy specifics, in which Ciattarelli is for redistribution and Murphy is opposed, but in prioritization.
Ciattarelli speaks about state aid often, and with passion. Murphy almost never addresses it at all, even when there is a consensus within the Democratic Party. After Chris Christie came out with his so-called "Fairness Formula," Phil Murphy took an entire week to say anything about it; after the State Auditor came out with a report outlining the unfairness of NJ's state aid distribution Murphy SAID NOTHING.
Although some of the tax cuts Ciattarelli favors would have a negative effect on the budget, in terms of new spending, he is much more restrained than Murphy is, so the contrast between Ciattarelli and Phil Murphy on state aid and the budget in general is very clear.
Ciattarelli is clear-eyed enough to see that New Jersey's health benefits are out-of-line with even the rest of the public sector, let alone the private sector, and is an area for savings. Murphy, has ruled out any new reforms to health care and publicly told the NJEA that he would veto a hypothetical renewal of Chapter 78 (which temporarily made health care cost-sharing for school districts and school employees non-negotiable.)
Murphy's opposition to health care reform is in line with his opposition/indifference to any spending cuts whatsoever, as he said to Tom Moran.
(Murphy has repeatedly said he will cut corporate tax incentives, but this is unilateral disarmament in an interstate tax incentive war, and I can't see Murphy following through. If he does follow through, the gains from not giving out tax subsidies might be outweighed by the losses of corporations not expanding in NJ or leaving NJ altogether. Murphy will also be freezing redevelopment in NJ's struggling cities too, since Camden, Paterson, Newark etc are dependent on tax-incentive facilitated growth.)
On state aid, not just the budget itself, the differences are very stark. In this Larry Mendte interview when Murphy was asked about state aid redistribution he was evasive and gave a flat "I'll implement that formula" answer.
"Implementing the formula" is better than what Christie has done since 2013, but Murphy has never said how much this would cost, let alone where he would get the money from. (which would be $2 billion per year (without redistribution)).
Murphy has never shown any anger at the injustice of how unfair NJ's state aid distribution is to working class and poor non-Abbotts, even though his gubernatorial campaign was originally headquartered in severely underaided Red Bank Boro.
More recently Murphy has said the state aid formula needs to be "tweaked," but we have no idea what he means by that.
Phil Murphy is accepting support from everywhere he can get it, but his indifference to state aid redistribution comes amidst endorsements from the mayors of mega-aid hoarders such as Dawn Zimmer of Hoboken, Steve Fulop of Jersey City, and John Moor of Asbury Park (who is not a Democrat). Murphy's frequent condemnations of state tax breaks, but silence on local tax breaks (ie, PILOTs) could be due to the fact that Hoboken, Jersey City, and Newark award PILOTs constantly and the urban-specific nature of NJ's state corporate tax incentives are less well-known.
Zimmer and Fulop purport to be progressive (even though Zimmer endorsed Christie in 2013, Fulop accepted a $1 million donation from the CEO of a notorious hospital price gouger, and both lavishly give out unneeded tax abatements), but their progressivism and morality stop and their municipal borders. John Moor of Asbury Park, is a fiscal conservative, but his fiscal conservativism is really forcing the rest of New Jersey to pay for services that Asbury Park should be able to pay for by itself.
Murphy also has the enthusiastic backing of the NJEA, which is also not in favor of state aid reform, except in that they want some change to charter school funding that could force the state to double-fund charter school students.
When it comes to state aid reform and fairness for NJ's tax-burdened working class and poor communities, a Republican could actually be the best choice.
Sept 28th, 2016, after a two hour meeting on topics unknown, Steve Fulop endorsed Phil Murphy.
What is it about Steve Fulop that prevents him from treating state aid as a serious issue?
I don't like running negative posts about Steve Fulop, but time and time again, whenever Fulop has been questioned about the fairness of Jersey City's state aid he has either ignored the question or insulted the person asking the question.
Ciattarelli Asks, Fulop Insults (Again)
Lately, Steve Fulop has been bragging about how Jersey City has been able to go three years without increasing taxes while still dramatically increasing spending. Since this is the exact opposite of what happens in most other New Jersey towns, Fulop's been boasting about it and implying that he could perform the same increase spending/cut taxes magic for the rest of New Jersey if he became governor.
�Without increasing taxes, we have been able to hire 150 additional police officers, increase the city�s open space by 10%, implement the state�s first paid sick leave policy, increase minimum wage for all city employees, and construct housing for homeless veterans. We have also been able to lead the state in the number of construction starts, and have created more jobs than any other large city in New Jersey.�
This isn't Fulop's only recent in-your-face bragging about Jersey City becoming an "economic powerhouse."
After S&P increased Jersey City's credit rating Fulop sent out a similar press release where he boasted of Jersey City's economy and took all the credit for it:
Driven by strong local leadership, Jersey City has become an economic powerhouse. S&P�s report notes per-capita effective buying power of more than 120% of the national level and a total property value for the city that�s risen nearly 10% over the past year alone. With 450 new small businesses opening, more than 6,000 jobs created, and median household income and property values on the rise, Jersey City�s middle class is stronger than ever � and growing....
This boasting was too much for Assemblyman Jack Ciattarelli, who used Fulop's boasting about Jersey City's economic strength as an opportunity to question the fairness of Jersey City's state education aid and say, yet again, that Jersey City epitomized the need to redistribute state aid.
�What the mayor never boasts, despite Jersey City�s economic fortunes, is weaning his school district off a state subsidy paid for by the taxpayers of New Jersey.
�Of Jersey City�s annual $665 million school budget, $420 $490 million million or 63 74 percent is paid for by citizens around the state � citizens who pay exorbitantly high property taxes because they�re subsidizing Jersey City�s school system. After all subsidies, Jersey City pays less than 20 cents on the dollar for its schools.
�The mayor�s boasts, which only add insult to injury to taxpayers across the state, call attention to just how terribly flawed and blatantly unfair the current distribution of state school aid is. And it is exactly the reason we desperately need school funding reforms that are fair to taxpayers across the state.� [edits are mine]
�It�s easy for local policy makers to achieve tax reductions when the state subsidizes their services,� said the Assemblyman. �The fact is, fiscally speaking, we�re experiencing a very painful squeeze or crowding out effect with our state budget. Overly generous property tax abatements are one of the reasons why. These abatement are not only an exploitation of our state school funding formula, they are an injustice to property owners in places like Jersey City. In trying to solve the state�s problems, we need policy makers at all levels of government to take these issues seriously. In that respect, the statement issued by the Fulop camp is an embarrassment and a disservice � a disservice to the taxpayers of this state who fund Fulop�s school system.�
Indeed.
While the median district in New Jersey gets $550 less per student than SFRA says it needs, Jersey City gets $4,272 per student more per student from the state than SFRA says it needs. Because of massive state aid, Jersey City only pays for 19% of the cost of its K-12 public schools.
That $4,272 per student is $130 million total in excess money that allows Jersey City to have a minimal school tax rate of 0.5, meaning someone with a $1 million property (if the assessment were accurate) would only pay $5,000 a year in school taxes. The low school taxes enable Jersey Cityans to have spending power than people in most of the rest of the state don't have.
And because Jersey City's school taxes are so low, the municipal government can cannibalize its school system's tax base through PILOTing since property in Jersey City pays so little in school taxes anyway.
And because Jersey City is an Abbott district, all parents there, no matter how high their income is, get two-years of "free" state-funded Pre-K for their children. This $70 million a year subsidy injects spending power into Jersey City's economy that most other NJ towns don't get.
Ciattarelli has also criticized Fulop and Jersey City for granting tax abatements profusely. The granting of PILOTs also makes Jersey City's tax base appear smaller than it actually is and thereby sustains the elevated school aid level:
�This [Jersey City municipal report] reveals the tip of an iceberg that is vast and mostly underwater. Short-term property tax abatements, under very special circumstances, may have their place. What�s happening in Jersey City and elsewhere is crony capitalism at its worst and an injustice to all New Jersey taxpayers.
�Jersey City can afford to siphon property tax revenues from their schools because the state provides such large subsidies. In Jersey City, the state contributes 60 74 percent of its [K-12] school funding. This subsidy is so overly generous that local taxpayers pay only 15 19 cents on the dollar for their [K-12] schools.� [my edits]
It is new PILOTed buildings being built and putting more money into the municipal government that is the major reason Steve Fulop can increase spending and keep taxes flat. Brigid D'Souza of Civic Parent has demonstrated this repeatedly.
After these latest criticisms of Jersey City's state aid Steve Fulop has been flippant and attacked Jack Ciattarelli.
First, Fulop rubbed Jersey City's flat taxes and economic growth in the rest of the state's face
�Jersey City had a tax reduction last year and just today we will adopt a budget without a tax increase. Jersey City has led the state in job creation just as we had a credit upgrade last year.
Then Fulop insulted Jack Ciattarelli:
Nevertheless, we are excited that after 25 years in elected office, Ciattarelli finally decided to speak up on an issue. We look forward to hearing about his next policy stance in the year 2040 as directed by a new generation of Republican officials.
And after the latest criticism, City spokeswoman Jennifer Morrill said Ciattrelli should "do his homework and look in the mirror."
Fulop then blamed Jack Ciattarelli for something that happened decades before Ciattarelli entered the legislature and has nothing to do with state aid anyway.
"Jersey City schools have been under state control for the last 30 years of which he has been part of the Trenton establishment"
The Fulop counterattack is preposterous. It is Steve Fulop and Jersey City who "haven't done their homework."
First, Jack Ciattarelli has been in the Assembly since 2011, so that's 5.5 years, not 30.
Second, state aid and state control of the Jersey City Public Schools have zero to do with each other. Jersey City gets a lot of state aid because it was poor in the 1980s and the NJ Supreme Court forced the state to fund the Jersey City Public Schools ABOVE the level of DFG I and J districts. Jersey City was put under state control because of systematic corruption and patronage in the administration of the schools.
Bridgeton gets a huge amount of state aid, but Bridgeton isn't under state control because it hasn't had any scandals; Lakewood gets relatively little state aid, but it is under state monitoring because it has had scandals.
Get it?? And now that Jersey City is an "economic powerhouse," there is no justification for it to only carry 19% of its K-12 education system. As Jersey City Councilman Michael Yun has admitted, Jersey City's state aid "doesn't make sense."
Corporate Tax Subsidies: Jersey City's Other Megasubsidy
Yet Ciattarelli actually understates his case against Jersey City because he misses the other half of New Jersey's oversubsidization of Jersey City, which are tax subsidies for corporations who relocate to Jersey City or for real estate development there.
Although New Jersey has a large tax subsidy program, most towns in the state is not qualifying locations for (re)location subsidies because the towns are not considered "urban transit hubs," "distressed cities," or the handful of other qualifications for corporate subsidization.
You don't hear about it often, but Chris Christie has done a lot maybe too much for Jersey City.
Under the Grow NJ and Economic Development & Growth tax-incentive programs, Jersey City is considered both a "Distressed City" and an "Urban Transit Hub."
Because Jersey City meets two of the major qualifications for subsidies, businesses qualify for tax breaks there they couldn't get elsewhere. These state subsidies allow Jersey City to outcompete the rest of New Jersey because of state policy not because Jersey City has a fantastic mayor. The Goya relocation illustrates the unfairness of the tax subsidy situation to other towns in New Jersey.
Goya had been headquartered in Secaucus since 1974, but after it got an offer for tax subsidies from New York State, it used the threat of relocation to extract tax subsidies from New Jersey.
Goya's New HQ/warehouse in JC got an $82 million "Urban Transit Hub" Tax Credit Even Though it isn't realistically transit-accessible.
To keep Goya in New Jersey, in 2012 the Economic Development Authority in 2012 approved $81.9 million in tax credits to stay in New Jersey and build a headquarters on the western edge of Jersey City. The tax credits were through the "Urban Transit Hub" program, even though the Goya site is nowhere near viable public transit and contains at least 7 acres of parking. (Jersey City also threw in a $8 million tax abatement.)
Although Goya's new headquarters was literally just one mile from its old headquarters, the Jersey City location counted as a transit-hub and the Secaucus location didn't.
I accept that the state has to give out corporate tax subsidies to be competitive, but Steve Fulop needs to give the rest of New Jersey credit for Jersey City's growth.
Note: the subsidy awards are paid out over a number of years upon certain investment benchmarks being reached; there are often retained jobs to go along with new jobs. I have not listed retained jobs, nor construction jobs.
�Time and again we�ve heard from New Jersey conservatives that government must take the low road of austerity, but Jersey City�s success shows that progressive policies and fiscal responsibility go hand in hand,� said Analilia Mejia, executive director of New Jersey Working Families.
But Jersey City isn't this proof because its progressivism and spending increases haven't required tax increases. Fulop has been able to have progressivism without paying for it.
Through massive state subsidies, Jersey City can have progressivism without increasing its own taxes because other taxpayers already pay for so much its services. Jersey City can attract businesses galore because a business in Jersey City would pay lower state taxes and lower property taxes than it would elsewhere in New Jersey.
Hey, Steve Fulop has been dealt a strong hand in Jersey City, but rhetorically, he can't have it both ways: he can't brag about Jersey City becoming an "economic powerhouse" and still support Jersey City's $420 million in K-12 aid.
I don't understand what Steve Fulop is thinking politically. How fatal could it be for him as mayor of Jersey City to admit that Jersey City gets more state aid than it economically and morally is entitled to? As gubernatorial candidate, how can Steve Fulop not admit that Jersey City gets more than its fair share?
Fulop owes it to New Jersey to treat the issue with respect. He owes Jack Ciattarelli an apology too.
At a certain point, the mayors of other towns where development wouldn't be subsidized will feel insulted that Steve Fulop doesn't acknowledge that the design of NJ's corporate subsidy program is tilted in favor of Jersey City and that Jersey City's growth is not simply amazing municipal government. In the meantime, can't Steve Fulop say "thanks"?
Between Fulop's opposition to a Jersey City reval and flippancy on state aid, I see him as politically tone-deaf. He's young. He has years of political viability ahead of him. But I see him less and less as New Jersey's next governor.
