This Deal Was Done Wrong

The following is from Congressman Rush Holt's newsletter:

As Congress lurches from self-imposed crisis to self-imposed crisis – most recently in the debacle regarding the fiscal cliff – it is easy to understand why members of the public shake their heads in disgust at the inability of the government to do the important work of America to help Americans.

Of course, for long-term economic stability and growth, we must have greater balance between revenue and expenditures. That means Congress should pay close attention day to day, month to month, to revenue and to spending and should bring them more into line. That should always be true, though, not just whenever someone invokes a crisis.

And say what you will, there was no good reason for a crisis at the end of 2012. The “cliff” deadline was artificial, the result of a deal agreed to in August 2011 when some Congressional members who dislike government tried to prevent the U.S. from paying our bills, and the White House and Congressional leaders allowed them to hold the government hostage and then to impose automatic spending cuts and tax increases in the most thoughtless, ham-handed way.

As I see it, the big problem with the fiscal package that Congress passed earlier this week is that it was debated and negotiated on the terms set by the hostage-takers in 2011. The negotiators came up with a solution, barely acceptable, but it was a solution to the wrong problem. Instead of talking about what our government needs to do put people to work; to reduce unemployment; to educate Americans; to rebuild our roads and bridges; to stimulate vibrant and innovative industry; to tend to the nourishment, the housing, the cultural well-being of all Americans – and then doing those things – Congress and Administration spent several months neglecting all the important work in front of us. Instead they focused on such things as whether the marginal tax rate should be 36 percent or 39.6 percent for income earned above $250,000 or $450,000. The sad irony is that meeting the needs of Americans and doing things to bring about growth would do more to remove the debt problem and to make the U.S. the kind of country we can be proud of than all the tinkering with marginal tax rates.

This deal was done wrong. The postponed crisis will reappear with the debt crisis and sequestration and tax increases in March, and the President will be in a weaker, not stronger, position to deal with the crisis then.

However, it seemed to me that if the deal failed to get the approval of Congress, we would not get back to what we should be doing. Because I did not want to make the situation worse by weakening the President's hand and weakening the economy by allowing the government, so to speak, to fall off the cliff, I voted with great reluctance in favor of the McConnell-Biden deal, and Congress passed it earlier this week.

Nine Weeks of Inaction

It has now been about nine weeks since Hurricane Sandy brought winds and tidal surges. In Central New Jersey, in Connecticut, in New York, people are hurting. Towns have exhausted their emergency funds and exhausted their borrowing capacity.

In other disasters, such as the disaster associated with Katrina or with wildfires or with any number of other natural disasters, Congress has acted, and aid has been provided quickly. And yet earlier this week, the 112th Congress adjourned before passing a much-needed disaster relief package. The Senate had already acted to pass a well-constructed aid package bill. The only reason that this bill is not law today is that House leadership refused to act.

There is, at least, a light at the end of the tunnel. The Speaker allowed a small flod insurance bill to pass on Friday, to be supplemented by a larger aid package in the weeks ahead. Yet the supplemental bill must now go through the Senate, which won't bring it up until after January 21 – and the same radicals in the House who refused to allow the earlier Senate package to come to a vote may yet rebel against the new deal.

This delay has gone on too long already. To say “you’re on your own” to victims of a natural disaster breaks our trust, and it hurts people.

The Oath of Office

On Thursday morning, I was honored to take the oath of office as a member of the 113th Congress.

As is only too clear to anyone who has read this far in this message, the past few weeks – indeed, the past few years – have been a time of great challenges for America. So it is worth pausing to reflect on the oath that all members of Congress take at the beginning of a new Congress:

“I do solemnly swear that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.”

As Jim Leach, a former Republican Congressman and the current chairman of the National Endowment for the Humanities, noted in remarks at my oath-of-office ceremony, it is notable that American legislators affirm their loyalty to the Constitution, a set of principles, not a person, and they mean it. Of course, other nations have constitutions, but I don't know of any that is the touchstone that ours is.

Most of the members of the U.S. House of Representatives took the oath of office on Thursday. Although our differences are stark, I am hopeful that our shared loyalty to the Constitution and to what it represents will be a point of commonality that brings us together in these trying times.

Sincerely,

Rush Holt

Middletown School Budget Approved

Both the Independent and Middletown Patch have articles posted online  about the new budget for the Middletown school system.

On February 29th, a special meeting of the Middletown Board of Education(BOE) took place to introduce and propose the 2012-2013 Tentative School Budget.

According to both articles the school budget will increase by .98%, which would equate to roughly $2.6 million or about $46 a year on median homes assessed at $376,800.

In keeping this years tax rate increase so low, the BOE has the $851,000 increase in state aid to thank. Otherwise the tax increase would have been larger or more services or teaching positions may have need to be eliminated in order to stay below the state mandated 2% budget cap.

Instead, according to both the Independent and Middletown Patch, the BOE is using the increase in state aid to offset class size with additional teachers and another student services supervisor and provide for numerous curricular enhancements, including academic labs for high school students, which seems on the surface to be good things. But of course, like anything else, the devil is in the details and people should read through the budget before forming opinions, which at this point I have not done as of yet, but intend to do so.

In the mean time, on the surface this budget seems pretty good, but how it will effect the school system and the Township moving forward in the use of deferred taxes (which no one wants to address) will be interesting.

Many (not all) municipalities in NJ defer school taxes to help offset their own tax rate increases and at some point must return those taxes back to the school system. Some municipalities return the money to the local school systems promptly while others such as Middletown do not. Middletown currently owes its BOE over $60M in deferred taxes, the ramifications of which could be felt if the BOE needs to exceed the State's 2% cap mandate in the future.

Corruption Behind the $4 Million Tab for Tax Appeals in Middletown

By guest blogger Linda Baum

I’m sure we all recall the big jump in our property assessments on 2009 tax bills. That was the result of a town-wide revaluation done at the height of the market in 2008 -- a huge mistake. It guaranteed there would be an onslaught of appeals and the drastic measures we saw this year by the Mayor and Township Committee to find extra money to pay the $4 million dollar tab.

Remember the ugliness? The seizure of $500,000 of library funds and threats of police layoffs to gain concessions. Middletown certainly didn’t feel like a great place to live.

The Township should have done a revaluation years earlier. It had been at least 15 years since the last one. The company hired to do the revaluation had difficulty explaining the delay. That company, Realty Appraisal, does loads of revaluations around the State, and the cause for the delay didn’t stem from their efforts. So then where does blame lie?

If you spoke to the County Tax Administrator, I’m sure he would tell you that revaluations should probably happen every 4-5 years. By waiting, Middletown drew the ire of the County Tax Board.

Middletown Republicans basically thumbed their noses at the County and refused to do a revaluation while other municipalities followed the law. Meanwhile, the richest property owners in the Township saw property values increase hundreds of thousands or even millions of dollars in that time period while their taxes were based on assessments from long ago.

Residents in less affluent sections of the Township were picking up the tab for the Navesink River Road crowd. That’s because when expensive properties are dramatically under-assessed, the effect is to remove potentially hundreds of millions from the town-wide assessment base. The result is that everyone else pays proportionately more.

The low assessment base means that the tax rate would have been set too high. Evidence of that is the big decline in the overall tax rate upon revaluation – it went from $3.787 in 2008 to $1.725 in 2009 (per $100 of assessed value). Owners of newly built homes would have been among the most adversely affected by the inflated tax rate, which, coupled with their higher more up-to-date assessments, means they were paying more in property taxes than they should have been in the years prior to the revaluation.

The bottom line is that the more valuable your property and the longer you owned it, the more money you stood to save from the Township's failure to revaluate.

Per the County, around 60% of Middletown residents saw a reduction in taxes as a result of the revaluation. Since the Township still needed to collect the same total revenue, it stands to reason that owners of high end properties saw the largest dollar increases in their taxes after the revaluation.

It seems to me the Township most likely delayed the revaluation for two reasons.

First, the Republican Party leaders resided along the Navesink River Road corridor and had enjoyed tax-free, enormous increases in the value of their homes. As they took advantage of this increase in equity, the Township gave them a free pass. A revaluation would have increased taxes for many of them.

Second, Democrats had started to take seats on the Township Committee and the Republican Party desperately wanted to avoid losing votes, and possibly control of the Township, by doing a revaluation. Republican strongholds like Shadow Lake might have punished Republican leaders for tax increases and shifted the balance of power.

The County was upset with Middletown officials and, in 2008, took the unprecedented step of suspending our tax assessor, Charlie Heck, for failing to submit the paperwork necessary to do the revaluation. In a brazen admission of the underlying truths, then Mayor Scharfenberger actually referred to Mr. Heck as "Saint Charlie”. And this year, Mayor Fiore and our all-Republican Township Committee voted unanimously to award Mr. Heck a $15,000 bonus.

While you can draw your own conclusions, it seems obvious to me that Republican officials manipulated the process for their own political and personal financial gain. Due to their delays, when they were finally compelled by the County to submit the data for the revaluation, they did so on the eve of the financial crisis, just before property values plummeted. It would have been wise to postpone the revaluation until the market settled, but they couldn’t ask for another extension because they were already in deep trouble with the County for waiting as long as they had.

The delay cost taxpayers dearly. To deal with the unrealistic property data created by the poorly-timed revaluation, the Township was forced to undertake a costly reassessment this year, forcing taxpayers to expend hundreds of thousands of dollars on a reassessment that could have been avoided.

The overall tab may be $6 million or more now. Township officials won’t reveal how much or exactly where the money is coming from to pay for it. But appeal awards continue to roll in, and one thing is certain. Middletown residents will be feeling the sting for years to come.

Letter: Fed Up With "Tax Man" Scharfenberger

I'm fed up in Middletown. How much more does the Township Committee majority think we homeowners can take?

Mayor Gerard P. Scharfenberger, the "tax man," went to Trenton to get dispensation for his unconscionable increase in taxes.

The state has a 4 percent cap on tax increases, but thanks to his connections in Trenton, he was allowed to increase them more than 12 percent.

Scharfenberger would like us to believe the increase is only 2.8 percent. This is a smokescreen that lets him hide behind the actual increase. Don't be fooled.
It's time to retire the tax man with your vote for Sean Byrnes and Mary Mahoney, who better understand the pressures on Middletown homeowners.

Byrnes is the only serious financial voice on the Township Committee. He voted down this unprecedented increase in taxes because he felt the township could have done a better job in planning this year's budget.

Marilyn Tuohy
MIDDLETOWN

Anger Level Rises As Tax Bills Arrive Throughout Middletown

I've been hearing a lot from Middletown residents over the past few days, it seems as though the new property tax bills are starting to show up in their mail boxes and they are not happy.

They are angry over the huge increase in the municipal tax rate that for many seems to be a 14% increase over last years bill.They are also angry at the deception that mayor Gerry Scharfenbegrer and those that are in the majority and have held power in Middletown for 3 generations are trying pull over on them.

To continually insist to residents that their tax TOTAL bill only increased by 2.67%, while true, is extremely misleading and downright dishonest. It is nothing more than a ploy to distract the less sophisticated residents around town that live their lives in a bubble from questioning what is really happening. For those people who are living in the bubble and for those who are not take a good look at your tax bill and the letter that accompanied it.

As I stated, yes the overall TOTAL tax increase to OUR tax bill is 2.67% but the total tax bill (Municipal, Schools and County combined) has risen by a total 4.00%.

That's 2.67% for Middletown and 1.33% for school,county,open spaces, garbage.... Middletown's municipal tax increase makes up 2/3's of the total tax that is reflected in the tax bill.

You will notice that the letter of explanation that was enclosed with the tax bills does not state that a 13.99% increase in the municipal rate has occurred no matter how it is twisted, but it is clear to see that Middletown's increase is easily twice that of the school increase while the County and Garbage taxes declined.

The only thing included in the letter that was clear and honest was the table that divided up the total $.07 cents per $100 increase to the total tax rate which showed that Middletown's portion of that increase was $.048, which tells it all.

Middletown is fully responsible for nearly 69% of this years TOTAL tax increase to residents property tax bills.

NJPP Monday Minute: 2/1/10 High tech investments yield solid returns

"I'm tired of New Jersey getting its lunch eaten by other states, particularly by Pennsylvania," is a sentiment often expressed by some New Jerseyans when discussing the possibility that New Jersey businesses are moving to Pennsylvania. How true is the rhetoric? Are New Jersey companies and jobs really being lost to Pennsylvania because of the Keystone State's low taxes and more lucrative job subsidies (a common misconception)?

The answer is no, according to a recent study by Good Jobs First, a national policy research center that promotes accountability in economic development and smart growth. The report, "Growing Pennsylvania's High-Tech Economy: Choosing Effective Investments", focused on the competition for high-tech jobs between Pennsylvania and its neighboring states and uncovered provocative findings. For example:

• Pennsylvania's tax rates when compared to those of neighboring states were not always lower. This challenges the oft-repeated mantra that Pennsylvania is always a lower tax state than New Jersey. In fact, Pennsylvania's 9.99% corporate tax rate is higher than New Jersey's top corporate rate of 9% - disputing the notion that Pennsylvania has rock-bottom tax rates as many in New Jersey argue.
• High-tech job creation and loss is overwhelmingly driven by events inside Pennsylvania, not by interstate relocations. From 1990-2006, the study found that Pennsylvania's interstate in-migration or out-migration of high-tech jobs was dwarfed by the impact of company startups, closings, expansions and contractions within Pennsylvania. In other words, a large part of Pennsylvania's job growth is not fueled by jobs sucked out of New Jersey, as many contend.

Some say that the Keystone State's flat 3.07 percent personal income tax rate is a boon to small businesses. In fact, the income of married couples who earn less than $70,000 a year is taxed at the top marginal rate of 2.45 percent in New Jersey-less than Pennsylvania's flat 3.07 percent. In addition, the income of married wage earners making under $20,000 is not taxed at all in New Jersey, while in Pennsylvania it is still taxed at 3.07 percent. Furthermore, New Jersey does not have local income taxes as Pennsylvania does, which means more tax savings.

The Good Jobs First report recommends that Pennsylvania continue its Industry Partnerships program that integrates workforce and economic development needs. This program brings together businesses to identify common training priorities, thereby investing in technology industries' human capital infrastructure. New Jersey has made similar investments using the Edison Innovation Technology Fellowship Fund, which provides salary money to life-science and tech companies to hire recent PhDs from New Jersey colleges.

Given New Jersey's large number of science and technology PhDs (and the large number of patents granted annually), the state should continue to invest in its high-tech workforce. Technology changes quickly and the future will be increasingly reliant on the progress made today. Better policy choices will further New Jersey's competitive edge much more than tax cuts and business subsidies.

If Fair Haven Can Reduce The Tax Rate, Why Not Middletown?

The great budget battle in Middletown continues to rage on.  Already nearly 40% of  FY 2009 budget has been spent by the Township through emergency appropriation. 

How can we allow this to happen? No matter how much budget wrangling goes on, it will be almost impossible to save taxpayers from a municipal tax increase with only 60% of the budget left to play with.

If anyone thought that the leaf pick-up this year was a fiasco, wait until you see what the results will be of the draconian budget cuts that will be needed to close a possible $7 million deficit in the township budget. 

The reason why Middletown is in this type of mess to begin with is because the Township Committee, controlled by Assemblyman want to be Gerry Scharfenberger, Pam Brightbill and Tony "the Fibber" Fiore, unlike Fair Haven, has refused to cut services. Instead, the GOP control Township Committee has raised our tax rate by 17% over the past 3 years to close the budget deficits, all the while blaming Trenton for it.

How did Fair Haven save it's taxpayers 2% on their tax bill? They consolidated departments, bid out fro professional services and now do engineering work in-house.

Now granted, Middletown is a much larger town than Fair Haven, with more complex issues to deal with, but if Fair Haven can consolidate services to save money, then Middletown should also be able to, there is a lot of fat that could be trimmed before Middletown should consider a tax increase.

One idea being floated by Democrat Sean Brynes is to transfer the Cultural Arts Center from the Parks and Recreation department to the Middletown Library. Many of the programs offered at the Arts Center are duplicated by the library system, so why not ask the library to take over the Arts Center in order to run it more efficiently. In doing so, it could save the township over a quarter million dollars in operating fees alone.

Middletown should look at Fair Haven as an example of how to control costs and limit spending in order to contain the need for tax increases.

Click here to read how Fair Haven was able lower it's tax rate 2 years in a row.