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Governor Corzine’s proposal to raise tolls by 50% every four years between 2010 and 2022 has attracted much debate and drawn a lot of ire, both from within and outside the real estate community. As the governor travels the state, trying to persuade his constituents to accept the plan, we asked our readers if they thought the plan had a chance of passing. Most respondents (50%) said no, there’s no way it’ll pass. A third believe it will pass with modifications. A mere 17% expect it to pass as is. George Martin, vice-chairman of Studley in Iselin believes the measure will pass, but that more needs to be done to solve the state’s fiscal problems. He shares his thoughts below:

“Yes, the plan will pass. It will be modified somewhat, but it will pass. Unfortunately, it doesn’t deal with the fundamental issue. This is just more fodder for those in Trenton who want to keep spending.

“The fundamental problem is that spending in the state is out of control. We have the highest income tax in the United States. There are others as high but no one higher. We have the highest property taxes. We have the highest sales tax along with three other states and we have the lowest threshold for estate taxes in the entire country. We still have defined benefit plans for government employees.

“Jim Hughes [dean of the Bloustein School for Planning and Public Policy at Rutgers University] was recently quoted as saying that none of the spending is sustainable because people are leaving the state in droves. There are a lot of people my age that are becoming permanent residents in Florida.

“I admire the governor’s willingness to take on a huge problem, because everyone else has chosen to ignore it, but a 50% rise every four years is a huge increase. It could hurt the state because of the negative business climate that has affected distribution centers in New Jersey, specifically exit 8A, which was one of the best industrial real estate markets in the US. It’s stalled, and 100 miles away in Pennsylvania, industrial is not stalled. That’s not an accident. That’s people making a conscious decision that the cost of doing business here is too high.

“Pharma has left, and job growth in the state is anemic. In 2006, I believe we created 5,000 white-collar jobs. That’s terrible and can’t really sustain any growth. We’re not growing in the areas of biotech or life science. It’s a real issue.

“In 2006, there was a proposal to raise the gasoline tax, and people fought it tooth and nail, so we settled for a 1% increase in the sales tax. That really only paid for one more year of unsustainable rebates on real estate taxes that were out of control. So it didn’t put a cork back in the bottle, it just made the bottle a little bigger for one year. It’s nowhere near a long-term solution. Yes, it’ll create some relief and bridges and roads and tunnels need to be revamped, but nobody’s asking the question of why is transportation so underfunded? The answer is because bridges and roads and tunnels don’t vote. There’s not going to be any capital allocation, so that means we’re going to play catch-up every 25 years, and that means some major increase in taxes.

“There’s never any effort to say, ‘let’s look at the model because it appears to be broken.’ The knee-jerk reaction is always ‘where can we find more revenue?’ not ‘where can we cut expense?’ because cutting expenses means you might lose your job.

“The only people who are going to be trapped into paying these increases are residents who have to go to work or get home. Anyone who can avoid it will, so I question the models that they’re using, saying that these increases will generate the sort of revenue that’s expected. My bet would be that the revenue will not be nearly what they predict. It’s like the MTA with the subway, every time they raise the fare they lose riders, so they need to raise the fare again. The cycle is endless. I suspect that people in business will find ways of going around these tolls. If you tell truckers and people with businesses that tolls will cost $5000 a year more than it did before, they will find ways of avoiding that. You’re suddenly competitive with air freight and trains. The whole dynamic changes.

“This would be a huge change in quality of life for residents, and it’s not on the ballot. It’s going to be negotiated in Trenton by people who have proven that they put self-interest ahead of the best interests of the state. The governor is being intellectually honest, he sees a huge problem and his background training is telling him he needs a huge solution. He’s not wrong, but the emphasis is wrong. You need to go after the expense base in the state and reduce it. We’ve gone from being one of the top states in which to do business to number 47. We’ve gone from the highest per capita income in the country to being second or third. Everything is trending in the wrong direction. And, what’s the solution? Raise more revenue, which exacerbates the problem, it doesn’t solve it.”

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