Assemblyman Jay Webber is proposing legislation that would lower the cost of health insurance in New Jersey and reduce the number of uninsured without requiring a subsidy from taxpayers.

We’ve supported similar ideas in the past and suggest our lawmakers in Trenton give serious consideration to Webber’s New Jersey Health-care Choice Act. It’s a model for health-care reform that we desperately need and can afford.

We’re posting Webber’s piece from the Daily Record that explains his proposal. We hope you will contact your representatives and tell them you want access to quality, affordable health-care insurance through the passage of the New Jersey Health-care Choice Act.

Opening Health-care Market Will Lower Costs
By Jay Webber

New Jersey Democrats recently unveiled the latest in a long line of big-ticket spending items: a universal health insurance mandate for New Jersey. The plan would require every New Jerseyan to buy a health insurance policy, and if one cannot afford a policy, the state would subsidize its cost. The initial annual price tag for this expansion of government is $1.7 billion. Gov. Jon S. Corzine himself has acknowledged that taxpayers simply cannot afford the proposal.

And when was the last time we saw a government program come in under budget in New Jersey? Audits already have found wasteful spending, poor oversight and outright fraud in the state's existing health-care program.

Our state needs health-care reform to be sure, but there is a better alternative to that taxpayer-funded, bureaucracy-based proposal. My proposed legislation, the New Jersey Health-care Choice Act, would instantly lower the cost of health insurance in New Jersey, slash the number of uninsured and require no government subsidy.

That reform is not another massive government program -- New Jersey's politicians got us in the health insurance mess we're in. (We have 1.2 million residents without health insurance at any one time.) In fact, for our politicians' past attempts at health-care "reform," one commentator called New Jersey "the 'poster child' for how to destroy a health insurance market."

How did the state fail so spectacularly? New Jersey law permits individuals to purchase only high-end health insurance policies subject to our state's cumbersome and expensive regulatory requirements, which are arguably the most burdensome in the nation. Micromanaging lawmakers have locked us into a Hobson's choice of purchasing expensive, gold-plated, one-size-fits-all health coverage, or living with no coverage at all.

The government's hyper-regulation of the health insurance market results in our paying as much as three times more for coverage than our neighbors in states such as Pennsylvania. The higher costs our regulatory scheme places on New Jerseyans are striking. For example, a single female, 29, living in Montville will pay $2,040 annually for a bare-bones health policy. Across the Delaware River in nearby Lansdale, Pa., the same individual would pay $810 for basic health coverage. A family of four living in Parsippany would pay $7,835 annually for low-end coverage; the same family would pay $3,172 in Blue Bell, Pa.

My act would permit New Jerseyans to access lower prices available in other states by doing something very simple: buy health insurance from insurers approved to sell insurance in other states. Individuals, families and small employers would have the right to cross state lines and look for health insurance policies anywhere in the country. They then could purchase the policies that best suit their needs and budgets. Nothing would force New Jerseyans into buying insurance outside New Jersey -- any consumer still would be free to purchase high-end New Jersey policies.

But many will not continue to shop only in the Garden State. Policies in our neighboring states are not inferior to those sold here; they are just less encumbered by government regulation. Those policies therefore span a much greater range of affordability. Think of it this way: while New Jersey requires everyone who has health coverage to own "Cadillac" policies, other states permit their residents to buy "Honda," "Chevy," or "Cadillac" policies. That increased accessibility encourages more of the uninsured to buy health insurance, greatly reducing the problem of the uninsured -- without costing taxpayers a dime.

Health-care choice would be especially helpful for those lacking health insurance because they are out of work temporarily. (An estimated 45 percent of our uninsured lack insurance for six months or less, most because they are between jobs.) Opening our market to out-of-state insurers will lower the cost of health coverage for those families by as much as 60 percent or more and allow them to maintain health coverage during a tough time without government assistance. Costs also will plummet for small employers, who often would provide health coverage for their employees, but cannot afford it.

Liberating state health insurance markets is a developing trend across the country. Legislators in Maine, Wisconsin, Georgia, Colorado and California are in various stages of crafting proposals to permit their citizens to go out of state to buy insurance. A bill pending in the U.S. House would accomplish this for everyone in the country.

We live in a state that likes to consider itself "progressive" and "cutting edge." If we are as ahead of the curve as we believe ourselves to be, then let's be the first to open our health insurance market to genuine competition from outside the state. By loosening New Jersey government's iron-fisted grip on our citizens' health insurance choices, we can make progress on an important social goal and save taxpayers from a mammoth and counterproductive health insurance mandate we cannot afford.

Has anyone else noticed a pattern of “progressive” Democrats venting their frustrations on small-town people?

Gov. Jon Corzine has targeted small towns with a grossly unfair school aid funding formula and the reduction or total elimination of municipal aid. Corzine claims the state of New Jersey just can’t afford small towns any more.

Presidential candidate Barack Obama tells his San Francisco supporters that small-town people in Pennsylvania are “bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment”.

Governor Jon Corzine’s proposed 2009 New Jersey state budget calls for cuts to municipal property tax relief based on population.

Municipalities with populations of less than 5,000 would receive no municipal property tax relief from the state. Those with populations greater than 5,000 but less than 10,000 would have municipal aid cut in half. The remaining municipalities with populations greater than 10,000 would have their state aid reduced to the amounts received in 2006-07 budget.

Department of Community Affairs Commissioner Joseph Doria said. "The incentives are we have the grants for shared services and working toward consolidation. That's the carrot. The stick is not receiving the aid." The Governor proposes $32 million for this purpose.

A fair way to allocate municipal property tax relief would be to grant the aid on a per person basis and let the chips fall where they may. The new aid formula takes inequity to a new level. Many of the numbers are jaw dropping, even by New Jersey standards.

Update: We have posted the municipal aid information for every town, including actual state aid for 2007, 2008 and proposed 2009 aid based on the new guidelines. You’ll also be able to compare municipal aid per person for every municipality.

Click on the links below to view the information for each County.

Atlantic County
Bergen County
Burlington County
Camden County
Cape May County
Cumberland County
Essex County
Gloucester County
Hudson County
Hunterdon County
Mercer County
Middlesex County
Monmouth County
Morris County
Ocean County
Passaic County
Salem County
Somerset County
Sussex County
Union County
Warren County

New Jersey state municipal aid certifications for 2007 and 2008 may be reviewed here. The 2009 state municipal aid proposal may be found here.

The text of Governor Jon Corzine’s budget address may be read here and a summary of his proposed New Jersey state budget for 2009 may be reviewed here.

The following is a comparison of Governor Corzine’s 2008 vs. 2009 state budget by revenue source and expenditure by budget area.

Data Source: New Jersey Department of the Treasury – Office of Management and Budget
2008 New Jersey State Budget
2009 New Jersey State Budget

Update: The 2009 budget proposes $334 million be set aside as a "long-term obligations and capital expenditure fund". In other words, Governor Corzine is proposing no reduction in state spending as compared to his 2008 budget proposal. However, the Governor’s 2009 budget proposal is $177.9 million leas than 2008’s adjusted appropriations of $33,470,900,000.

In our previous post we provided a high-level overview of the spending side of New Jersey’s state budget. Today, we’ll take a look at the revenue side and again compare the changes from 1998 to 2008

This year, the state’s income tax will generate $12.4 billion - more than all other state taxes, fees and revenue sources combined, with the exception of the state’s sales tax. The sales tax will bring in $8.8 billion and everything else, a total of $10.8 billion. In total, state revenue has increased by 86 percent or $14.8 billion since 1998.

New Jersey’s actual revenue for 1998, $17.2 billion, was greater than budgeted spending, $16.4 billion. The reverse was true for 2008, where budgeted spending, $33.3 billion, was greater than reoccurring budgeted revenue, $32 billion.

New Jersey State Budget
Revenue Sources
1998 vs 2008
(In Thousands)

Click to Enlarge

Revenue from the state’s income tax has increased 121 percent since 1998 and now comprises 39 percent of total state revenue. That’s up significantly from1998 when the income tax paid for about one-third of state spending.

Increasingly, New Jersey relies on families earning a $100,000 or more to support the state’s spending. As Governor Jon Corzine explained in his 2008 Budget in Brief, 85 percent of the state’s income tax revenue is paid by 20 percent of the state’s income tax paying households. Income tax revenue for 2008 is projected to be $6.8 billion more than in 1998.

Sales tax revenue has increased 84 percent, and supports about 28 percent of the state’s budget, as it did in1998. In the fall of 2006, the state’s sales tax was increased from 6% to 7% and expanded to cover additional goods and services. For 2008, sales tax revenue is projected to generate $1.9 billion more revenue than in 2006 and $4 billion more than 1998.

In total, all other taxes, fees and state revenue sources have increased by 58 percent or $4 billion, and now support just 34 percent of the state’s budget, as compared to 40 percent in 1998.

New Jersey State Budget
Revenue Sources By Category
1998 vs 2008
(In thousands)

Click to Enlarge

The corporation and bank tax is New Jersey’s third largest revenue source. Revenue from this tax has increased by 82 percent in the ten year period, although projected to take in less for 2008 than its peak of $3 billion in 2006. This tax category still supports about 7.5 percent of state spending as it did in 1998.

The inheritance tax ($602 million) is now the state’s fourth largest tax, fifth, if you count the Lottery ($848 million) as a tax. The motor fuels tax ($580 million) has fallen to sixth place. The insurance premium tax ($503 million) rounds out the list of state taxes generating more than a half-billion dollars annually.

Of New Jersey’s other major revenue sources, the realty transfer tax ($380 million) was the largest percent gainer, increasing 500 percent since 1998. On the losing side, motor vehicle fees ($278 million) are down 25 percent and cigarette tax revenue ($252 million) is down 23 percent. While revenue is down, the cigarette tax has increased from 40 cents a pack to $2.58 during this ten year period.

The state’s take from all other taxes, fees and revenue sources has increased 82 percent since 1998 and will generate a total of $4.3 billion in 2008.

Revenue source as a percent of the state’s total is shown in the chart below. Only two taxes carry a heavier load in 2008 than in 1998 – the income tax, shouldering 6 percent more of the budget and the reality transfer tax, 0.6 percent more.

New Jersey State Budget
Revenue Source As A Percent Of Total
1998 vs 2008
(In thousands)

Click to Enlarge

Data Sources: New Jersey Department of the Treasury – Office of Management and Budget and State of New Jersey Division of Taxation

Governor Jon Corzine has been conducting town hall meetings across the state to educate New Jersey residents about the state’s financial crisis and his $38 billion asset monetization plan. He uses graphs and charts in his Power Point presentation to explain his side of the story and to convince people that the creation of a Public Benefit Corporation and hefty toll road increases are the answers to New Jersey’s financial problems.

It’s now time for someone to begin an education tour of New Jersey’s 21 counties with the real story. (Republican leaders in Trenton should consider taking on this project.). As concerned taxpayers, we’ll help, starting with our first in a series of facts and charts.

Source for data: New Jersey Department of the Treasury – Office of Management and Budget

New Jersey’s state budget has more than doubled over the past ten years, increasing by $16.9 billion. However, state operations consumes a smaller portion of the budget with each passing year - 30.8 percent in 1998, 21.3 percent in 2002 and only 19.7 percent by 2008.

Investment in capital construction is slightly higher in 2008 at 3.8 percent than 1998’s 3.1 percent, although down from the 5.1 percent share of the budget for 2002.

Contrary to popular belief, the state's debt service has been taking a declining share of the budget with 3 percent in 1998, 2.2 percent in 2002 and 1.3 percent in 2008.

State aid has been level at about 39 percent during the ten-year period, while grants in aid have grown from 23.3% of the budget in 1998, to 31.9 for 2002 and to 35.9 percent by 2008.

State debt is greater than any taxpayer would like to see, but it’s the expanding share of grants in aid that’s putting the squeeze on New Jersey’s ability to invest in vital infrastructure with current revenue streams.

Grants in aid have grown to consume 12.6 percent more of a pie that’s doubled in size in just 10 years. Conversely, the portion now consumed by state operations is 11.1 percent less than in 1998.

State Operations consists of services provided and programs operated directly by State government. The largest component in this spending category is for salary and benefits of State employees.

Debt Service payments represent the interest and principal on capital projects funded through the sale of general obligation bonds.

Capital Construction represents “pay-as-you-go” allocations for construction and other infrastructure items.

State Aid consists of payments to or on behalf of counties, municipalities, and school districts. This aid transfers the expenditures of local governments to state taxpayers. The largest component in this spending category is School aid. In addition, his category includes the Consolidated Municipal Property Tax Relief program; the Municipal Block Grant program, and other forms of municipal aid. It also includes funding for county colleges, local public assistance and county psychiatric hospital costs.

Grants-in-Aid are appropriations for programs and services provided to residents on behalf of the State by a third party provider or grants made directly to individuals based on assorted program eligibility criteria. The Medicaid program, Homestead Property Tax Rebates, payments for State inmates housed in county jails, public transportation aid, the Tuition Assistance Grant Program and funding for State Colleges and Universities fall into this spending category.

New Jersey State Budget By Category

FY 1998-FY2008

Have You Heard About the $1 billion State Tax Cut?

Governor Jon Corzine has pledged not to spend more next year than in 2008 if his “financial restructuring plan” is approved. With all the hullabaloo about the toll road increases, we must have missed the coverage about the nearly $1 billion tax cut we’ll be getting next year.

Below are the state’s revenue projections for this year and for 2009 from New Jersey’s 2008 budget. As you can see, the state will take in $948 million more revenue for 2009 than 2008. Since Corzine promises not to spend more than last year, taxpayers are due a big tax cut in 2009. Why haven’t we heard more about this?

New Jersey State Revenue Projections
Fiscal Years 2008 and 2009
(In millions)
Click to Enlarge