Property Tax Convention - Task Force Transcripts

1 STATE OF NEW JERSEY

3 NEW JERSEY PROPERTY : TRANSCRIPT

4 TAX CONVENTION TASK FORCE : OF

5 --------------------------- HEARING

7 Date: October 26, 2004

9 TRANSCRIPT ORDERED BY:

10 JACK DONNELLY, State of New Jersey, Office of
the Governor, The Statehouse, PO Box 001,
11 Trenton, New Jersey 08625

13 PANEL PARTICIPANTS:

14 MICHAEL R. COLE, VICE CHAIRMAN
SUSAN A. COLE
15 SHERRYL GORDON
SENATOR LEONARD LANCE
16 TERRENCE MALLOY
ASSEMBLYMAN KEVIN O'TOOLE
17 MAYOR GARY J. PASSANANTE
ERNEST C. REOCK, JR., Ph.D.
18 MAYOR JO-ANNE B. SCHUBERT
CARL E. VAN HORN, Ph.D., CHAIRMAN
19 SENATOR RICHARD VAN WAGNER, SR.

22
Coleen Rand, AD/T
23 Certified Court Transcriber
For Guy J. Renzi & Associates
24 824 West State Street
Trenton, New Jersey 08618
25 (609) 989-9199

1 (Tape 1, Side A)

2 MR. VAN HORN: -- so I'm going to get

3 -- call this meeting to order and get underway.

4 This is, I believe, the sixth meeting

5 of the Property Tax Convention Task Force. My name

6 is Carl Van Horn, I'm the chair of the task force;

7 and, as has been my custom, I would like to ask my

8 distinguished colleagues on the panel to introduce

9 themselves, so that the witnesses and the audience

10 knows who's here today. I'll start with Dr. Cole.

11 DR. COLE: Susan Cole, President of

12 Montclair State University.

13 SENATOR LANCE: Leonard Lance in the

14 State Senate.

15 MR. MALLOY: Terrence Malloy, City of

16 Bayonne, Business Administrator and CFO.

17 ASSEMBLYMAN O'TOOLE: Kevin O'Toole in

18 the New Jersey State Assembly.

19 MR. COLE: Mike Cole, I'm an attorney.

20 MAYOR PASSANANTE: Gary Passanante,

21 I'm the Mayor of the Borough of Somerdale, and

22 Chairman for New Jersey State League of

23 Municipalities, Property Tax Reform Committee.

24 DR. REOCK: Ernest Reock, retired from

25 the Rutgers University faculty.

1 MR. VAN HORN: We have two excellent

2 panels here today, invited to talk with us about our

3 responsibilities. And we're going to begin with

4 Phil Kirschner, who's the President of the Business

5 and Industry Association. He will be followed by

6 Rich Goldberg from the Commerce and Industry

7 Association.

8 Joan VerPlanck is en route and stuck

9 in the inevitable New Jersey traffic, so hopefully

10 she will be here soon, as well.

11 And Senator Van Wagner, a member of

12 the task force, has just come in. Welcome, Senator.

13 And then we're going to be hearing

14 from Richard Locke (phonetic), who is representing

15 Charles Wowkanech. Mr. Wowkanech, I believe, is

16 attending a funeral today, so he was unable to be

17 with us, but Mr. Locke is here representing him.

18 I'm going to -- as I've discussed with

19 the panel members -- I mean, our witnesses, I've

20 asked them to each make a three-to-five-minute

21 opening statement. I believe that it would be most

22 efficient if they all made their statements, and

23 then we had an opportunity to question them and

24 follow up on their comments.

25 And we'll begin with you, Phil. Thank

1 you very much.

2 MR. KIRSCHNER: I thank you. Good

3 afternoon again. My name is Phil Kirschner, I'm

4 President of the New Jersey Business and Industry

5 Association. And on behalf of our 23,000 employers,

6 I want to thank you for inviting NJBIA to

7 participate in what we consider a very important

8 process.

9 A lot of people tend to view property

10 taxes as an issue that only impacts homeowners. The

11 fact is, is that rising property taxes are a

12 critical problem for employers, as well.

13 Every year at BIA, we do a survey and

14 ask our members what are the most important, most

15 critical business problems; and, over the past ten

16 years, our members have consistently ranked the cost

17 of property taxes that they pay as one of the most

18 important business problems that they -- that they

19 face.

20 Businesses, employers directly pay

21 about twenty-five percent of the property taxes in

22 New Jersey, and the rest see property taxes

23 reflected in the leases or rents that they pay; yet,

24 they receive none of the rebates or property tax

25 relief programs that homeowners do. So it is a

1 significant, significant problem for them.

2 Additionally, we are starting to see

3 more and more that high property taxes are a real

4 disincentive to attract particularly some of the

5 younger, high-skilled employees that we seek, who,

6 not just only for property tax reasons, but find

7 that living and buying a home in New Jersey is just

8 quite -- is just too expensive, and get

9 opportunities in other states.

10 It is also a factor in relocation

11 decisions or location decisions.

12 So we have a keen interest in this

13 issue. So the question is: What is the best way to

14 approach it?

15 We do not believe that a

16 constitutional convention is necessary. We don't

17 think it will achieve the complex goal that you've

18 set out. Our legislators have the power to reform

19 New Jersey's property taxes now. They do not need

20 what we believe to be a convoluted political process

21 that will take years, involve a necessary

22 complexity, and be carried out largely by special

23 interest groups.

24 One thing I want to make clear, some

25 of the proponents, well-meaning proponents, have

1 this romantic notion that a constitutional

2 convention will be this citizen-run, citizen-

3 dominated, New England town meeting type of event,

4 where everyone gets together, puts all kinds of

5 partisan rancor aside, thinks the great thoughts,

6 and a wonderful solution comes out of that. We do

7 not.

8 We believe that a constitutional

9 convention will be a special interest event,

10 dominated by those who rely on public spending, who

11 will organize the process, who will work hard to

12 elect their delegates, who have a predetermined

13 agenda in what is a very political process, every

14 bit as political as the Legislature is now. And we

15 really don't see a way around that if you're going

16 to have an electoral process. Even if you limit

17 spending on that, those groups that are organized

18 that can elect their delegates, that have well known

19 delegates, will be the ones that will prevail.

20 Furthermore, any process that doesn't

21 address spending cannot achieve meaningful property

22 tax reform. Spending is what drives the need for

23 additional property taxes, and no shift to other

24 taxes is going to change that. Any savings in

25 property taxes will be eaten up very rapidly by

1 increased costs, and we'll be back here very

2 shortly. Any solution, any relief will be short-

3 lived and temporary, at best.

4 We understand this has been a long-

5 term problem, but we think a -- there is an

6 alternative that has not been tried yet, that is an

7 alternative to a constitutional convention, and that

8 is a special session of the Legislature. And by

9 that we mean a session that is devoted exclusively

10 to reform of our property tax system, one that

11 considers no other business for as long as it takes

12 the Legislature to resolve this problem; a special

13 session that has legislators coming to Trenton every

14 day, and I mean every single day, whether that's

15 days, weeks, or months, until they resolve the

16 problem.

17 We believe that a special session

18 would be more efficient, solutions could be achieved

19 quicker. The infrastructure is already in place, in

20 terms of the research infrastructure and the place

21 to meet, and the, quote, "delegates" are already

22 there, and that is our elected governor, forty

23 senators, and eighty assemblypeople. They should do

24 the job that they were elected to do, and take

25 control of reforming property taxes, rather than

1 defaulting on their obligations and punting to a

2 different, but albeit as political a process from

3 where they came.

4 Again, this has not been tried. And

5 we think, before you recommend the rather drastic

6 step of a constitutional convention, all other

7 legislative alternatives should be exhausted, and

8 this one has not.

9 The Governor, the legislative leader

10 could decide very shortly that they're going to do

11 this, and it would be well accepted by the public if

12 it's in the manner that we said: One totally

13 devoted to it, and take as many weeks or months as

14 it -- as it needs.

15 With regard to the substance of

16 property tax reform, I just want to address the

17 issue of government spending a little more because

18 it is so -- it is so intertwined to a resolution of

19 this problem. If we're going to do this, let's do

20 it right. And spending and the taxes to pay for it

21 are just so intertwined.

22 We strongly believe that the scope of

23 inquiry, if you're going to have a convention or a

24 special session, has to include school district and

25 municipal spending. That should be part of the

1 inquiry. The credibility of the process in the

2 eyes, certainly, of our members, while we believe in

3 the eyes of the public, demands a review of the

4 spending side of the equation, and not just the

5 revenue side.

6 On average, it costs over $11,000;

7 11,248, to educate a public school student in New

8 Jersey, compared with a national average of almost

9 7,400. That's more than a fifty percent difference.

10 Why? Fifty percent. Since sixty to eighty percent

11 of local school budgets are salary and benefits,

12 again, any spending inquiry has to look at that side

13 of the equation.

14 Any discussion of education

15 improvement and financing must also address the

16 longstanding obstacles to cost efficiency and

17 educational excellence, and that's issues such as

18 consolidation of school districts, promoting shared

19 services, consolidating local and school board

20 elections on one day, and examining built-in costs

21 for mandated benefits. They all should be careful

22 examined and included in any process of inquiry in a

23 constitutional convention.

24 Furthermore, it's -- again, going back

25 to the representation issue. It's our fear that any

1 delegation for a constitutional convention would be

2 populated with representatives from special interest

3 groups, and the voice of employers and the owners

4 and renters of industrial and commercial property

5 would be muted.

6 Such issues as lifting the

7 constitutional bar, which we have now, on taxing

8 commercial and residential property might be lifted;

9 increase corporate taxes could be part of the

10 equation, and that would hurt the competitiveness of

11 our state, the economic competitiveness of our

12 state. It will have a negative impact on ratables,

13 which already help to keep down the cost of

14 residential property taxes, and, really, will hurt

15 us in the ability to produce the kind of jobs that

16 provide the ability to support any kind of tax that

17 -- that is finally adopted.

18 So, again, I thank you for the

19 opportunity to address you. I don't envy the job

20 that you have. It's very difficult. We pledge to

21 work with you, to try to come to a resolution and

22 the best resolution possible of the issue of

23 property taxes. Again, thank you for your time.

24 MR. VAN HORN: Thank you, Phil.

25 Richard Goldberg.

1 MR. GOLDBERG: Good afternoon, Mr.

2 Chairman and members of the task force. My name is

3 Richard Goldberg, I'm the President of the Commerce

4 and Industry Association of New Jersey. I'm pleased

5 to provide testimony on behalf of our members

6 regarding the scope of a constitutional convention

7 to address the issue of property tax reform.

8 Clearly, the employer community

9 recognizes the urgent need for real property tax

10 reform; however, let me be clear in saying that our

11 association cannot support a constitutional

12 convention that does not equally address spending at

13 all levels of government, nor can we support a

14 constitutional convention that empowers special

15 interests by not providing for a fair and equitable

16 delegate selection process.

17 Should our state proceed with a

18 convention, we are very concerned that, in order to

19 find alternative revenue streams, the convention

20 will increase the tax burden on New Jersey

21 businesses by raising the corporate business tax,

22 sales tax, or income tax, or by raising the rate by

23 which commercial properties are taxed.

24 Over the past several years, the

25 business community has been hit with various tax

1 increases targeted at specific industries. New

2 Jersey currently has one of the highest business tax

3 burdens in the nation, and any additional tax

4 increases will further put our state at a

5 competitive disadvantage.

6 Furthermore, history suggests that

7 such an increase in other taxes would not

8 effectively reduce property tax rates. In 1976, New

9 Jersey introduced the state income tax to reduce the

10 reliance on local property taxes, and increased the

11 income tax in the '80s and '90s for the same reason.

12 However, since 1976, there has not been one year in

13 which property tax rates have declined. It is clear

14 that the more tax dollars government receives, the

15 more government will spend.

16 Therefore, it's the opinion of this

17 association that the answer to property tax reform

18 does not lie in finding new revenue sources, but in

19 implementing new spending controls at every level of

20 government.

21 While the Governor recently signed

22 legislation to cap local government discretionary

23 spending by 2.5 percent, we must go much further and

24 implement strong tax and expenditure limits at the

25 state level, as well. When state government spends

1 beyond its means, the result is looming budget

2 deficits and a greater burden on municipalities to

3 fund our schools and other programs through

4 increases in their property tax rates.

5 We believe the constitutional

6 convention should implement strong tax and

7 expenditure limits at all levels of government,

8 pertaining to all budgetary items. Twenty-six other

9 states in the nation currently have tax and

10 expenditure limitations known as "TELs," which help

11 to control state spending and reduce taxes.

12 Specifically, the convention should

13 look at the Colorado Taxpayers Bill of Rights as a

14 model for tax and expenditure limits in our state.

15 In 1992, the people of Colorado passed a

16 constitutional amendment which capped spending at

17 the rate of growth plus inflation, and required the

18 immediate refund of surplus tax revenues to the

19 taxpayers. As a result, Colorado taxpayers have

20 received 3.2 billion in tax rebates since 1997.

21 Between 1995 and 2000, the state ranked first in

22 gross state product growth and second in personal

23 income growth. Such strong controls in New Jersey

24 would go a long way to help control state and local

25 spending, generate property tax relief, and avoid

1 future budget crises.

2 Other states have implemented TELs,

3 but many have not achieved the degree of success of

4 Colorado because they've not been as stringent. In

5 fact, in 1978, New Jersey enacted a very weak TEL

6 with many loopholes, which was allowed to lapse in

7 1983. History has shown that the most successful

8 spending control mechanisms are constitutionally

9 mandated; and, therefore, cannot be changed or

10 circumvented by elected officials.

11 The Heartland Institute recently

12 issued a study which discussed other important

13 components of successful state TELs. The institute

14 said that strict definitions of spending caps were

15 critical, and that the limits should apply to both

16 local and state governments, so constraint at the

17 state level could not be circumvented by shifting

18 functions to local governments. Moreover, the

19 institute said that, in order to control spending,

20 no government function such as education should be

21 allowed to operate outside of the spending limits.

22 Another important component is the

23 stabilization of state and local budgets through a

24 rainy day fund, which eliminates the need to

25 increase taxes or incur debt when there is a revenue

1 shortfall. In periods of rapid growth, part of the

2 surplus revenue is returned to the people through

3 tax cuts and tax rebates, and part is set aside for

4 such a rainy day fund. This fund is then used to

5 offshoot -- offset revenue shortfalls in periods of

6 recession.

7 It's our opinion that a

8 constitutionally mandated cap in state and local

9 expenditures is an important part of reforming our

10 property tax system; however, New Jersey must also

11 take a look at the inequitable manner in which we

12 fund our schools.

13 By mandating that urban school

14 districts receive the same amount as the highest

15 spending school district in the state, we're

16 shortchanging the majority of our middle class --

17 excuse me -- state's middle-class schools, resulting

18 in massive property tax burdens on New Jersey

19 homeowners in those communities.

20 It makes little sense that urban areas

21 receive the majority of our state's education

22 dollars with little improvement in their test scores

23 and graduation rates. Clearly, this is a funding

24 formula that's broken and harmful to both suburban

25 property taxpayers, as well as the students in those

1 urban districts.

2 In closing, I'd like to thank the

3 members of the task force for hearing the concerns

4 of our member community and employers in this state.

5 Should it be decided that a constitutional

6 convention is the appropriate course of action, it's

7 our hope that the scope of the convention includes

8 controlling government spending at all levels, and

9 avoids placing additional tax burdens on New Jersey

10 employers or working families. Thank you very much.

11 MR. VAN HORN: Thank you, Mr.

12 Goldberg. Richard Locke -- or Lockey, is that?

13 MR. LOCKE: Yes.

14 THE COURT: Just use the microphone,

15 please.

16 MR. LOCKE: I'm sorry.

17 Mr. Chairman and committee members,

18 thank you for having the opportunity -- providing

19 the opportunity for us to present a position before

20 you today, I think on behalf of AFL-CIO President

21 Charles Wowkanech, who was unable to attend, I serve

22 as co-general counsel to the New Jersey State AFL-

23 CIO.

24 We represent approximately one

25 millions heads of household, virtually all of whom

1 work or live within the State of New Jersey; of

2 those, a little over 200,000 are in public

3 employment at various levels. We have a genuine

4 concern with the efficient flow of services

5 protecting our membership, of course, but the

6 efficient flow of services and support of the

7 efficient functioning of state and local government.

8 My remarks will be focused in two

9 separate areas: First, the area of creating an

10 effective and appropriate enabling statute or

11 convention call, and the second are will be the

12 issue of delegate selection.

13 With respect to the first issue, there

14 is, of course, precedent for legislative control and

15 constitutional convention agenda-setting in both our

16 '47 and '66 experiences. These can be

17 distinguished, of course. The more narrow enabling

18 legislation was in 1966, where Senate Bill 2-61 was

19 very narrow in its addressing the Baker decision,

20 having to do with reapportionment. And even that

21 constitutional convention was preceded by the Meiner

22 Commission (phonetic), which even more narrowly

23 focused the debate. That charge was narrow and

24 clearly focusing, it was a readily identifiable

25 issue, as distinguished from the issue of property

1 tax.

2 Property tax is neither so readily

3 identifiable, nor narrow in scope. One cannot, for

4 example, address taxation without addressing

5 spending. Revenue is inextricably linked to

6 appropriation.

7 Once the door is opened, a

8 constitutional convention could develop directions

9 of its own, given a broad charter; and, unless there

10 was very clearly defined -- there are clearly

11 defined parameters, things could occur that no one

12 anticipated.

13 For example, one might call it a

14 runaway convention, as has been occurred elsewhere

15 in other states. Things might happen such as I&R;

16 initiative and referendum, which might change the

17 lay of the land in many areas.

18 A Proposition-13-type circumstance, so

19 encouraged by Howard Jarvis in California some years

20 ago.

21 Revisions of the debt ceiling, and the

22 ability of governmental bonding and borrowing

23 generally, which could have significant impacts on

24 capitalization of projects, and so forth.

25 And, of course, if one were simplistic

1 and attacked only one phrase, "thorough and

2 efficient education," enormous savings could be

3 achieved instantly throughout our state. And nobody

4 is suggesting the mooting of Robinson v. Cahill or

5 Abbot v. Burke. But, once one gets that ball

6 rolling, where does it end? And the comments made

7 earlier about school spending and so forth, after

8 all, it's approximately two-thirds at the local

9 level. How can that be overlooked?

10 There's a delicate balance that, I

11 think, has to be set in -- which justifies the

12 calling of the convention, and doing that which the

13 Legislature, for some reason, is not able to do;

14 yet, maintaining some appropriate level of control

15 to avoid the crippling of government or the

16 effective delivery of service.

17 I think, clearly, the best method of

18 dealing with questions of taxation and spending is

19 for such questions to be dealt with legislatively.

20 Why would a convention be necessary if the only

21 questions to be placed before said body were those

22 questions which are readily and presently within the

23 control of our legislative body.

24 The deferral, you know, to a

25 constitutional body, does have pitfalls, and they're

1 far-ranging and difficult to estimate at the

2 threshold. One thinks of the Frankenstein monster

3 that was created in good faith, and didn't work out;

4 it turned on its creators. And one could similarly

5 find themselves situated.

6 On the subject of delegate selection,

7 there is no clear precedent. There are many

8 different examples, even within the State of New

9 Jersey. The 1967 model differs from the '47 model.

10 And while one issue, for example, is,

11 should legislators even serve on the constitutional

12 commission -- on the constitutional body as a

13 delegate, this has been debated over the years. On

14 the one hand, one may see a need a for legislative

15 experience, where practicality of the legislative

16 charge is being discussed on a convention floor.

17 But, on the other hand, if the legislator --

18 Legislature is deferring the issues which are

19 presently within the scope of their control to this

20 constitutional body, would we see a duplication?

21 If I may quote from that debate -- and

22 I didn't realize Professor Reock would be here on

23 the panel -- but referring to his book, he quotes

24 the statement of then-Senator Nelson Stambler

25 (phonetic) of Union County on the subject, where he

1 says, and I quote:

2 "Allowing active legislators to take

3 part would only compound the mess by adding the

4 extra and troublesome ingredient of unenlightened

5 self-interest."

6 That was responded to by Governor

7 Hughes at the time, who suggested a limit on

8 legislators. I guess Senator Stambler established

9 some traction with that comment.

10 But we have had, over the years,

11 percentage breakdown on the earlier '66; that is,

12 seventeen percent current members of the

13 Legislature, eighteen percent former members. On

14 the '47 convention, there were eleven percent

15 current and twenty percent former legislators.

16 The issue has to be submitted,

17 resolved as a threshold issue, how this is to be

18 handled. If we are only replicating the

19 Legislature, why are we having a convention? On the

20 other hand, we can't operate in vacuum of

21 legislative expertise.

22 In selecting delegates, one, of

23 course, cannot ignore the elective process. But

24 then we also have to talk about the size. It's been

25 related to the districts in the '47 convention, over

1 eighty-one delegates; and in '66, 126. There, some

2 were casting half-votes, rather involved.

3 There's little doubt that there is

4 some correlation between the size of a body doing

5 work and what's going to get done. And there's also

6 a restricted time frame, one would anticipate, in

7 the charge, and the logistical and scheduling

8 considerations that flow.

9 The position of the AFL-CIO would be

10 to recommend that, in addition to those elected

11 numbers of delegates, that certain others be

12 appointed at large. The specific intent of this

13 suggestion is to ensure that requisite experience

14 and knowledge on those issues is directly at hand

15 before the constitutional convention body.

16 For example, the typical municipal tax

17 levy has a factor for education of about sixty to

18 sixty-five percent. How efficient could such a body

19 be without representation from knowledgeable

20 educators? While we are not here to argue, and

21 certainly not here to argue in support of the League

22 of Municipalities or the New Jersey Association of

23 Counties, they do bring a level of experience and

24 practical knowledge, which would be an asset to a

25 body otherwise formed, and would increase focus and

1 efficiency.

2 One cannot ignore other major

3 organizations, too. However, the largest single

4 representative bodies in the entire state also

5 cannot be overlooked.

6 The government is a labor-intensive

7 industry; it certainly is. It is the position of

8 the New Jersey State AFL-CIO that labor must have

9 representation at such a convention, and it must be

10 so arranged in the initial enabling legislation.

11 Labor must have a seat at the table. With due

12 respect to other organizations of varying size and

13 scope, the best equipped and the best prepared is

14 the New Jersey State AFL-CIO.

15 A suggestion would be that, in

16 addition to the elected convention persons, there

17 would also be reserved delegate positions; for

18 example, five to the Governor's Office and five to

19 each house of the Legislature, with a specific

20 intent to bring into play these other areas of

21 expertise. The specific charge would be very

22 focused in that regard, and I think it must be done

23 up front.

24 The other area on selection I wanted

25 to comment on is the voting. The time line would

1 likely be your recommendation by the end of the

2 year; and, assuming it's in favor of a convention,

3 legislative action next year, with a ballot going to

4 the people in November of '05. It is suggested that

5 there would be a separate vote in April of '06 to

6 select delegates, and this is the reason:

7 First, one must determine whether or

8 not there is to be a convention before the

9 contingent question of who would be on it would be

10 selected. There's a model for this. In fact, in

11 '66, there was a special election held on March 1 of

12 that year. That might be more costly than the April

13 date we're suggesting because there's already an

14 election across the state, the school board

15 election, in April. So second-balloting, second-

16 printing, second duplication of efforts would be

17 avoided to some degree.

18 The second question, in April would

19 also give an opportunity for campaigning, which is

20 another issue this body must consider, or the

21 Legislature perhaps must consider. Again, quoting

22 the professor's book, and it's dealt with at length,

23 I'll just mention that the use of -- quoting:

24 "The use of party names and slogans,

25 the bracketing of names on the ballot was

1 specifically authorized."

2 So there was an entire campaign

3 procedure with respect to the delegate body. And an

4 April date would seem to be appropriate there.

5 It might also provide some support

6 that somebody will go out and protest the two-thirds

7 piece of their tax on the school board, where we

8 typically get across the state about twelve percent

9 voter turnout on the two-thirds piece. Yet, when

10 we're in the municipalities, talking about other

11 types of public service, there are frequently

12 comments made that, you're driving up the tax rate;

13 yet, only a fraction of the people who can vote, do

14 vote.

15 We are not taking a position at this

16 time with respect to whether or not there should be

17 a convention, only to these two procedural points

18 referenced. Thank you for the opportunity to speak

19 before you.

20 MR. VAN HORN: Thank you very much,

21 Mr. Locke.

22 Joan, your timing is impeccable.

23 Welcome, and sorry we don't give you a chance to

24 settle in, but if you're ready, we'd like to have

25 you give your remarks, as well, and then we'll start

1 the questioning of the task force.

2 MS. VER PLANCK: Thank you. My

3 apologies. I was on Route 1, and a double-ambulance

4 accident, so it took quite a bit of time to get

5 here. But I'm better off than they are, we should

6 all have them in our prayers and thoughts, I

7 suppose.

8 Good afternoon. I'm Joan VerPlanck,

9 President of the New Jersey Chamber of Commerce, a

10 Trenton-based trade association that represents

11 2,500 businesses across the state. I thank you for

12 giving me the opportunity to speak before you here

13 today, and I appreciate the seriousness of the

14 assignment that is before you.

15 The property tax crisis in New Jersey

16 is a tremendously difficult issue, one that can only

17 be solved by everyone working together to find

18 innovative and dynamic solutions.

19 The state chamber's board of directors

20 has not had the opportunity to consider the pros and

21 cons of a constitutional convention, nor have they

22 taken an official position on the issue. That said,

23 they have had ample opportunity, particularly over

24 the last few years, to consider the overall impact

25 of taxation on the business community.

1 Early in this discussion on how to

2 solve the property tax dilemma, I'm not surprised

3 that some are already recommending that the employer

4 community should pay more so that tens of thousands

5 of homeowners in the state do not have to. If there

6 is one point to be made to the members of this panel

7 in the few minutes I have before you here today, it

8 is that targeting the business community to shoulder

9 the bulk of property tax relief would be a

10 disastrous mistake.

11 New Jersey's long-term economic

12 expansion is already seriously threatened by the

13 state's current policies toward business, and the

14 nation is taking notice. A flurry of recent

15 research has placed New Jersey at the bottom of the

16 pack when it comes to how the state is viewed

17 nationally as a place to conduct business. This is

18 research that is examined closely by out-of-state

19 companies deciding where to relocate, or by New

20 Jersey companies considering expansion.

21 New Jersey ranked forty-second out of

22 fifty states in economic opportunity, according to

23 the May 2004 U.S. Economic Freedom Index 2004

24 report, which is published by the San Francisco-

25 based Pacific Research Institute, in association

1 with Forbes magazine. The ratings are based on

2 state spending, occupational licensing,

3 environmental regulations, income redistribution,

4 right to work, and prevailing wage laws, tort laws,

5 and a number of government agencies.

6 Similarly, the Washington D.C. based

7 Tax Foundation ranked New Jersey fortieth in a study

8 examining business tax climates in the nation's

9 fifty states.

10 Another recent study from the Council

11 on State Taxation; "COST," also based in Washington,

12 revealed that New Jersey businesses shoulder the

13 sixth-highest state and local business tax burden in

14 the nation, paying an average of $4,613 in business

15 taxes for each and every employee.

16 COST also reported that, since New

17 Jersey's 2002 corporate business tax overhaul, no

18 other states have followed our lead and crafted such

19 massive changes. COST findings are not surprising.

20 Those opposed to the CBT rewrite predicted that no

21 other state would willingly damage its business

22 retention and attraction efforts by adopting New

23 Jersey's policies.

24 CFO magazine released a study earlier

25 this year listing the states with the least-friendly

1 tax environments for business, in which they called

2 New Jersey, quote, "the falling star" of their

3 survey. Respondents ranked New Jersey's tax

4 environment least fair and predictable of all fifty

5 states, and named the Garden State least desirable

6 when it comes to locating or expanding a business.

7 In the nine-question survey of corporate CFOs from

8 around the country, New Jersey ranked worst in four

9 among the five worst -- in four categories, and

10 among the five worst states in four others.

11 I cite these studies because

12 increasing the tax burden on New Jersey businesses

13 would only further damage the reputation of our

14 state as a desirable place to do business. At a

15 time when we so desperately need to create private

16 sector jobs, we should avoid crafting policies that

17 will further discourage companies from setting up

18 shop or expanding in our state. As these studies

19 reveal, New Jersey's businesses already pay an

20 exorbitant amount of taxes in comparison with other

21 states in the nation.

22 The New Jersey business community paid

23 $15.6 billion of the 37.9 billion total tax burden

24 in New Jersey in 2003. This equals 41.1 percent of

25 the total state and local tax burden.

1 Property taxes in New Jersey account

2 for over 45 percent of total state and local

3 revenue. In fiscal year 2003, New Jersey employers

4 paid over $7 billion in property taxes to local

5 entities and to the state. This represents a 13.2

6 percent increase in property taxes paid since fiscal

7 year 2000.

8 Any discussion of property tax reform

9 must also include a serious discussion about cost-

10 cutting measures, such as the consideration of

11 levels of government, the elimination of duplication

12 of services, the regionalization of schools, and

13 many other factors that currently challenge our

14 state.

15 Senator Adler, in a release dated

16 September 21st, said essentially the same thing,

17 quote:

18 "We need to look at the tax side, as

19 well as the spending side, to make sure that tax

20 relief this year is not outdone by local spending

21 jumps the next."

22 It's time to question expenditures to

23 determine whether they are necessary, fair, and

24 reasonable, rather than simply determining who will

25 pay. Ideally, this issue should be addressed by the

1 Legislature.

2 Should you, however, following your

3 deliberations, recommend a constitutional

4 convention, I would ask that you consider assembling

5 a delegation that is reflective of the taxpayer

6 community. The number of delegates from the

7 business community should be commensurate with the

8 percentage of property tax dollars provided by that

9 community. I believe that you can find a great deal

10 of talent within this community, and assure you that

11 the leadership of my organization will assist in

12 identifying individuals for consideration.

13 Thank you for the opportunity to speak

14 before you today. I hope that you will consider

15 seriously the impact on the business community

16 before adopting any recommendation that can damage

17 the long-term economic growth of our state. The

18 business community needs to be part of this

19 discussion. So I look forward to continued dialogue

20 on this issue as the process continues. Thank you.

21 MR. VAN HORN: Thank you very much.

22 I just want to recognize Sherryl

23 Gordon and Jo-Anne Schubert, members of the task

24 force that came in after the panel started.

25 And I would, as before, recognize

1 panel members who would like to ask questions of our

2 witnesses.

3 UNIDENTIFIED: Mr. Chairman?

4 MR. VAN HORN: Yes.

5 UNIDENTIFIED: Assuming the convention

6 moves forward, and making another assumption, that

7 there's not additional tax burden placed upon the

8 business community by shifting from the residential

9 end, in your opinion, do you view any of the

10 existing or different business tax, would that be

11 more equitable than property taxes?

12 (Participants confer)

13 UNIDENTIFIED: I'm not sure I quite

14 understand the question.

15 UNIDENTIFIED: Well, again, making two

16 assumptions --

17 UNIDENTIFIED: Right.

18 UNIDENTIFIED: The convention moves

19 forward, and there's not a shifting a taxes on to

20 the business community, but rather proportionately

21 remains the same, in your opinion, is there a fairer

22 tax to the business community than property tax.

23 MS. VER PLANCK: Oh, so you're just

24 asking us to pick our poison?

25 UNIDENTIFIED: In essence, making the

1 assumption that your tax load is not going to be

2 changing. But is there a more equitable method in

3 which to tax businesses, besides the existing

4 property tax method.

5 MS. VER PLANCK: We've already got so

6 many fees, fines, taxes on everything from income to

7 filing for permits. I guess I don't know what the

8 numbers -- you'd have to look at the numbers and

9 then better understand.

10 But if what we're talking about is

11 just freezing the property tax where it is for

12 businesses, but then finding more money somewhere

13 else, it just exacerbates the problem. It's still a

14 greater percentage of the tax is for the business

15 community, I would think.

16 (Mr. Kirschner not identified for the record)

17 MR. KIRSCHNER: I would agree. I'm

18 not sure there's a book -- a favored tax, so to

19 speak. There are modifications to existing taxes,

20 like the corporate income tax, where actually for

21 the New Jersey resident corporation, the

22 disadvantage if you have property here and a payroll

23 here, versus somebody who just uses sales, New

24 Jersey as a sales office, they pay less taxes.

25 (indiscernible) we've advocated for a long time that

1 all companies should just be taxed on state sales,

2 to make it equitable.

3 But I'm not sure if it's

4 (indiscernible) taxes that just one that is

5 considered better than another.

6 (Mr. Goldberg not identified for the record)

7 MR. GOLDBERG: Well, I would say a

8 reduction would probably be a good idea to encourage

9 development in the state, to encourage more

10 companies to come here, and also to increase the

11 amount of jobs in the state, to make us more

12 competitive with our neighbors out there in

13 surrounding states. So it's not always a matter of

14 which tax would be better. Making us more

15 competitive will generate more income and revenue

16 for the state, as well as provide more jobs.

17 MR. VAN HORN: Assemblyman O'Toole?

18 ASSEMBLYMAN O'TOOLE; Yeah, I just

19 want to touch upon what, Richard, you just hit upon.

20 I mean, we're not really talking about, you know,

21 picking our poison. I think what I'm hearing from

22 the four of you is that we really have to look at

23 the spending, as well as revenue. And when you say

24 "look at spending," it's because we have to cut

25 spending. Is that what I'm hearing?

1 Because, frankly, the costs you're

2 absorbing right now are, frankly, costs that are

3 just too much. Is that what I'm hearing?

4 MR. GOLDBERG: There's no business out

5 there that can operate the way the state, local, and

6 county governments operate, spending more than they

7 are able to take in. And then the result is having

8 to just increase taxes to avoid this increased

9 spending. I think, for all of us, none of our

10 companies would survive if they operated that way.

11 MS. VER PLANCK: There's a --

12 MR. VAN HORN: Mr. Locke.

13 MS. VER PLANCK: Oh, I'm sorry.

14 MR. VAN HORN: Mr. Locke, did you want

15 to make a comment? Then we'll come back to you,

16 Joan.

17 MR. LOCKE: Yes, the fact -- what

18 Assemblyman O'Toole mentioned, the inextricable link

19 between revenue and -- and expenditure; that one

20 cannot just attack one side of the formula. If

21 people make a choice in a given municipality or a

22 county of a certain level of services, then that

23 must be linked. One cannot defer the

24 responsibility, one cannot ask for the Legislature

25 to make it go away; or, in this case, a

1 constitutional convention to act in some magical or

2 mystical form.

3 It's a very -- when they run their

4 businesses, they have a similar consideration. Why

5 is it so, you know, obtuse, or do we deal with it in

6 such an obtuse way here.

7 MR. VAN HORN: Go ahead.

8 ASSEMBLYMAN O'TOOLE: One follow-up.

9 If you've exhausted your explanation, I have a

10 different --

11 MS. VER PLANCK: I just have one more

12 point to make.

13 ASSEMBLYMAN O'TOOLE: Yes.

14 MS. VER PLANCK: We know that, as the

15 Governor has pointed out, there are many school

16 districts that don't even have a suitable number of

17 children to have a school district for. We know

18 that there's tremendous overlap between

19 municipalities and counties. I know that there was

20 a study done a couple of years ago that pointed out,

21 if you, say, got rid of county government and went

22 into districts, so you'd share purchasing power and

23 the like, but you'd have them grouped around

24 legislative districts, you could save roughly $3

25 billion a year, which would then maybe open the door

1 to discussions for consolidations of school

2 districts, which would save immense amounts of

3 money.

4 So I mean, you know, we've always --

5 rather than saying, you know, why are we paying more

6 for -- per student than any other state in the

7 nation, any other country in the world, we just say,

8 how are we going to pay for it, who's going to bear

9 the burden. We don't ask whether it's a legitimate

10 burden, we just say, how are we going to pay for it.

11 We'd like to back it up and ask, why are we buying

12 it in the first place.

13 ASSEMBLYMAN O'TOOLE: Chairman, the

14 second question I'd like to ask, we talked about the

15 delegate selection, and I'm curious about some of

16 the testimony that talks about it should be

17 reflective of the population. I mean, how do we do

18 that?

19 You know, Richard, you talked about

20 whether the Governor would have five allocations,

21 and maybe both houses have five, and perhaps you're

22 going to have a special allocation to make sure the

23 unions and business, and make sure that minority

24 groups are represented.

25 If we have forty districts and we have

1 elections, how do we guarantee a balance,

2 nonpartisan, bipartisan, special interest, non-

3 special interest in that scenario.

4 MR. LOCKE: I'm not sure that it's any

5 more doable than the creation of the Legislature as

6 it's imposed today in the makeup of the Senate and

7 the Assembly. We have our legislative districts,

8 and they are apportioned, and they are apportioned

9 with some rationale, and that is a basis to work

10 from.

11 The reason we suggest this amount of

12 at-large delegates is to ensure that the body does

13 not meet without governmental finance knowledge.

14 There's a labyrinth on governmental finance at the

15 local and county and state level, of course.

16 Someone has to understand what's going

17 on. We cannot have simplistic approaches taken to

18 complex problems that will only create more issues

19 down the line; particularly where to cure a

20 constitutional change may require another

21 constitutional amendment and we're compounding the

22 problems.

23 There should be a mix, and not --

24 we're talking about a mix of people with experience

25 and knowledge of the subject matter. It will still

1 be in the minority of the -- if there are eighty

2 delegates, an example, I suggested fifteen, those

3 are just suggested numbers. But there should be

4 someone there who understands the nuts and bolts of

5 the operation and can offer that information at the

6 time.

7 MR. VAN HORN: Phil, do you want to

8 comment on that?

9 MR. KIRSCHNER: Yeah. A mix is -- is

10 a very important concept, as Mr. Locke has proposed.

11 It's -- because, otherwise, the electoral process,

12 left to its own device, is -- will result in special

13 interests. So you can have a mix of both appointed

14 and elected.

15 The other thing is, the reservation of

16 slots, there is precedent there. We elect our

17 county committee people all over the state with male

18 and female. Why? Because we say, because that's

19 what it says, we'll have male and female. So it's

20 not unprecedented to reserve slots, in this case

21 gender. But there certainly is a precedent that has

22 held up for many, many, many years.

23 MR. VAN HORN: Does anyone else want

24 to comment on the delegate selection process.

25 MR. GOLDBERG: Yeah. I think just to

1 echo something Joan had in her comments, I think you

2 need to make sure that the business community, which

3 does pay over forty percent of the taxes in the

4 state, are well represented. The taxes -- those who

5 pay the taxes should be well represented on this

6 eventual board through the process.

7 I can't give you an exact breakdown of

8 what we would recommend that should be, but I think

9 any group that is responsible for paying in a large

10 share should be well represented.

11 MR. LOCKE: If I may just add one

12 point on that. When one considers the methodology

13 of setting up the delegate body, one must also

14 consider, I think, issues such as compensation and

15 any others, not to increase the cost of this process

16 unnecessarily.

17 However, if there is a limited time

18 within which work must be done, be it ninety days or

19 one eighty or whatever, who can afford to leave

20 their businesses or jobs for perhaps extended

21 periods to go to New Brunswick or wherever to work

22 on this process, and forego pay? So one compounds

23 the problem. We don't want to have just wealthy

24 people, who can afford to take substantial blocks of

25 time off from their businesses, or suffer for it,

1 for that matter, if they're not (indiscernible).

2 MR. VAN HORN: Uh-huh.

3 MR. LOCKE: So there has to be a

4 balance in many areas. Okay?

5 MR. VAN HORN: Dr. Cole, and then

6 Senator Van Wagner.

7 DR. COLE: Mr. Locke, you mentioned

8 quite articulately the problems of narrowing this

9 very complicated question on property tax and how

10 its tentacles went out and touched a whole variety

11 of other areas. Have you given any thought to how

12 you would frame the question?

13 MR. LOCKE: Well, the threshold

14 question is whether we're dealing with issues that

15 are now available for legislative action, or is

16 there some reason to call a convention, as per our

17 next question to this body.

18 DR. COLE: But if there is a

19 convention.

20 MR. LOCKE: Well, if we are

21 replicating the Legislature, there is one set of

22 concerns. If we're going to have something

23 different done, a different set of concerns, the

24 initial charge, the enabling legislation for

25 (indiscernible) if you will, is critical; in that,

1 it must be sufficient to give a reasonable charge

2 and scope or realm within which to act by the

3 ultimate convention body; yet, it must not be so

4 broad or vague as to give the keys to the kingdom to

5 people, persons unknown, unnamed, of whatever point

6 of view.

7 If, for example, you put on the

8 ballot, the state puts on the ballot, you want to

9 save money, vote yes on -- you know, who's going to

10 say no to that one? How do you want to start the

11 ball rolling? That's why I suggested earlier a

12 separate election for delegates, as opposed to the

13 question itself. Because one can easily structure a

14 result by just how the question is presented to the

15 public. And that will go back to the people in the

16 Legislature, how they handle it next year.

17 You know, if we need a convention, we

18 have to strike a balance. I wish I had the answer

19 today; I don't, to say, this is the reason to have a

20 convention, but this is too much to give them. It's

21 pretty delicate, pretty dangerous. That's why I

22 used the Frankenstein analogy.

23 (End of Tape No. 1, Side A)

24 (Beginning of Tape No. 1, Side B)

25 SENATOR VAN WAGNER: I take it all of

1 you -- this work?

2 I take it all of you in your comments

3 basically would prefer not to have a Constitutional

4 convention. Is that right?

5 MS. VER PLANCK: The State Chamber is

6 not taking a position.

7 SENATOR VAN WAGNER: You don't have a

8 position.

9 MR. KIRSCHNER: We were part of a

10 special session --

11 MR. GOLDBERG: For us, depending on

12 what it entails, what comes out of this Commission

13 will depend on whether we can support it or not.

14 MR. LOCKE: The State AFL-CIO is not

15 taking a position on that question.

16 SENATOR VAN WAGNER: Should this panel

17 recommend it, or recommend something to the

18 legislature that would call for a Constitutional

19 Convention, would you be opposed, in favor or

20 neutral on whether or not that convention also had

21 the power to change statute as well as -- or

22 recommend changes in the statute?

23 Do you have any feelings about that?

24 MR. KIRSCHNER: Well, focusing perhaps

25 on some previous discussion if you're going to have

1 it it should be as narrow as possible.

2 We couldn't agree more that if you're

3 going to have it, it really -- it can't be wide

4 open; otherwise, that does replicate everything the

5 legislature does.

6 The comment was made -- I mean, even

7 right now we're talking about issues of spending and

8 taxation. What's so unique about that? There's

9 special sessions of the legislature held every

10 single year in this country in different states

11 dealing with those specific issues of taxes and

12 spending. This is not something unique or drastic.

13 Every single year in various states

14 there are special sessions devoted to that.

15 SENATOR VAN WAGNER: Well, why do you

16 suppose those states are successful in getting that

17 done and we're not?

18 MR. KIRSCHNER: We've never had a

19 special session.

20 SENATOR VAN WAGNER: Yes, we have.

21 MR. KIRSCHNER: You know, not in

22 recent --

23 SENATOR VAN WAGNER: No. But we have

24 had --

25 MR. KIRSCHNER: -- not in recent

1 history. So it's hard to answer that until we try.

2 But certainly, before we go to a Constitutional

3 Convention that is -- that is something of which

4 there's precedent, it has worked in other states,

5 we'll look at best practices there. And it's worthy

6 of consideration.

7 SENATOR VAN WAGNER: Do you think

8 that, taking your suggestion, if we were to

9 establish or recommend the establishment of a

10 selected slate and an appointed slate of super

11 delegates or whatever you wanted to call them, you

12 think the public might look askance, given the view

13 the public is getting of government in New Jersey

14 being run basically by special interests? Do you

15 think the public would again look askance at that

16 type of recommendation?

17 MR. KIRSCHNER: I don't know that the

18 public cares that much how it's composed. I think

19 they care what comes out of it -- out of the

20 Constitutional Convention.

21 SENATOR VAN WAGNER: So you don't

22 think the public is concerned at all about the

23 process that we -- I recommend?

24 MR. KIRSCHNER: I think they're

25 concerned about the process, but I think they're

1 concerned more about the result. They're concerned

2 more that it -- that it be something that lowers

3 property taxes.

4 MR. GOLDBERG: I think the public

5 would be extremely skeptical no matter what we do.

6 It's just in New Jersey unfortunately we've set a

7 different type of tone out there amongst the

8 electorate and anything could be termed political

9 and usually is.

10 So I think it would have -- if it does

11 move forward, it would have to move forward

12 regardless of this perception because it will be --

13 I believe it will be there.

14 SENATOR VAN WAGNER: Thank you.

15 MR. LOCKE: When commenting on that

16 example, I purposely use the example of eighty

17 delegates elected and fifteen appointed keeping

18 those people in a distinct minority but they would

19 not be able to, well it's theoretically possible

20 swing a vote, political skepticism is something we

21 live with in New Jersey daily. But I think if we

22 have to trade that off with having expertise at the

23 table rather than have people creating something

24 which they have -- perhaps a majority of whom have

25 never seen before or dealing with concepts they have

1 not seen before, I think the tradeoff is well worth

2 taking.

3 MS. VER PLANCK: Could I just add one

4 thing to that?

5 SENATOR VAN WAGNER: Yes.

6 MS. VER PLANCK: I mean, when we talk

7 about expertise, and I know Phil was part of this

8 and when we went through the corporate business tax

9 exercise and the business organizations in the state

10 really did try to come together and look for

11 alternatives to what we actually ended up with, and

12 there is so much tax expertise in the tax

13 departments of these major corporations who do

14 business all over the country, all over the world.

15 They know where other states find the money. They

16 know what makes us competitive. They know what

17 makes us uncompetitive.

18 They -- I don't know. Phil, to my

19 mind, I was amazed at the kind of expertise we have

20 at our fingertips with some of these bigger

21 companies who have enormous tax departments.

22 So, you know, when I mentioned about

23 having some representation for the business

24 community I wasn't suggesting that the person who

25 has a twelve-employee Quick Check is the person you

1 necessarily want here. But we do have a great deal

2 of far-reaching tax expertise in the state that

3 isn't governmental.

4 SENATOR VAN WAGNER: I take it Quick

5 Check is not one of your accounts.

6 MS. VER PLANCK: Is this on the radio?

7 SENATOR VAN WAGNER: It's being

8 recorded. Thank you.

9 Phil, in your statement you

10 highlighted that you strongly believe that spending

11 at the school and municipal side should not be

12 included. You go on to say that spending at all

13 levels should be considered.

14 But are we to -- to take that as the

15 NJBIA's position that the most serious problems are

16 in the school on the municipal side or --

17 MR. KIRSCHNER: It's all government

18 spending. School side certainly accounts for

19 anywhere between sixty and two-thirds of spending

20 dollars fall a lot less than that, ten to fifteen

21 percent. But it was meant to include all spending.

22 SENATOR VAN WAGNER: So County and

23 State --

24 MR. KIRSCHNER: Yeah, absolutely.

25 SENATOR VAN WAGNER: Thank you.

1 MR. VAN HORN: Mayor Schubert.

2 MAYOR SCHUBERT: Thank you. You've

3 talked about delegate selection, but I don't think

4 I've heard anybody talk about how the delegates

5 finance their campaigns, will there be allowed to be

6 special interests making donations with all of the

7 pay-to-play talk and concern about special interests

8 having a hand in that.

9 Will there be a -- do you suggest that

10 there's a way that they can finance the campaign

11 without that special interest background?

12 MS. VER PLANCK: Well, my initial

13 concern, again, this hasn't been vetted with my

14 board yet, but for anybody who's spent any time

15 looking at initiative and referendum and how it's

16 played out among the states historically, once you

17 get really good at INR it's whoever throws the most

18 money behind the issue wins.

19 And so the general population pretty

20 much decides that. They -- they've selected,

21 they've picked their poison or whatever. They've

22 done it. But they've been so influenced by the

23 amount of money that's been plowed into that side of

24 the issue.

25 So this is almost like a -- the same

1 kind of situation. And short of public financing

2 and limiting public financing I don't know how you

3 control that. But that's personal opinion.

4 MR. VAN HORN: Any other views on the

5 financing?

6 MR. GOLDBERG: Yeah. Again, we

7 haven't taken a formal position on that or reviewed

8 it enough either. But I could say that whatever

9 guidelines are put on there they should be stringent

10 and unwavering. And it should be much more strict

11 than current legislation such as Pay to Play and

12 others.

13 There should be no way that this --

14 this process could be considered compromised. And

15 although we don't have a list of all the methodology

16 that has to happen, I think when you do finally come

17 out if you do recommend this, that there is a very

18 serious and strict list of requirements that can't

19 be circumvented. And too many -- too many of the

20 ways that elections do take place can be.

21 MR. LOCKE: Yes. With a follow-up to

22 the question. With respect to the issue, and it's

23 been stated a few times before, if one follows the

24 same path as we use to elect our officials today we

25 will replicate that in the Constitutional Convention

1 floor.

2 The suggestion of cross-sectional

3 representation which we addressed in a very small

4 way, fifteen out of ninety-five, was meant to bring

5 other people to the table though we'll have

6 differing views.

7 You know, it's been said that a camel

8 is a horse, you know, joined by a committee. And we

9 don't want one of those in New Jersey. We want an

10 efficient and effective moving forward.

11 With respect to campaign finance

12 reform, that's an issue that goes beyond our remarks

13 here or my remarks here. However, perhaps that is a

14 way to go rather than have the same interest groups

15 present the same -- and that includes the League of

16 Municipalities, by the way, advanced therapy.

17 MAYOR SCHUBERT: Thank you. And just

18 as a follow-up to that, based on what you've said it

19 sounds like you want to keep special interest money

20 away from this and basically let the people of New

21 Jersey make decisions about who the delegates will

22 be.

23 So that brings me to the question,

24 Governor Burn had made a suggestion to us that there

25 be a super slate of candidates presented to the

1 public and the public has the right to either vote

2 yes on them or vote no on them and not vote anyone

3 else in.

4 Do you feel as though it's better to

5 have it sort of wide open to the public to have

6 delegates run or to have that super slate presented?

7 MR. LOCKE: I think wide open would be

8 preferred rather, than have them called to vote yes

9 or no on one question.

10 UNIDENTIFIED: An at-large slip.

11 MR. LOCKE: Yes.

12 MR. VAN HORN: Dr. Reock?

13 MAYOR SCHUBERT: Thank you.

14 DR. REOCK: The purpose of a

15 convention is to change the constitution. Now in

16 terms of the scope of this proposed Constitutional

17 Convention, are there any sections of the present

18 constitution that you believe should be changed,

19 something which gives your -- the people you

20 represent problems?

21 And, secondly, are there any sections

22 of the present constitution that you believe should

23 not be changed and should not be within the scope?

24 MR. LOCKE: I can say we didn't make

25 the proposal. We have not come asking for

1 constitutional change.

2 MR. KIRSCHNER: I would say we're very

3 much opposed to changing the uniformity, the uniform

4 taxation clause of the current constitution

5 whereupon all property is taxed at the same rate,

6 that there is no distinction between residential

7 property or property owned by employers.

8 MS. VER PLANCK: I would like to -- I

9 have not had the opportunity to even look at it in

10 that light, but I'd like to ask to get something

11 back to you in writing. Let me go take a look and

12 float that and see if, you know -- I'll send a

13 follow-up response. Is that all right?

14 MR. VAN HORN: Absolutely.

15 MR. GOLDBERG: Yeah. We concur with

16 the taxation, that it does remain -- the property

17 taxation remain equal across both commercial and

18 residential. It's something that we've looked at

19 and our members are very concerned about.

20 MR. VAN HORN: Okay. I want to thank

21 you very much, ladies and gentlemen -- lady and

22 gentlemen, for coming here today and sharing your

23 views.

24 Let me just reiterate that we

25 certainly welcome your further communication with us

1 if you so desire, and you could just send that to

2 the governor's office in care of the task force and

3 it will be distributed to all members of the task

4 force.

5 Thank you very much for your -- for

6 coming here today.

7 I'd like to --

8 MS. VER PLANCK: Would you like copies

9 of --

10 MR. VAN HORN: Yes, please. Yes.

11 I'd like to ask the second panel to

12 come forward, please.

13 Welcome to you all. We have Mr. Jeff

14 Tittel who is the Chapter Director of the New Jersey

15 Sierra Clubs. And Jeff, you want to say hello?

16 MR. TITTEL: Hi.

17 MR. VAN HORN: I know you are -- it

18 says Sierra Club in front of you, so people will

19 figure out who you are.

20 We have Judith Cambria from the --

21 who's the Fiscal Policy Specialist from the League

22 of Women Voters and Mr. John Shure who's President

23 of the New Jersey Policy Perspective.

24 And we welcome you all and we'll begin

25 with Mr. Tittel.

1 MR. TITTEL: Thank you. Jeff Tittel,

2 Director of the New Jersey Sierra Club.

3 The Sierra Club, which is the nation's

4 oldest and largest conservation organization, looks

5 at property taxes probably differently than many of

6 the other people in this room.

7 We look at it as really a tax that

8 furthers the disruption of open space and natural

9 resources. We see it as one of the driving forces

10 in the state for sprawl.

11 We believe that the so-called ratables

12 chase is one of the reasons that New Jersey is the

13 most densely populated states in the -- it's the

14 most densely populated state in the country and our

15 population is more denser per square mile than Japan

16 or India. And the only thing that's been denser has

17 been the politicians who don't seem to get it.

18 We believe that in order to really

19 deal with the environmental issues that face the

20 State of New Jersey, since we are, number one, in

21 watersheds that are considered impaired or polluted

22 or a threat for pollution, we're number one in

23 vehicle miles traveled and we're number one for

24 ground level ozone. We see the direct impacts of

25 sprawl and over-development on a daily basis.

1 And, in fact, New Jersey is losing

2 land at a rate quicker than any other state in the

3 union. One percent of New Jersey every year is

4 paved over. And we will be the first state to run

5 out of land.

6 And one of the driving forces has been

7 and will always be some of the misperceived notions

8 on the ratables chase, that towns think that they

9 can grow themselves into prosperity, that by

10 allowing this new subdivision to come in here or

11 this new development over here that they'll have new

12 money for a new library or a new ball field. And

13 what turns out to be a ratables dream ends up to be

14 a sprawl nightmare because not only do they lose

15 open space and environmental quality and quality of

16 life, but they end up spending more money on taxes,

17 not just to service the new populations and even new

18 businesses, but because of infrastructure

19 improvements that will be necessary to move that

20 population around and deal with flooding or so many

21 other things.

22 In fact, when you look at studies of

23 even something as positive that some people may

24 think from a tax side as this new Xanadu proposal up

25 in the Meadowlands, we estimate in order to properly

1 move the people in and out of this 1.3 billion-

2 dollar so-called rateable, it will cost the

3 taxpayers over $1.5 billion for light rail and rail

4 improvements as well as road improvements just to

5 bring people in and out of that region that's

6 already over-burdened with -- with traffic.

7 And that's true for around the state

8 when you look at the needs that we have with falling

9 down roads and roads that need to be improved, with

10 the need for more light rail and other transit

11 options. That's a direct relationship of our land

12 use patterns.

13 And at the same time it promotes

14 sprawl in rural areas. The property tax situation

15 we have in New Jersey also undermines urban

16 revitalization.

17 If you look at the major cities in New

18 Jersey and you would like to go and buy a home, you

19 will find out that your tax rates for local property

20 taxes are through the roof because most of our

21 cities and older communities have to, you know, bear

22 their disproportionate share of governmental

23 function, whether it's hospitals, universities,

24 governmental buildings, airports. And you'll find

25 out that if you want to buy a nice three-bedroom

1 cape cod in the city of Paterson as a friend of mine

2 did, the house is assessed at about $200,000 a year,

3 he's paying $12,000 in property taxes.

4 It's true in Newark, it's true in

5 Elizabeth as well and so it really becomes

6 inequitable. In fact, a friend of mine moved into a

7 new place in Elizabeth and because they were in a

8 new development and they had not had a re-val in a

9 long time, they were paying $17,000 a year in taxes.

10 And so it affects both urban and rural areas of the

11 State of New Jersey and it really does undermine not

12 only our quality of life but the ability to try to

13 bring populations back into the cities as well.

14 So we strongly support the

15 Constitutional Convention. The system that we have

16 we keep talking about changes, but we keep doing the

17 same thing over and over again and expecting a

18 different outcome. And that's really the definition

19 of insanity, doing the same thing time and time

20 again and thinking it's going to turn out

21 differently.

22 It's not going to -- what we're doing

23 now isn't going to work. You know, homestead

24 rebates, extra state aid, school aid, all those

25 things are just band-aids on a brain tumor. We've

1 got to get to that cancer that's causing the sprawl,

2 urban decay and high property taxes in New Jersey.

3 And we believe that a Constitutional Convention is

4 the appropriate step in the right direction.

5 Unlike some of the people in the

6 previous panel, we don't believe the legislature --

7 having a legislative session will do it. They've

8 had their opportunities. They've punted so many

9 times. I think that it really is up to the citizens

10 of New Jersey to be the ones to fix the problems

11 that we have. That we cannot necessarily trust the

12 legislature because there is so many special

13 interests and different interest groups that are

14 pressuring them.

15 And also to take the political heat of

16 doing something that could be unpopular is another

17 reason why I think that a Constitutional Convention

18 is the way to go.

19 We believe that the convention should

20 be made up of diverse groups and people, not

21 dominated by any one interest. We believe there

22 should be a mix of populations.

23 One of the things that we think should

24 happen is that there should be no PAC money allowed

25 at all. We believe that, quite frankly, even though

1 I'm a registered lobbyist, I don't believe lobbyists

2 should be allowed to run.

3 I think it should be citizens as much

4 as possible and interest -- and people who are

5 actually knowledgeable in the field.

6 We would look at trying to run people

7 in districts by petition, not by interest group.

8 But we do think that there may be a need to also

9 have expertise and other people with more expertise

10 and others either appointed or maybe run as part of

11 an at-large slate. But maybe instead of just voting

12 yes and no you can have a larger field of candidates

13 where maybe five out of twelve or -- or fifteen out

14 of twenty-five would actually be elected by the

15 population so that you can bring in some people who

16 have more expertise in the different fields.

17 But also when you set up the

18 convention to bring in experts to help educate the

19 delegates, whether it's financial experts or land

20 use experts, but to really bring in people with a

21 broader range to actually help, you know, make the

22 Constitutional Convention a place for learning as

23 well as a place for coming up with solutions to New

24 Jersey's problems.

25 There are many ways we can help deal

1 with some of the -- you know, some of the problems

2 that we have and with taxing in New Jersey, allowing

3 for things like more tax sharing, looking at natural

4 resources or consumption-based taxes. There are a

5 lot of things there.

6 But the one thing I will mention, and

7 I don't think the people of New Jersey, you know,

8 are not anti-tax. We have some of the highest

9 property taxes in the country, if not the highest

10 rate. But yet 244 towns in New Jersey and all

11 twenty-one counties have raised their property taxes

12 to buy open space.

13 So I think when the public sees that

14 there's a public benefit in what they're doing and

15 it's one of the ways that they can help limit the

16 sprawl and help protect their communities, people

17 are willing to spend more money. I think it's going

18 to take real leadership and I think that if that

19 leadership comes from the convention I think there's

20 a good chance of getting it done versus the system

21 we have which is -- which is not working.

22 We also think that as part of this we

23 should be looking at regionalization of services and

24 other ways of helping to fix government. You know,

25 every town zones for every possible use. And it

1 doesn't make sense that one town, you know, have,

2 you know, industrial parks, office research,

3 commercial, block store, you know, when we should be

4 thinking more regionally. And by sharing services

5 and sharing possibly your tax base it may actually

6 help make a better and more reasonable comprehensive

7 planning in New Jersey, which I think is the other

8 part that we need to really look at if we want to

9 deal with the property tax issue so that we look

10 more holistically at our -- at the regions of the

11 state.

12 When you look at the pinelands, the

13 towns that are in a no-growth of the pines have done

14 much better economically than the towns in the

15 growth areas when it comes to property taxes. So we

16 need to really look more holistically with regional

17 planning if we really want to deal with the property

18 taxes.

19 And just an ending, you know, John

20 Gorka (phonetic) who's a folk singer from New Jersey

21 always had the line that, I don't expect a lot, I'm

22 from New Jersey, if the world will end tomorrow I

23 will cope, I'm from New Jersey.

24 Well, I think that we need to raise

25 those expectations by saying that we can help solve

1 the problems that are facing New Jersey and that we

2 can -- that we can bring hope and a chance for

3 change for both property taxes and land use in the

4 State of New Jersey.

5 Thank you.

6 MR. VAN HORN: Thank you, Mr. Tittel.

7 Judith Cambria who represents the

8 League of Women Voters.

9 MS. CAMBRIA: Is that good? Yes.

10 Okay. Thank you.

11 First of all, I'd like to thank you

12 for the invitation to meet with the Property Tax

13 Convention Task Force and to thank you for giving

14 your time and energy to serve on this very important

15 group.

16 I think before I talk about our

17 positions, I just wanted to remind everyone that the

18 League of Women Voters has a very, very long history

19 on New Jersey tax issues, and particularly our

20 concern and action on our property tax which goes

21 back at least half a century.

22 Also you should be reminded the League

23 acts only on those state issues with which its

24 members have reached consensus. Unless we study and

25 reach consensus we do not speak out. So we do

1 represent citizens quite well.

2 I have prepared for you to be passed

3 around, this is on tax and spending policies of the

4 League of Women Voters of New Jersey. It's not all

5 of them; it's some of them.

6 I'd like you to note that the one

7 entitled, "Tax and Spending Policy", which is one

8 section, the first date of it is 1971. That's when

9 this position was reached. I served on that

10 committee.

11 And you will then notice that after

12 that there's 1996. That's because we totally re-

13 studied, updated and brought in a new position to

14 reflect current conditions and that I ran in 1996.

15 And you will find that many of the

16 things that Mr. Tittel was talking about are

17 reflected here. Some of the things that we don't

18 seem to be hearing about the massive differential

19 between the wealth and the property tax ratables in

20 different cities, the change that's happening in

21 terms of every year more and more of our

22 municipalities are beginning to look like our

23 cities, failed economically and fail socially. And

24 that is happening every year. We see more of them

25 twisting over and turning over.

1 And with that happening we are seeing

2 greater increases in -- in -- the wealth is being

3 concentrated, racial disparities are being

4 concentrated. We have a whole series of things that

5 are happening in this state, none of which are good

6 for our future.

7 So I will ask you to look at that.

8 I just wanted to say that while I was

9 not born in this state, I moved here when I was in

10 the fifth grade and I graduated from Weehawken High

11 School. My father was ill and out of work at the

12 time when I graduated and I could not go to college

13 because we couldn't afford to. So I went and I

14 worked for a year.

15 The reason I say this is because I

16 want to point out to Dr. Cole here that New Jersey

17 made the difference for me because I was able after

18 working a year to go to Montclair State which was

19 then a teacher's college, and it gave me a superb

20 education which has made a huge difference in my

21 life and the life of my family.

22 And it is one of the things that I am

23 most concerned about, both at the lower level and at

24 the upper level. We're doing -- we have some

25 problems there. We're not supporting it enough.

1 That's not today's topic.

2 The -- we presented the coalition

3 members, your task force members, with an eight-page

4 document with the league's recommendations to you to

5 help and assist you in the task of developing

6 legislation that would -- that would bring about

7 this property tax convention.

8 I please urge you to review them if

9 you have not done so because a great deal of time

10 and effort and a long history went into their

11 preparation. And this included the input of fifteen

12 members on my education fiscal policy committee.

13 So there was much discussion and thank God

14 for emails.

15 We believe there are a number of areas

16 that are of utmost importance and which will

17 determine whether a convention actually takes place,

18 number one, and if it does, whether it will be

19 successful. And we believe very strongly and we've

20 been working for a convention for several years

21 because we -- we believe it's the only reasonable

22 prospect we have for reform.

23 We would like to point out, however,

24 that we will oppose a convention if one of two

25 things happen, either one of those two things.

1 While everyone here has talked about that they think

2 that spending should be part of this convention, we

3 believe absolutely the opposite.

4 We believe it should not be an issue

5 at this convention and that's based on our long

6 history of working on taxing and spending issues.

7 Including spending would give the powers of elected

8 mayors and elected councils, elected freeholds,

9 elected and appointed school board members and

10 elected state legislators to some eighty to ninety

11 people. It's too much power. It can't be handled

12 by -- in that format with those things.

13 Every one of those places there is a

14 long, long period of discussion to developing a

15 budget, determining how the money must be spent,

16 what was spent. Frankly, if we continue -- if we

17 put this in, we are absolutely convinced the

18 convention would flounder and it would fail because

19 it would just be a quagmire. So that's a very

20 strong position.

21 The second one is that we feel very

22 strongly that allowing -- the delegates cannot

23 address protections that are provided to New Jersey

24 citizens by the New Jersey constitution. It's got

25 to be off limits.

1 We have worked and fought too hard,

2 number one, for the rights of our children to high

3 quality education that prepares them for

4 citizenship, participation in society and the world

5 of work to allow any of that to be endangered.

6 We also have worked too hard on

7 housing to have that endangered and we need to do a

8 lot more work. So there are a number of these if we

9 cannot do that.

10 I think we would -- something that

11 came up at the end that I was surprised about. Let

12 me just look at my notes here. Where did I put it?

13 Excuse me while -- I'll think of it as I go through

14 here.

15 Here are some other. We feel very

16 strongly that there should be a separate election

17 for the delegates not tied to the same general

18 election where the people would vote for or against

19 a convention.

20 I've gone into a great deal of detail

21 in our material as to why we believe that is true.

22 But we do think that it's very, very important. And

23 certainly we believe that if it were at a general

24 election where we have the governor, the senate, the

25 assembly, all of these things on, it will absolutely

1 get lost in the shuffle and their political

2 partisanship is very, very, very likely to be the

3 major gauge of who can get in by getting the most

4 money from the delegates.

5 Besides, we don't think it's fair to

6 ask someone to spend their time, energy and money to

7 run for a delegate and find out maybe that New

8 Jersey would say I don't want it. So we don't think

9 that's fair.

10 We believe it should be revenue

11 neutral, no increase or decrease in total revenues,

12 and we believe it should be non-partisan, not

13 bipartisan or partisan.

14 It should -- and we believe, along

15 with -- very interesting, every place we've ever

16 talked to this about people say, don't let the

17 legislators be delegates. They all believe you have

18 had -- that they have had their chance and they have

19 failed time and time again and, therefore, they do

20 not deserve another one.

21 We believe that candidates should run

22 without a political party designation, they should

23 run individually not as slates and that we agree

24 with what several people have spoken here about is

25 that there should be a number of extra delegates

1 selected by a non-partisan group looking for people

2 with real expertise. The kinds of some of the

3 expertise that was discussed by various people here

4 we think is very important to have.

5 They should be a small proportion but

6 they should have -- I'm probably at my five minutes.

7 I'll quit.

8 MR. VAN HORN: Thank you very much.

9 Jon Shure?

10 MR. SHURE: Thank you for the

11 opportunity to share some thoughts with you that

12 reflect in large measure the work my organization

13 has done over its seven-year existence on trying to

14 find alternatives to New Jersey's over-reliance on

15 property taxes.

16 Let me first just very briefly address

17 myself to a comment made by the first speaker in the

18 previous panel. And I would just say, what is

19 democracy if not romantic notions?

20 A convention for the purposes of

21 restructuring New Jersey's tax system has the

22 potential to greatly serve the citizens of this

23 state. This is true not only because it might

24 recommend very positive alternatives to the state's

25 over-reliance on property taxes but also because it

1 can raise the visibility of debate on this issue to

2 a higher level than it's ever been before.

3 It's not hard to imagine the

4 convention's deliberations will receive considerable

5 media attention and that the campaign for and

6 against the ballot question created by a convention

7 will be treated as though it were an election.

8 The recommendations of the convention

9 might not be good ones, but there will be an

10 opportunity for the public to defeat them if that's

11 the case.

12 The recommendations might be good ones

13 but they might not be approved by the public. But

14 even if this were to happen debate would have been

15 joined and New Jersey would likely be closer to a

16 solution, perhaps even a legislative solution, than

17 ever before.

18 So there's reason to be optimistic

19 about how this process will play out. My experience

20 working on the Citizen's Tax Assemblies held by the

21 Coalition for the Public Good has helped confirm my

22 belief that on matters of tax policy the public of

23 New Jersey is ahead of elected leaders.

24 People can handle the discussion with

25 all the trade-offs, details and complexities that it

1 entails. And a more rational tax system will very

2 likely pave the way for other reforms that could

3 relate to spending and fairness.

4 But many of the fears expressed by

5 those who oppose a convention or who are not sure

6 where they stand on it are reasonable. It will be

7 important as the convention goes forward to make

8 sure steps have been taken to do everything possible

9 to ensure the credibility of the convention and also

10 to keep it focused on the matter at hand.

11 One controversial issue, as you

12 obviously heard so far, concerns the scope of the

13 convention. The original reason to have such a

14 gathering was to deal with the tax system in New

15 Jersey. That makes sense. And straying very far

16 from it would be a mistake.

17 There are those who say that a

18 discussion on taxes is impossible without a

19 discussion of spending. That's not necessarily the

20 case.

21 Whether New Jersey were to raise twice

22 as much money as it raises today or half as much

23 money, we would still need a fair way to raise that

24 money and today we don't have that.

25 And every year elected or appointed

1 officials and, directly in some cases or indirectly

2 in others, voters deliberate over spending. Budgets

3 are fashioned at the school district, municipal,

4 county and state level. That is all about spending.

5 But it is decidedly not the case that

6 every year there is a parallel conversation about

7 the tax system in New Jersey. So it makes sense to

8 have the convention deal more with taxing than with

9 spending.

10 That said, it's reasonable to require

11 that the delegates come up with a revenue-neutral

12 plan for taxes and I think we could all take

13 guidance in the 1988 report of the SLURP Commission.

14 This would help to calm the fears of

15 anyone who thinks the convention will try to

16 increase the amount of money that government spends.

17 But the flip side is also true. A tax

18 convention should not have as its ulterior motive a

19 reduction in spending. It could, however, take

20 steps to make sure that whatever systems it puts in

21 place to help make sure that the value and

22 effectiveness of our tax system is increased are not

23 eroded over time.

24 Nor should the convention have the

25 opportunity to reverse court rulings, laws and

1 constitutional mandates that contribute to the need

2 for spending. To erase, for example, the thorough

3 and efficient clause of the constitution or the

4 language of the Mount Laurel decision would not be

5 proper.

6 This convention will work best if it's

7 a gathering of citizens of good faith and good will

8 focusing on a very specific thing.

9 We should keep in mind that the reason

10 why a convention is needed is that elected officials

11 have not responded to the ever-worsening inequities

12 and inadequacies in New Jersey's tax system. But

13 they certainly have over the years made decisions

14 about spending, whether to raise it or to lower it.

15 A convention of the public then is not

16 needed for the purpose of addressing spending

17 issues.

18 Besides what the convention will do,

19 the issues of who will do it and how are important.

20 Delegates should be as representative as possible of

21 the state as a whole. They should be elected along

22 geographic lines with legislative districts being

23 the most likely mechanism.

24 Most, but not necessarily all the

25 delegates should be elected by popular vote. Others

1 could be appointed with the specific aim of ensuring

2 a reasonable degree of diversity.

3 I believe a strong case could be made

4 that those appointed as delegates could for the most

5 part come from the pool of people who ran for

6 election as delegates but were not elected. They

7 will already have shown the interest in the process

8 to offer themselves as candidates.

9 I'm not that concerned about the

10 people who become delegates having a great amount of

11 expertise because, again, I've watched the public

12 deal with this in ways that really inspires

13 confidence. The staff would need to have a great

14 deal of expertise and that would be an important

15 part of making sure that the convention was

16 successful and credible.

17 It is not essential that elected

18 officials be delegates. In fact, at some level it

19 might not even be desirable.

20 In the deliberations of the Citizens

21 Tax Assembly many people concluded the legislators

22 should not be delegates but that municipal officials

23 might be. There may be some sense to that.

24 Because the earliest a public vote

25 could be taken on whether to have a convention is

1 November of 2005 a strong case can be made that this

2 should be also the time when delegates are selected.

3 This would mean asking voters to cast

4 a ballot for or against having a convention and also

5 to select the people who would be delegates if the

6 convention were approved.

7 This would have the advantage of

8 delegates being elected at a high turn-out election

9 rather than at a special election where it's likely

10 that a low number of people would vote. I think

11 this would help the convention to be credible with

12 the public.

13 Ideally, the State would finance

14 delegate campaigns providing ample opportunity for

15 prospective delegates to mail information and

16 provide it online to voters, while limits on how

17 much a candidate could raise and spend would be

18 appropriate.

19 While there is no way to completely

20 eliminate the influence of political parties or

21 interest groups, nor is it necessarily the case that

22 they should be totally absent, I think it would be

23 advisable to require candidates to run without party

24 labels and as individuals rather than in slates.

25 Delegate candidates should be required

1 to be registered voters.

2 I'd be happy to answer any questions

3 as we go on, but let me just close with a final

4 thought.

5 There is no way to assure what will be

6 the outcome of a tax convention, nor should there

7 be. This will be an exercise in democracy and also

8 an exercise in faith. I think the gamble is worth

9 it. New Jersey has for far too long refused to

10 confront the problems of a tax system that calls on

11 the poorest person in the state to pay twice the

12 share of his income and major state and local taxes

13 as the wealthiest person.

14 It has for too long relied too heavily

15 on taxing the value of someone's house out of all

16 proportion to that person's ability to pay or to how

17 much of his or her assets that house might actually

18 be.

19 There are better, fairer ways to do

20 this and there is reason to believe that the people

21 of New Jersey are willing and able to rise to the

22 task.

23 Thank you.

24 (End of Tape 1, Side B)

25 MS. CAMBRIA: -- was brought up by the

1 -- the people who were here earlier that I thought

2 was a -- that I said I knew I wanted to speak to.

3 And I think it's very important. And it's not been

4 touched upon by anyone here.

5 In terms of what is the -- what the

6 delegates are -- can do, we had someone earlier

7 speak and say they should only be able to -- I guess

8 in address the constitutional issues, they should

9 not be able to change statute.

10 Well, one of the biggest problems we

11 have here in New Jersey is we have far too much tax

12 stuff in our constitution and other things that

13 don't belong there at all.

14 Most of our tax system is done by law,

15 by statute, by passing it. If we -- if we bar them

16 from doing that we will do -- we'll have them

17 focusing on doing more on the constitution than

18 necessarily we should be doing and they'll be --

19 their eye will not be on the ball which is a tax

20 structure which mainly is put in place by how we

21 vote on it.

22 Thanks.

23 MR. VAN HORN: Okay. Thank you.

24 Then we're open for questions from

25 members of the task force. Dr. Reock?

1 DR. REOCK: I think Jon may already

2 have touched on this, but I'd like to ask Judy for

3 her opinion and Jeff for his.

4 Do you think it's -- a number of

5 people have made the point that we need some

6 expertise in the convention. Do you think it's

7 necessary that the expertise is provided by

8 delegates or can it be provided just as well by

9 consultants and possibly even better?

10 MR. TITTEL: I think that it would be

11 nice to have some as delegates and hopefully there

12 will be quality people running and they will get

13 elected.

14 But I also believe that as part of the

15 convention to have, you know, workshops and to bring

16 in experts for people to ask questions could be a

17 natural part of the function, as well as having some

18 expertise on staff. Because I think if you want to

19 look at how to fix and change your system there may

20 be some -- and in fact there are some very good

21 experts from University of California, for instance,

22 that have worked on this issue for a long time in

23 California trying to deal with Proposition 13 and

24 its aftermath.

25 So there are places to bring in

1 expertise for workshops as well as having it on

2 staff. But I think there should be some on, if

3 there is non-elected, that there should be some.

4 MS. CAMBRIA: I, of course, believe

5 that it's absolutely essential that the staffing

6 with high quality who is able to provide very high

7 quality analysis and -- for them -- for the

8 delegates.

9 But I also think that it would be very

10 important to have within the delegate body at least

11 some of that. And some of the people who spoke

12 earlier I thought mentioned, you know, the expertise

13 that's included, like at the municipal level and the

14 budgeting and that sort of thing.

15 So I would -- if they don't appear and

16 don't come out and run and don't get elected, I

17 would like to see that added and do support that.

18 MR. VAN HORN: Mr. Cole?

19 MR. COLE: Yeah. A question I guess

20 for Jon Shure.

21 Jon, I think you suggested that you

22 would have the question and the selection of

23 delegates put -- put to the voters at the same time

24 in I thought you said November '05.

25 Have you given any thought to the

1 timetable thereafter? When would the convention

2 take place? When would it be concluded?

3 MR. SHURE: I'm trying to think what

4 the original legislation said about I believe the

5 election is in March and then the convention

6 starting in April.

7 I think that electing the delegates in

8 November would give the option of starting the

9 convention perhaps sooner, maybe as early February

10 just to get the work begun and -- and finished

11 sooner.

12 I don't think it's a horrible idea to

13 elect the delegates separately, but I think the two

14 issues are, first of all, let's get the convention

15 started as soon as possible and, secondly, I really

16 don't want the opponents of the convention to have

17 the opportunity to say, but these delegates were

18 elected by six percent of the voters, they're not

19 legitimate.

20 And so while I understand the trade-

21 offs that are involved I'm concerned that

22 credibility could suffer from a low turnout

23 election.

24 MR. COLE: It would also give you more

25 time, wouldn't it, Jon, for educating the delegates

1 and bringing the expertise together?

2 MR. SHURE: It would. It would do

3 that. If you wanted to -- you know, you could start

4 the convention earlier if you wanted to or you could

5 start it later and have more time for delegates to

6 get ready. But you'd be ready. You could get

7 underway with it and I think that would be a good

8 thing.

9 MR. COLE: And you would put the

10 results of the product of the convention to the

11 voters in November '06, Jon?

12 MR. SHURE: Yes.

13 MR. TITTEL: I would -- I didn't

14 really address it in my comments, but I -- I would

15 have a concern with it because, since it's a

16 partisan election as well as a gubernatorial

17 election with a lot of candidates that are up, I

18 think it could be very confusing to people. And in

19 some counties the delegate that draws Line A may win

20 because people are just used to voting, like, Line

21 A.

22 And so I would tend to think it should

23 be held separately just so that -- for people to

24 come out.

25 MS. CAMBRIA: I'd like to add to that

1 that this became a specific discussion question

2 amongst my committee. We have someone who I think

3 very, very highly of who weighed in saying, well, I

4 don't like to have an extra one and, you know, I

5 think we should have it the way we do charter

6 questions, you know, that you do it then.

7 So we had a full-fledged discussion

8 with everybody weighing in and we came out for a

9 separate election to get away from the partisanship.

10 And I think, perhaps it's wishful

11 thinking, but I believe that we will have so much

12 more focus on the idea of a convention, what a

13 convention is all about, if we don't have it tied up

14 with a gubernatorial election, a senatorial election

15 and an assembly election and the question itself. I

16 think then it's going to get lost -- totally lost in

17 the shuffle and that I think was the major reason

18 why the group as a whole came to the consensus that

19 despite the cost we should have a special election.

20 Thanks.

21 MR. SHURE: Let me just add -- I don't

22 want dwell because there's a small difference

23 between people who basically feel the same way.

24 But the question of whether to have a

25 convention or not will be on the ballot in 2005 in

1 November so it's already tied up in a gubernatorial

2 election.

3 So my sense is that adding the

4 delegates' names to that on a separate part of the

5 ballot away from the partisan lines wouldn't

6 necessarily confuse people; it would give them the

7 opportunity. If they choose not to vote about it --

8 on it because they're confused they don't have to.

9 But, again, the delegates would have

10 been before a larger pool of voters which I think

11 would help the credibility.

12 MR. VAN HORN: Mayor?

13 MAYOR PASSANANTE: I believe --

14 SENATOR VAN WAGNER: No, that's all

15 right. I'll wait.

16 MR. VAN HORN: I'll get to you,

17 Senator.

18 SENATOR VAN WAGNER: Yeah, I know.

19 MAYOR PASSANANTE: Thank you. This is

20 directed to Mr. Shure and Ms. Cambria.

21 You had indicated that neither one of

22 your organizations would support a convention that

23 would look at spending as an issue and that you're

24 looking for a revenue-neutral solution from the

25 convention.

1 We have had many people that have said

2 that spending needs to be addressed. Would you

3 support the concept of having the convention address

4 the revenue side and requiring the legislature to

5 hold a special session to address the spending

6 issues through the legislature?

7 MR. SHURE: My group per se doesn't

8 have a position on whether there should or shouldn't

9 be. Our opinion is that spending should not be part

10 of it, so it's not a matter of whether we would

11 support it or not.

12 But, no, I don't think we need a

13 special session on spending. Again, I think we do

14 budgets every year and address the spending issue.

15 Some of the structure of spending is

16 important and some of that probably would get

17 addressed in a tax convention.

18 And, you know, I think I -- Jeff

19 mentioned ideas like regionalization. Those are

20 very important things. I think that a tax

21 convention based on what I've seen people do will

22 start to talk about those kinds of things and

23 they'll get a lot more credence and a lot more

24 momentum than they have now.

25 So I think that a rational tax system

1 arising from a convention devoted to taxes will in

2 fact lead to reforms in spending down the line that

3 will help make the whole system that much more

4 rational.

5 MS. CAMBRIA: I also think that I

6 agree with that. That the -- when we presented this

7 eight-page document to you all we talked about at

8 this point was the structure of the -- the questions

9 that you asked us because you have to answer them.

10 That's going to be followed by another

11 document. And that other document is going to say,

12 these are the things that the delegates at the

13 convention should be looking at.

14 And what Jon is alluding to and

15 speaking of is a much broader group of things that -

16 - that that's where they're going to come up with

17 any solutions or any ways of addressing that. And

18 that's where you begin to get -- we have some

19 distressingly high costs because we have such

20 fantastic, you know -- the place is falling --

21 flying apart. New Jersey flies apart.

22 I mean, where else do we have as many

23 -- as many school districts, as many towns, as many

24 everything? It just -- it's very irrational and we

25 need to work on it.

1 MR. SHURE: Let me just -- well, I

2 mentioned the SLURP Commission. Let me just speak

3 about that for another second.

4 It did address spending, not in terms

5 of saying, cut it down to this level, but it talked

6 about what is the appropriate jurisdiction to pay

7 for this thing. For example, it recommended

8 something that has come to pass which is the State

9 paying for -- for Superior Court judges. It also

10 recommended the State pay for prosecutors which has

11 not happened yet.

12 So it looked at jurisdictional issues

13 of spending, it looked at formula issues of spending

14 and it looked at what is the most rational way to

15 conduct ourselves in terms of how we pay for things

16 and I think that's appropriate. But I don't think

17 it's -- part of its scope should be to cut the level

18 of spending.

19 MR. VAN HORN: Senator Van Wagner?

20 SENATOR VAN WAGNER: You know, you all

21 -- all of you have really touched on what I think is

22 the core of the issue that we have to present I

23 guess. And if I missed -- if I'm reading this

24 correctly, when we present the question of the

25 convention, whether or not to have the convention,

1 what our recommendations of that, the scope of the

2 convention, we have to delineate what should and

3 shouldn't be discussed.

4 Is that correct, Mr. Chairman?

5 MR. VAN HORN: That's my

6 interpretation of our charge, yeah.

7 SENATOR VAN WAGNER: And it seems to

8 me that land use is at the core of what you said,

9 what everybody is saying, and the taxing

10 jurisdictions and where -- where they all fit into

11 the scheme of things. And I don't think anybody --

12 no one on this commission, I'm sure, and on this

13 task force and no one in New Jersey who has any --

14 any understanding of government in New Jersey knows

15 that we have too much government in New Jersey, too

16 many layers of government, the race for ratables at

17 the local level and the state government and the

18 county governments attempting to in some manner,

19 shape or form duplicate things like that.

20 So whether or not this convention, you

21 know, moves forward on those issues. When we --

22 when we get to the point where we make our

23 recommendation and there was a division it seems to

24 me in terms of whether or not to have it in November

25 or a separate election, and I -- you know, I'm sort

1 of ambivalent about it. I kind of agree with all of

2 you.

3 What would you think if there was a

4 process by which people could vote electronically,

5 over the internet for example? What if we were to

6 be able to craft a system where -- and there should

7 be an easy enough way to craft a system that would

8 allow people ease of access to the voting process.

9 MR.TITTEL: The Sierra Club which is,

10 you know, a national organization, is very active in

11 the enfranchisement issue. And I don't know if

12 people realize, but in the state of Oregon which

13 have been very active in -- at all their elections

14 are vote by mail today. And they have the highest

15 turnout in the nation.

16 And so I think that we should be

17 empowering the public.

18 I've never thought there would be a

19 problem with -- you know, we've got ATMs, we could

20 have automatic voting, you know? I think that quite

21 frankly I'd love to see the legislature, you know,

22 actually have -- could be overturned by a bunch of

23 people watching it on cable and plugging in their

24 cards and overturning a vote, quite frankly.

25 I think the more we can empower people

1 -- I know as a former legislator you probably

2 wouldn't agree with that.

3 SENATOR VAN WAGNER: I wouldn't agree

4 with that.

5 MR. TITTEL: Yeah. There's a few

6 times where --

7 SENATOR VAN WAGNER: I think that

8 makes for mischief.

9 MR. TITTEL: But my point being is I

10 think that we have technologies available today,

11 either electronically or through the mails, that we

12 can actually get more people to vote and to be more

13 involved as citizens. And I think that's what we

14 should be looking at.

15 And it's the same thing with the

16 convention. I would hope that we can get the

17 convention televised, you know, from gavel-to-gavel,

18 either on cable or on New Jersey Network so that --

19 that we have an informed public that is watching the

20 debate so that when it comes time to vote on the

21 recommendations they're there and it's not about,

22 you know, catchy slogans or ads or whatever, but

23 because people have actually been reading and

24 watching and been involved in the process.

25 SENATOR VAN WAGNER: What would you

1 think if the task force among its recommendations

2 were to set forth a recommendation that money be set

3 aside for let's say a public educational process

4 prior to the vote on the convention so the public

5 understood exactly what the task of the convention

6 delegates would be, what the convention was about in

7 essence, et cetera?

8 MR. SHURE: I think that kind of a

9 public education campaign would be a good thing.

10 I'm a little bit concerned about

11 internet voting. We've done some work in our

12 organization about ways to expand turnout and get

13 more people to be more accessible to voting.

14 But the experts tell us that internet

15 voting is not ready yet, that there are -- that

16 there are kinks that need to be worked out of it to

17 make sure that it's protected.

18 So I'd be concerned that the

19 technology is not quite there yet to have an

20 internet election with no fear of hackers or trouble

21 counting votes or --

22 SENATOR VAN WAGNER: How about voting

23 by mail?

24 MR. SHURE: I think voting by mail is

25 a good idea.

1 SENATOR VAN WAGNER: Okay, thank you.

2 MR. TITTEL: I also just wanted to say

3 that as part of when you do the convention setting

4 up, you know, a blog site (phonetic) and other

5 things where you could have your experts answer

6 questions would also help get the public more

7 engaged.

8 MS. CAMBRIA: Nobody feels more

9 strongly than the league about giving more people

10 the ability to vote. So, yes, we would be for that

11 and certainly also for any informational campaign to

12 help them understand it. Yes.

13 MR. VAN HORN: Ms. Gordon?

14 MS. GORDON: Yes. This question is

15 for Ms. Cambria.

16 You say in your testimony that

17 delegates should not be affiliated with any

18 particular party, that they should not have slogans

19 or any other kind of special interest on ballots;

20 yet, you say that they should be prepared to

21 advocate for themselves and their position.

22 And I guess I'm kind of curious how

23 you would envision that happening.

24 MS. CAMBRIA: It doesn't mean you

25 can't be a Republican or a Democrat. It means you

1 can't run as a Republican or a Democrat with that D

2 or R next to your name.

3 I'm asking them to run as a person --

4 we will want them to run as an unaffiliated person

5 who's going there to work on re-crafting and fixing

6 a very broken property tax system.

7 And so they can talk about all the

8 things they want about, but I just don't want them -

9 - I guess they could say something about, change the

10 property tax system because we'd all agree to that.

11 But other than that, I really don't want -- the

12 league really does not want partisan politics in it.

13 And the reason we don't is because our

14 legislature has become deadlocked over this. It's

15 part of the reasons we can't do anything is the

16 partisan politics included.

17 When one side is in they say the same

18 thing as the other one says when they're in. Cut --

19 when the Democrats are in the Republicans say, cut

20 the costs; when the Republicans are in, the

21 Democrats. It's -- it just -- it just becomes

22 partisan bickering. And that's not the purpose of

23 this.

24 The purpose of this is to get to a

25 problem that really is affecting every single person

1 here in this state, every person.

2 MR. VAN HORN: Dr. Cole?

3 DR. COLE: This question is for Mr.

4 Tittel.

5 I think that Mr. Shure and Ms. Cambria

6 have been very clear about how they might see the

7 question phrased. But I don't think, unless I've

8 missed it, you've talked about that.

9 MR. TITTEL: No, I didn't because I

10 thought they would do it better.

11 No. Actually, the Sierra Club

12 supports the concept of the convention and we

13 actually had a long internal debate on deciding to

14 support the idea of the convention. And Senator

15 Lance was actually part of that with a lot of

16 questions being asked of him.

17 We believe that the convention should

18 just deal very narrowly with the property tax issue

19 and not go off into other tangents, you know,

20 because we think that quite frankly you don't know

21 what you end up with. And I know that -- I think

22 that's really where we stand.

23 DR. COLE: Thank you.

24 MR. VAN HORN: Dr. Reock?

25 DR. REOCK: If there is a convention

1 it almost certainly will come up with a rather

2 complex set of recommendations.

3 Would you foresee the possibility of

4 multiple questions being submitted to the voters or

5 should it all be wrapped up into one yes/no answer

6 or would it be possible to put up alternative

7 solutions to the property tax problem from the

8 convention?

9 MS. CAMBRIA: We discussed that in

10 great depth and it is our position of the league

11 that it's got to be an up/down because when you

12 start breaking it into pieces or providing all --

13 I'm not sure. We haven't thought about the

14 alternative or any -- I'll hold off. I'll hold off

15 on that one.

16 But in terms of the way we're

17 structured now, we see that it has to be -- because

18 there's going to be -- in any plan there is going to

19 be the parts that people will say, oh, that's nice,

20 and the parts they're not particularly happy about.

21 If we allow more than one vote we

22 cherry pick. Oh, that's good, and I don't like

23 that. Well, what you get is not a plan that would

24 be workable. It would be a total disaster that

25 simply won't work because it won't match up. The

1 parts won't match up.

2 MR. SHURE: I agree with that. I

3 think that if a convention, for example, were to

4 come up with a comprehensive tax plan that had ten

5 elements to it and each was separately on the ballot

6 and the public approved five and rejected five, then

7 they wouldn't have the plan that the convention

8 recommended and you wouldn't have a system that

9 really worked.

10 But I hadn't -- I also now thought of

11 the other option which is to say there could be more

12 than one comprehensive alternative. It's these ten

13 things or these ten things, one or the other or

14 neither. That might -- that might have some merit.

15 But by and large, I think that we need to ask the

16 public to vote for a plan and not parts of a plan.

17 DR. REOCK: And you think this should

18 be defined in the enabling act and not left to the

19 convention itself?

20 MR. SHURE: That's right. And my

21 understanding from the legislation that's been

22 introduced previously was that there would be a

23 question on the ballot.

24 And I do think that that should be

25 part of what is approved when a convention is

1 approved and the delegates know that going in.

2 MR. TITTEL: We think that there

3 should be one key question, but then you can look at

4 things differently.

5 Michigan, when they did their

6 referendum banning property taxes, they actually

7 gave the public different choices on how you would

8 replace that spending, whether it would be an

9 increase in sales tax, an increase in I believe the

10 income tax or a combination.

11 So I think that the public can have

12 the ability to look at certain choices. And not if

13 it's -- you know, you don't want to set up a menu

14 where you pick one from Column A and Column B, but I

15 think you can in a simple way have different options

16 for the voters.

17 MR. SHURE: And I think the public can

18 handle it as long as they're being asked to pick one

19 comprehensive solution or another comprehensive

20 solution.

21 MR. TITTEL: Right. That's what I'm

22 saying. Yes or no on the top and then different

23 ways of getting there.

24 MR. VAN HORN: Seeing no other

25 requests for questions -- yes, Judith?

1 MS. CAMBRIA: Can I say one thing?

2 MR. VAN HORN: Okay.

3 MS. CAMBRIA: In case you had any

4 chance of thinking that you didn't need -- and there

5 isn't a -- I brought this the other day but it was

6 raining out so I didn't bring it in.

7 This is 1990. It took over 200 years

8 for us to get to about $10 billion in property

9 taxes. In the next ten years we added 4.4 -- $4.3

10 billion. In the next two years we ended up -- we

11 added $4.3 billion. We have added $8.7 billion in

12 fifteen years to our property tax burden. We can't

13 live with it.

14 Thanks. Thanks for letting me bring

15 this.

16 (Participants confer)

17 MR. VAN HORN: Good photo op there.

18 Thank you, lady and gentlemen, for

19 sharing your thoughts with us today. We appreciate

20 it very much.

21 I'm going to excuse the panel.

22 There's one more piece of business

23 that I just want to announce that on Friday at 10

24 a.m., on our usual afternoon sessions, we're going

25 to meet again in Winetzs Hall (phonetic). Is that

1 right, Mr. Malloy?

2 MR. MALLOY: Winetzs.

3 MR. VAN HORN: Yes. At ten o'clock

4 where the parking is better. And we will be hearing

5 from several education groups and the -- we'll also

6 hear from the NAACP, the League of Municipalities,

7 the AARP, the Coalition for the Public Good, and I

8 believe Greg Edwards who is also a policy analyst.

9 The name of the group escapes me at the moment. But

10 he is going to be presenting to us as well.

11 I am also going to be distributing a

12 memo which describes how the transcripts of the

13 first several hearings can be accessed. These are

14 of course available both to the public, the press

15 and of course to the members of the task force.

16 And, of course, in due time all of the

17 transcripts will be made available.

18 And I'm also distributing a memorandum

19 that was prepared by staff which is an analysis of

20 some of the key issues before us in relationship to

21 how these issues were handled in the '47 law

22 enabling that convention and then in some of the key

23 legislation introduced by Assemblyman Roberts,

24 Senator Adler, Senator Schluter, Senator Lance,

25 Assemblywoman Allen and so on. And I think the

100

1 staff certainly did a good job with this; however,

2 the authors of these who are members of this task

3 force may want to look at this and provide whatever

4 additional comments that they see fit, certainly, if

5 there has been any mischaracterization.

6 But I think this will be helpful to us

7 to -- as we begin to think about the different

8 options before us in our next phase.

9 And, again, unless there are any

10 objections or any other business, I would adjourn

11 the meeting now. And we'll reconvene on Friday

12 morning at ten o'clock.

13 Thank you.

14 (Proceedings concluded)

101

1 C E R T I F I C A T I O N

3 I, Coleen Rand, do hereby certify that

4 the foregoing transcript of proceedings by the New

5 Jersey Property Tax Relief Task Force, recorded on

6 audiotape on October 26, 2004, is a true and

7 accurate non-compressed transcript of the

8 proceedings to the best of my knowledge and ability.

12 Coleen Rand AD/T 419 Date

13 For Guy Renzi & Associates