THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, August 17, 1996 TAG: 9608170001
SECTION: FRONT PAGE: A15 EDITION: FINAL
TYPE: Opinion
SOURCE: Kerry Dougherty
LENGTH: 82 lines
Last year, with great fanfare, Governor George Allen scrapped the tolls on the expressway in Virginia Beach. Like many commuters who sat in snarled traffic at the toll booths, I was thrilled.
My joy wasn't from finding myself 50 cents richer each day - I knew the state would get my half dollar somewhere else. I was simply happy not to pay on the installment plan.
Bob Dole and Jack Kemp are campaigning on a seductive promise to slash the federal income tax 15 percent. Oh, it's so tempting to believe that our paychecks will suddenly swell and we'll have lots more money to spend. But does anybody really believe this? Won't other taxes skyrocket to make up the shortfall? Is there a model for this anywhere?
As a matter of fact, there is. In my home state of New Jersey, Gov. Christine Todd Whitman strode into the governor's mansion three years ago on a promise to reduce the state-income tax by 30 percent. She boasted to delegates at the Republican Convention this week that she's done just that.
What Whitman neglected to tell her San Diego audience is that her tax cuts have had little positive impact on the state and the long-range effects of her policies frighten many.
As a result of the lower income taxes - state revenues have declined by $1.2 billion a year - property taxes are climbing and fees charged by the state are soaring.
Despite the promises that her tax cut would produce an economic boom, job creation in the Garden State remains sluggish. Whitman will be lucky if half of the jobs she promised to create materialize by the end of next year.
In fact, critics say New Jersey is a slow-motion disaster. It will be years before the full fallout of Whitman's economic policies are felt.
To make up for the lost revenue, the Whitman administration has tried to increase every state licensing fee it could find, including motor-vehicle registration, corporate filing fees, fingerprinting and even criminal-history check fees.
In a very slick move, Whitman proposed expanding the sales tax to new areas of the economy (that's technically not the same as a tax hike) and imposed a $13-million assessment on the insurance industry.
If you have any friends in New Jersey, ask them what's happened to insurance premiums lately. Technically, increased insurance premiums are not the same as higher taxes, but the effect is the same.
Whitman's also proposed wiping out the state historical commission and taking $26 million away from environmental protection - in one of the most polluted states in the nation.
Whitman and her economic advisers perfected an intriguing shell game to trim spending. She has refinanced much of the state debt on things like transportation and education bonds, so that debts that were nearly paid off are refinanced for a longer period of time.
But the big problem is property taxes.
New Jersey has the fifth-highest property taxes in the country. They are rising by an average of 4 percent to 5 percent a year and that rate will probably accelerate as the fall-out from stagnant state aid to schools hits towns and cities.
A few more years of Whitmanomics and the state could rival New Hampshire (which has no income tax at all) as the state with the highest property taxes.
As New Jersey cut taxes it also held aid to municipalities steady. As a consequence, cities and school districts have had to cinch their belts a little tighter each year. Eventually the local property owners will have to pick up even more of the tab for Whitman's penny pinching.
``We're being held hostage,'' says Bill Dressel, executive director of the non-partisan New Jersey League of Municipalities. ``Most of the fat, if not all of it, has been cut from city spending.
``But as inflation continues to rise, goods and services get more expensive and so do health care and pension costs. There is only one place to go for money and that's to local property taxes. Taxes are going to go through the roof up here.''
Dressel said state officials are worried that retirees, who live on fixed incomes and don't benefit much from cuts in the income tax, will leave the state in droves if property taxes go much higher.
All this reminds me of how I felt for one brief, heady moment after the toll booths were demolished. I calculated that I would save about $130 a year on tolls and I toyed with splurging on a cashmere sweater I'd wanted to buy.
Then I came to my senses.
Now Bob Dole has promised to do a Whitman-like slash on federal income taxes. If New Jersey is any guide, don't spend the money until you get it. MEMO: Ms. Dougherty is an editorial writer for The Virginian-Pilot. by CNB