But Florio’s fans, including many intrigued liberals watching warily from afar, wonder if he is a William Jennings Bryan who wins, a housebroken Huey Long. Is he the last old liberal or the first new one? Whatever, the 52-year-old Democrat is making New Jersey, which has voted Republican in six consecutive presidential elections, a laboratory for liberalism. Today’s arguments in Washington and Trenton are superficially similar and interestingly different. Both concern taxes, but Washington’s argument rarely rises above arithmetic. Trenton’s is about justice. The issue in Washington is reducing the deficit. In Trenton it is social change.
Florio ran a relentlessly (and pre-emptively) negative and truth-shading campaign in which he said he saw no need for new taxes. He won 61 percent of the vote and not a morsel of a mandate for what he is now doing. He is closing a $3 billion budget gap. He has cut the budget in a way Ronald Reagan never even tried, either as governor or president. Florio has cut $2 billion from a $12 billion budget, cutting everything (for example, the arts from $23 million to $10 million) except the departments of Corrections and Human Services. The latter, which covers welfare, is now bigger than the entire state budget was eight years ago.
If he had run promising to cut $2 billion, voters would have scoffed. But even that whopping cut was not enough. So he has raised the sales tax–a regressive levy–17 percent, from 6 to 7 percent, and has broadened it to cover many more items, from telephone calls to toilet paper. But for Florio, who began a 15-year congressional career with the post-Watergate class of 1974, this was no fun. Heck, said he, might as well be hanged for a sheep as for a lamb. If you are going to sin, do so with gusto. Better still, say it isn’t sin. So, making (well, declaring) a virtue of what he called necessity, he imposed an aggressively progressive income tax increase.
New Jersey’s heavy reliance on property taxes has been worsening the urban implosion. Urban pathologies (poverty, crime, drugs, sickness) drive up property taxes, which drive people to the suburbs. Urban property taxes must climb as property values fall. The result for schools is particularly perverse. Last year affluent Princeton, taxing 67 cents per $100 assessed valuation, spent $8,346 per student. Camden taxed at more than twice that rate ($1.62) to raise just $4,186 per student. Each morning Princeton students go from good homes to schools with $100,000 more in resources per 25 students than in Camden. Thus do inequalities–class differences–become compounded.
The $1.3 billion income tax increase affects single people earning more than $35,000 and couples earning more than $70,000. It doubles the rate from 3.5 to 7 percent for individuals over $75,000 and couples over $150,000. About 75 percent of the income tax increase will be paid by the approximately 200,000 households with incomes higher than $100,000. This is part of a large revenue shuffle. Florio is reducing, through property-tax rebates, reliance on such taxes and redistributing money from suburbs to inner cities. About 300 poor school districts will get more aid; about 150 wealthy districts will have their aid phased out.
Bolshevism? Hardly. Seventeen states have top income tax rates higher than 7 percent. And Florio did not raise corporate profits taxes because he considers those taxes high already. His supporters say there is no simple correlation between state tax levels and economic growth: Some high tax states are booming, some low tax states are not. Businesses calculate the costs not only of taxes but of poorly educated workers and crumbling public infrastructures. Besides, Wall Street has smiled. In March Standard & Poors put New Jersey on a “credit watch.” After the tax package was enacted the state’s bond rating was reaffirmed as AAA, the highest in the Northeast.
Second richest state: Congressman Florio voted against the Reagan tax cuts of 1981 and figures that cost him more than the 1,797 votes by which he lost his 1981 race for governor. Like most legislators who escape to executive power, he is luxuriating in it. New Jersey’s governor is a semi-Caesar. He is the only statewide elected official; he appoints all judges and many other officials. Being a congressman–1/435th of one half of the legislative branch–is, he says derisively, fine if you prefer protective coloration to focused responsibility. As a congressman he voted against the Gramm-Rudman deficit reduction mechanism because he considered it an abdication of congressional responsibility. Florio, the former pug, disdains “hoarding political capital,” a sin he sees in George Bush. But Florio’s thumb-in-the-eye election campaign earned him no political capital. And New Jersey is now punchy.
In colonial times someone described the state, a rural expanse between New York and Philadelphia, as “a valley of humility between two mountains of conceit.” Today it is the second richest state (second to Connecticut), with a median household income of $40,000. But, says Florio, a $40,000 household is apt to have two income earners. A property-tax rebate, or an increase in highway tolls, can make the difference between a household budget being in the black or the red.
Florio is reading “Bonfire of the Vanities,” that novel about wealth and poverty in dangerous proximity. New Jersey is just a few minutes’ drive from some of the nation’s most opulent suburbs, such as Short Hills, to some of the saddest slums, such as Newark’s, which have the nation’s highest rate of pediatric AIDS. It is not so strange that this state is getting a small dose of the politics of class conflict.
To get to Florio’s statehouse office you pass a bust of New Jersey’s saint, Gov. Woodrow Wilson, whose portrait adorns Florio’s outer office. But Florio admires even more a man who considered Wilson prissy–Teddy Roosevelt, a boxer.
