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On Tuesday, it was revealed that an unexpected drop in tax revenues for New Jersey would leave the state short $402 million this year and $365 million next year. This near $800 million budget hole has raised serious concerns among those living in the Garden State. But, rather than give in to the temptations of political laziness by placing burdensome new taxes on the state's highest earners, Governor Chris Christie (R-NJ) was able to fill the hole without raising taxes. According to Marcia Kramer of New Jersey's local CBS affiliate:
...what happened was the budget freeze imposed by Gov. Christie when he took office generated more savings than expected, enough to cover much of the lost tax money.
When asked about the budget hole, Governor Christie stated:
We're very confident we've been able to close the additional budget gap in (fiscal year) 2010 and in (fiscal year) 2011 we're going to be able to solve that problem without any new taxes at all and without any real significant cuts.
The bold steps taken by Christie to address his state's budget woes without increasing taxes were met with some resistance. Critics supported a "millionaires tax" which would have placed added burden on the state's top earners and would have likely driven some residents out of the state. Recognizing this solution as flawed, the governor refused to add new taxes in a state that has already seen an astounding 115 tax increases. He proclaimed:
We're not raising taxes... That's it. It's not happening.
When his refusal to increase taxes is coupled with other items on his agenda--such as his proposed reform package that would cap property tax increases to 2.5% each year-- it becomes clear that Governor Christie is fighting for the taxpayers of New Jersey. In fact, a new study released jointly by the Manhattan Institute and the Common Sense Institute of New Jersey shows just how beneficial a cap on property taxes can be. The study examines Proposition 2.5 which limited annual property tax increases in Massachusetts to 2.5% of a home's assessed value. William McGurn of the Wall Street Journal writes:
...the Bay State cap helped the state shed its hated Taxachusetts label—going from the second most taxed state in the union when the proposition was passed to 23rd today, according to the Tax Foundation. In the study's executive summary, author Josh Barro puts it this way: "Proposition 2.5 has succeeded in restraining growth of property-tax collections, total tax collections, and per-pupil education spending in Massachusetts."
The study pays close attention to the effect that the cap has had the Massachusetts public school system:
Despite spending far less per pupil than New Jersey ($12,857 versus $16,163 in 2007), Massachusetts students in almost all demographics achieved better results than their Jersey counterparts.
The study makes clear the fact that a cap on property tax increases will help New Jersey residents by ensuring that taxes stay low and that free-spending politicians remain within a strict budget. And forcing lawmakers to adhere to a strict budget will help Governor Christie keep his promise that:
We're not raising taxes.
With most states and even the federal government running massive deficits, it appears that lawmakers from across the country would be wise to follow Christie's example. Hopefully the rest of the nation will follow New Jersey's lead and recognize that there are alternatives to burdensome tax increases when attempting to balance a budget.