A Tax Increase By Any Other Name

Times of Trenton, April 6, 2010

Over the last several weeks, we’ve seen disturbing contradictions emerge since Governor Christie unveiled his proposed budget for the upcoming fiscal year. In one of the defining moments of his budget address, he noted, “mark my words, if a tax increase is sent to my desk I will veto it.”

Let’s not be confused – a tax increase by any other name, is still just that, a tax increase. Sadly, the tax increases proposed this year are not the more obvious ones that the Governor has railed against, like the Millionaire’s Tax. In this case they are less obvious taxes that affect a disproportionate number of the middle class and working poor.

For example, the Governor’s proposal to cut funding for Earned Income Tax Credit amounts to nothing more than an increased tax on our state’s lowest income earners. The same can be said for the overwhelming cuts to school and municipal aid, which will inevitably increase property taxes, and the elimination of property tax rebates to seniors and the disabled, which essentially amounts to a tax hike. The increase in co-pays under the PAAD/Senior Gold insurance program; the cuts and charges being instituted for after-school programs in some of our poorest districts; the combination of funding cuts for higher education as well as student financial aid; and the increase in FamilyCare premiums are all tantamount to a tax increase.

In another disturbing move, the Governor announced funding cuts to NJ Transit while all but cajoling the agency into hiking fares to accommodate for this loss. In an inevitable announcement weeks later, NJ Transit proposed the largest fare increase in the agency’s history– a 25 percent across-the-board hike. Translation: yet another tax on the working poor. This is no different than a local government or school district increasing taxes to make up for a cut in aid rather than doing more with less as the Governor has preached.

While NJ Transit has conceded in recent days that this hike may be adjusted, the agency has failed to accept my suggestion to implement incremental fare increases, which would prove more reasonable, particularly for those on fixed incomes with limited transportation options.

My office has been flooded with complaints from residents worried they will no longer be able to afford to get to work. For example, one of my constituents commutes to New York daily for a job that pays $46,000. Under a monthly train pass, this person will be hit with an $85 increase, for a total of $425 a month. At a certain point, you have to question whether you’re working simply so you can afford to get to work.

We can’t lose sight of what it truly means to pinch pennies for our low and middle income earners, particularly during this economy.

Consider the predicament created for some of the state’s lowest wage earners. The proposed fare hikes create a recipe for disaster when coupled with the Governor’s decision in February to eliminate transportation services to and from work for clients who have just transitioned off the state’s Temporary Assistance for Needy Families (TANF) program. Most of these individuals have income levels at roughly 250 percent of the Federal Poverty Level.

These are people taking public transportation out of necessity, not convenience. Most post-TANF clients are typically making very little money, not enough to even support a family. Now you’ve eliminated their mode of transportation to and from work, forcing them to pay for public transportation while they brace for the fare hike to kick in. This is an enormous increase for someone making very little to begin with, one that I fear may precipitate another rise in unemployment if people can’t afford to get to work.

It says a lot about our character as a state if we attempt to solve our transit crisis by serving up a double hit to the working poor.

But it also says a lot about our lack of foresight in considering the broader consequences of these fare hikes on both state roadways and the economy.

Typically when fares are increased, we see a decrease in ridership. Now, not only are fares being increased, but services are being cut, creating an even further disincentive to use mass transit. In a state as densely populated as ours, we should be doing everything we can to promote mass transit in order to reduce congestion.

Furthermore, if these fare hikes turn people away from mass transit, reduced ridership will eventually force another fare hike to make up for the lost revenue. This increased financial drain posed by the fare hikes may also slow our economic recovery by taking more money out of people’s pockets, money that could be used towards the purchase of vital goods and services that will help reinvigorate our economy.