You have to feel sorry for those poor saps in Arizona. There they are seeing all kinds of problems from illegal immigration. Crime is up. Demand for government services like education and health is up. There ought to be a law against it!

Suddenly it dawned on the people of Arizona that there is a law prohibiting people from entering the country without a valid visa. So let’s enforce that law, they said, and passed SB1070, requiring law enforcement officials to enforce the federal law.

For doing what they thought was both right and good, the residents of the Arizona have been branded pariahs. What they forgot was to do what was smart.

Now the people of Utah – and I never thought I would be saying this – are doing what is smart. They are separating the issue of the need for foreign workers from the issue of immigration. Though we have always treated these two issues as one, they are, in fact, very different.

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Utah’s plan is to make work permits readily available to foreign workers. The state could thus screen, tax and track the workers. Only people coming to work would receive the permit; families would be left at home. The permit would be for a defined period and would allow workers to return home for visits with their families.

It’s a pretty good idea. And it comes from the most Republican state in the country.

Alas, I don’t expect the Utah plan to go very far. After all, how can a state supersede the authority of the United States government and issue its own work permits? It is an elegant solution, and a smart one, but by itself it is unlikely to go anywhere.

It may, however, change the debate. It is time that we stopped talking about immigration reform and started talking about work visas. This will be hard. We are, after all, a nation of immigrants and we have this idea that everyone else in the world is just dying to raise their kids as Americans.

Truth be told, if you have some money there are a lot of places around the world that are very nice to live in. With money you can get your kids a decent education and healthcare.

Most people come to the U.S. to make money to send home and plan to go back. At first they think their stay is temporary. Then, because they know they won’t get back in if they go for a visit, they just stay and stay and eventually become immigrants.

Work permits would allow them to be the short-term workers that they want to be.

But what if we just solve the problem by doing without all these workers? Won’t this also solve unemployment in our country? If it weren’t for all these illegals, couldn’t we put our own unemployed back to work?

How many of you mow your own lawn? When was the last time you painted your own house? Which of you would encourage your children to spend their summers doing back-breaking work on a farm? I actually sent my son to Colorado several years ago to spend the summer working on our family sod farm. He still hasn’t forgiven me for the experience.

The work performed by people who are in this country illegally is critical to our economy. No one else is going to do the work they do. So if we need them, isn’t the Utah solution the more sensible option?

There is an old rule that says if the majority of people are going to do something whether or not it is legal, it is both sensible and more efficient to make it legal, tax it and make money off it rather than spend money fighting it. I take my hat off to Utah for seeing this.

James Coyle

President

A Tale of Two Cities

“Boss, boss, our revenue is only going up by 2 percent this year, but our costs are going up by 10 percent! What are we going to do?!!”

Never has the difference between the mentality of government and business been clearer than when this question is answered.

As compared to:

“How are we going to make this work? How can we generate more money? Anyone have any ideas on other ways we can increase revenue?”

The incessant whining over budget cutbacks, caps and the like shows that a lot of the people who run this state are not accustomed to dealing with adversity. For far too long government at all levels of New Jersey have looked upon the taxpayer with avarice and disdain, as if our sole purpose was to fund whatever they wanted funded.

Now they are going to have to change. And as above, the change will constitute either primarily cutbacks or enhanced revenue.

Cutbacks are pretty well understood. We lay people off; we don’t repave streets as often; the football team disappears.

Less understood is the revenue enhancement side. How can a town generate more money?

Fees? Well, yes to an extent but not enough to balance the budget. More ratables? Now here we have something.

The best ratables are businesses. Businesses pay taxes at the same rate as a homeowner but usually a lot more of them due to their size. And a typical business doesn’t use many services. I have yet to meet a business that enrolls its kids (subsidiaries) in the local school system.

We all know that New Jersey in general is not a friendly place to do business. However, at the municipal level is where doing business can become really tough. And the wealthier the town, the harder it is to do business.

Take Linden, for example. Linden is considered by many to be the most business-friendly city in the state. A democratic bastion, this has remained true through successive mayors and councils.

Business is embraced in Linden and everyone from the mayor down works to make sure a new business is welcomed and an old business is treated with respect. Linden also provides an amazing array of services at a tax rate far below the norm.

Linden is well placed to survive and thrive under the property tax cap. The city has the desire, resources and knowhow to grow its tax base.

Contrast Linden with Springfield, considered to be one of the most unfriendly towns in the state when it comes to setting up a business. Filled with self-appointed resident committees who complain with great effect, few businesses are successful getting the approvals needed to conduct business.

Thus, the residents of towns like Springfield will bear the full ramifications of the tax cap. Why would a business locate in one of these unfriendly towns when there are friendlier environments in other New Jersey communities or other states that will welcome their investments, their jobs and their tax revenues?

Perhaps the real silver lining in the property tax cap is not that taxes will stop growing so fast, but that the state at all levels will be forced to reevaluate its anti-business attitudes and make New Jersey a business-friendly state at last.

James Coyle

President

As a boy growing up in Denver in the 1960s, my father had a small manufacturing plant where he made camping trailers. He had abut 50 employees and he built a good product.

James Coyle

President

Oh how sweet the siren’s song. How enticing is its sound. But how it clouds our brain and lures us to our doom.

The sirens are Senate President Steve Sweeny and Assembly Speaker Shelia Oliver. The song they are singing is “just tax the rich. . . just tax the rich . . . just tax the rich.” Said over and over it is so alluring, so appealing. “Just tax the rich and all our problems will go away.”

It is a song that has led us into the maelstrom and will crash us on the rocks of bankruptcy if we listen.

But unlike Odysseus of old, Chris Christie has chosen not to hear the song. He has closed his ears with wax knowing the folly of the song that has been sung for so long in New Jersey.

Two questions always arise in this debate: “Why does it matter if we tax the rich a little more, can’t they afford it?” and; “Why do we need to change the way we have done things for so long?”

“The rich can afford it” is what makes the siren’s song so seductive. It is seductive to the folks not in that top 1 percent of income earners because someone else pays. It is seductive to politicians because if you can make 99 percent of the population happy by screwing 1 percent, your chances of getting reelected are greatly enhanced.

But putting aside the question of whether it is fair for 1 percent of the population to pay over 40 percent of the income taxes in the state, is it a smart thing to do? The answer is a resounding no.

If a lot of people depend on a very few people, it is a recipe for disaster. And that is what we have seen these last couple years. Most people think of the top 1 percent as rich no matter what. But in reality this group has the highest variability in income because they are dependent on investment income and bonuses. When times get bad, their incomes plummet.

Jon Corzine was a prime example. In 2007 he paid millions in taxes. In 2008, and probably 2009, he paid nothing. He was still rich, but his income dropped and so did his taxes. This happened to a lot of people and is what caused the big budget deficits. To use a farm allusion, we had too few cows to milk, and they all went dry at the same time.

A much smarter policy is to spread the cost of government more widely. It is not only fairer, but smarter, as well. The bigger your herd of dairy cows, the more milk you are going to get even during the off season. This is true even if you exclude even the bottom half of income earners.

Most of the second question – “Why do we need to change the system?” – already has been answered. We need to change it because it doesn’t work.

If you keep the system for just one more year, as Jon Corzine did last year with an income tax surcharge on those earning more than $400,000, you will be tempted to do it when you need to again. This is what we are seeing right now. You can’t keep saying I’ll just eat this last cupcake tonight and really start dieting tomorrow, and then tomorrow go out and buy more cupcakes.

Without crisis we will not change. We will not bring government employee pensions and benefits under control. If we listen to the sirens song we will be dashed on the rocks. Let’s hope the governor remains deaf to the singing.

The Urban Enterprise Zone (UEZ) program is one of those really good ideas that didn’t work out quite right.

A legislative act in 1983 created the UEZ program. Initially 10 municipal zones were created. In 1993 these were expanded to 20. Subsequently more zones were created and they now stand at 32 covering 37 municipalities. About two thirds of the UEZs also are Abbott School Districts.

The purpose of the legislation was to lure business and customers back to blighted urban areas by providing very specific incentives. For a qualified business that operates in a UEZ, the primary benefits are an exemption from paying sales tax on most products the company purchases, and for those engaged in retail operations, the ability to charge half the sales tax (currently 3.5 percent) on most products except food, alcohol, tobacco, vehicles and energy.

This 3.5 percent sales tax also is supposed to be the big draw to get wealthy suburban customers to come shop in the UEZs. However, given that most mall shopping is for clothing, which is already tax free, outside the occasional specialized, big purchase, few people have changed their shopping habits for the lower tax rate.

Thus we have not seen developments like Jersey Gardens and IKEA in Elizabeth spring up in other UEZs and their development in Elizabeth had less to do with tax rates and more to do with great location and really, really low prices, especially for visiting shoppers from New York and other points outside New Jersey.

The second aspect of the UEZ program is what really makes it popular with local mayors and councilmen, however. The 3.5 percent sales tax that is collected is returned by the state Treasury to the town to be used for broadly defined economic development. In the past decade or so, this has approached nearly a billion dollars given with almost no oversight to some of the most corrupt cities in New Jersey. What a slush fund!

For years I have expressed concern that these funds are, for the most part, wasted on patronage jobs and payback contracts to political contributors. The deal has been so sweet that even more recent pay-to-play regulations have not been applied to these funds. They also are not part of the municipal budget, so they receive negligible oversight from city council, and no public review or disclosure.

My office happens to be in the middle of one of the biggest UEZs, in the city of Elizabeth. After more than 15 years of being a close observer, I can see no difference that the millions and millions of dollars spent have made to the business climate or appeal of the city. It has been money wasted on buying political favors.

Gov. Christie, through necessity, has proposed a change to the UEZ program. Under his proposed budget, the tax benefits of the UEZ to both businesses and consumers would remain unchanged. However, the 3.5 percent sales tax collected in the UEZs would be used for the state general fund rather than as a slush fund for city mayors. In the FY 2011 budget, this is estimated to be $91 million.

This is a very good idea. This money has been so misspent for so many years that there is little reason not to change the program. Though I have not come across any, I am sure there may be some programs out there that are worthwhile. If so, these towns should be willing to fund the project out of their own budgets, as do the other 600-odd municipalities around the state.

The governor also should conduct a complete review of all the projects that have been undertaken with UEZ funds. There are a lot of skeletons to be dug up.

James Coyle

President

It is amazing to see how much pent up anger there is in our state. For years we have buried our heads in the sand, oblivious to the holes every level of government was digging. Times were good and we were generous.

Now we are waking up to just how generous. Like a drunk with a hangover, we are really mad at how much of a tip we left the bartender. Only in this case, our over-generosity went to public employees.

James Coyle

President

When Scott Brown was elected to the U.S. Senate several weeks ago, the sigh of relief heard around the country was almost audible. It is amazing how fast something as important as health care reform became so frightening to so many.

Now you can feel the steam going out of the process. Many believe we will be left with status quo, just like we were when there was an attempt to reform social security a few years back. This would be unfortunate.

Misguided though both the Senate and House versions of health care reform

were, there is a pressing need for substantial change.

The big problem with what is now on the table is that it has been foisted upon us by just one party. And it has been foisted on the members of that party by some of their most radical elements. It missed the boat on reforming health care and resulted primarily in just spending more on the present failed system.

Perhaps now that the issue can no longer be forced, calmer heads will prevail and ideas that truly address the main problems will be discussed. This of course will take both sides and I only hope that the Republican members of Congress will be up to the task of being constructive. There are things more important than just winning the next election.

Over the past year we have all been inundated with ideas, claims and counter claims on both the problems and solutions facing health care. I have come to realize that there are a few key elements that must be realized if we are to both control costs and provide better health care in this country.

First and foremost, everyone needs to participate. This means that like car insurance, if you want to drive, you have to have insurance. Many of the so called “uninsured” are uninsured not because they can’t get or afford health insurance, but rather because they are young and realize that the cost/ benefit ratio is far too high. Why spend thousands of dollars a year when you are likely to have only hundreds of dollars in expenses? The reason is because this broadens the pool and makes insurance more affordable for everyone. It also provides for that sudden unexpected illness that we think will never happen to us.

Second, we need to modernize our medical information systems. In his book, The Healing of America, T.R. Reid examines health care systems from around the world and discusses at length the advances that have been made in France and Germany in particular by issuing smart cards to everyone. With these cards, all the paperwork and the people who process the huge volumes of documents that our system

requires are eliminated. The savings in overhead for the insurance industry as well as the doctors and hospitals is huge.

Third, we need a lot more doctors, and doctors who are not saddled with hundreds of thousands of dollars in education debt. Ours is the only country where this happens, and the result is fewer doctors who can charge more because there are fewer of them. When you add to this that expanded coverage is going to result in expanded demand, unless we have many, many more doctors, we can expect prices to skyrocket. This is an area where a relatively minor government investment can make

a big difference.

Fourth, doctors in other countries pay a small fraction of the malpractice premiums that U.S. doctors pay. The cost of this insurance is a huge expense for doctors. Perhaps this is something that can be nationalized. For those who want a single-payer system, this is the place to do it. Let the government pay the outrageous malpractice claims that are often filed.

But the real solution to health care is staring us in the mirror. Just look sideways. Until we lose weight and start taking care of ourselves, all these other things are band aids.

James Coyle

President

The recent passage of health care legislation a couple weeks back by the U.S. Senate was really touch and go. Not because the passage was ever in doubt.

The difficulty was the ability to end debate and bring the motion to a vote.

While passing a piece of legislation requires a simple majority of 51 votes, ending debate requires 60 votes. These 60 votes were only garnered by serious changes to the legislation and huge bribes to a couple of western and southern senators.

Many think this oddly called cloture rule is unconstitutional and not what our founding fathers intended.

Cloture rules which end debate, sometimes called filibuster, are a tool of the minority. They are used to prevent important matters from being decided.

While it is true that the founding fathers did not include the cloture concept in the Constitution, I think they would see it as an important and useful rule. The Constitution was designed to provide checks and balances.

Its intent was to ensure that studious effort went into any decision, and that compromise was achieved. The thought of ramming something through would have been abhorrent to its framers.

The tyranny of the majority was a key concept to Alexander Hamilton and James Madison, the two major intellects behind the Constitution. They understood that for a democracy to succeed, the rights of the minorities had to be protected from the passions of the majority.

In fact, the Senate was set up primarily to ensure this. At the time the Constitution was written there were 13 states. Some like Virginia and New York had large populations. Others like Rhode Island and Vermont did not. The small states needed protection from the large states and a body that equally represented all states

would offset the power of population as represented in the House of Representatives. The Senate was to be another check on the passions of a majority faction.

Okay, so why wasn’t this enough? Why did someone come up with the idea of the filibuster and later the concept of cloture to bring filibusters to an end?

What Madison and Hamilton did not foresee was the ascendency of political parties, at least when they were framing the Constitution. Parties are by definition factions. Their power is their ability to get their members elected and then control them once they are in office. In this country for some reason we have always had two major parties, meaning a majority faction and a minority faction.

Interestingly, when Hamilton started running the government (he was Secretary of the Treasury in Washington’s administration), he did an about-face and created the first faction which ultimately became the Federalist Party. He did this so he could ram his agenda through Congress. Thomas Jefferson, his arch enemy, founded the Democratic-Republicans with James Madison to stymie Hamilton and push his own agenda.

Filibusters came along in the 1840s as a way for the minority to stop the majority from doing what it wanted. The idea of closing off debate, i.e. ending a filibuster, was a new rule added during the Wilson administration. Back then, it took 67 votes to end a debate.

The legislative strategy of using debate to prevent action is as old as this country. It has often been used to prevent or delay very admirable pieces of legislation. One of the most effective filibusters was Senator Robert Byrd from West Virginia using the technique in an attempt to prevent the passage of civil rights legislation by a coalition of northern Republican and Democratic senators.

More recently, when the Senate was controlled by Republicans during the Bush administration, there was a lot of talk about reforming the system of cloture. At that time the minority Democrats were using filibusters to block judicial appointments and prevent an earlier attempt at health care reform known as association-based

health plans.

So pray that we keep the present system. The health care bill that finally passed is a lot better than it would have been without cloture. You may not always get what you want, but this system prevents the tyranny of the majority.

James Coyle
President

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Back in the mid-1990s when I was working at the New Jersey Board of Public Utilities, there were three commissioners, two Republicans and one Democrat. The Democrat had been appointed by Gov. Florio and had gained great experience in utility matters by being a high school basketball coach. One of the Republicans, also appointed by Florio, had run a restaurant. The other guy was just a mediocre lawyer who needed a job and was appointed by Gov. Whitman.

These guys had three jobs among the most important in the state. Their decisions affected billions of dollars of economic activity. I have always found it amazing that the lights stay on given the qualifications of the people running the show. I spend more time checking the credentials of my plumber than the state spends on most of its appointees.

Few people notice who gets appointed to the boards, authorities and commissions that abound around New Jersey. There are specialty boards, regulatory boards, promotional boards, water boards, sewer boards, etc. There are statewide boards, regional boards and local boards. There are important boards and unimportant boards. Some board members get paid, some do not.

The governor has the authority to appoint thousands of people to all these boards. It is one of the greatest sources of political patronage, and unlike the state payroll jobs, these appointments are generally made without much public knowledge or oversight. It is a truly insider game that is being played.

As he prepares to leave office, Gov. Corzine has submitted 180 names for a myriad of boards to the Senate for confirmation. These range from the Board of Public Utilities to the board of directors of Horizon Blue Cross and Blue Shield to the New Jersey Maritime Pilot and Docking Pilot Commission.

While it is fairly common for outgoing governors to grant a few last favors, the magnitude of the Corzine appointments is really beyond the pale. The move is a cynical attempt to place as many poison pills around the state as possible, rather than an attempt to pay off a few old friends.

At the Board of Public Utilities, which I view as the most important of all the regulatory agencies, Gov. Corzine’s nomination of Ken Esser as a commissioner will ensure that the Democratic party maintains control of the board until 2012 with a three-to-two majority. Now, while Mr. Esser may be the most qualified nomination to come along in a long time, this breaks the time-honored tradition of allowing the party in control of the Statehouse to control the levers of government.

So why is this important? Is tradition all there is to this argument?

When we elect a new governor, we expect him to be able to govern. That is why the team at the top changes. We get all new cabinet officers and appointments several layers down in the different state agencies. This way new policies can be implemented.

However, when you have all these authorities, which actually have authority to do things, you cannot implement a policy agenda if the other side retains control. It basically undermines the election result. It is a poison pill.

A much better system would be to get rid of most of these appointed bodies and bring these semiautonomous groups back under the direct control of the state.

In the near term, however, Gov. Corzine should stop this shenanigan. He should withdraw these last-minute appointments and allow his successor, Chris Christie, a chance to do what he was elected to do – govern.

James Coyle
President

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