Healthcare in Post-ACA New Jersey

The arguments in front of the U.S. Supreme Court have ended and it is likely that the judges have already formed their opinions. But it may take months before they put them in paper, researching for all case-law that supports their conclusions, etc.

The U.S. Supreme Court, like almost everybody else, appears to be divided along party lines

If the insurance mandate – the economic centerpiece of ACA – is thrown out, the entire reform may become untenable for its cost. Once the millions of young and healthy are not forced to buy insurance but the insurance companies are forced to accept customers regardless of previous condition, premiums will dramatically increase for all. Small businesses and those with individual policies who are not poor enough to qualify for subsidies will be the most affected.

New Jersey must chart its healthcare course regardless of what happens in Washington.

I had proposed Medical Tort Reform since 2010 when my campaign began, either with award caps or a right to sue option similar to that of auto insurance. Democrats appear to be the major obstacle to such reform.

My tax reform plan would also assure that more people would have or be able to buy medical insurance without any government intervention. But the hefty increase of the minimum wage with healthcare benefits and even higher without would only be tolerable for businesses if we bring the New Jersey corporate tax to zero. Otherwise we would just be putting people out of business and increasing unemployment.

In turn, to be able to afford the loss of nearly $3 billion in corporate tax revenue, the government itself must undergo a drastic haircut. That haircut can only be functional at the top, with at least an entire layer of government trimmed.

That is how all elements of my plan concatenate. Think of it as a chain and every step is a link. All its components are a must. Perhaps the most important one will be the spike in wages because it will give a super-boost to aggregate demand for all goods and services, including health insurance.

And finally, a New Jersey health exchange should be open to all private insurers, to minimize adverse litigation, but the state should offer a rating of the available plans. The NJ Health Exchange should welcome non-NJ companies. There must be a cost-neutral public option in the exchange as well although I believe its administration should be put out for bid. Republicans are more likely to oppose the public option.

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Winners and Losers with Tax/Economic Reforms I Propose

Winners:

a) Anybody who works for less than $15/hr with benefits or $18/hr without benefits. Their gains are dampened somewhat by the fact that state income tax will be higher. On the other hand, they will have no sales tax and if they are homeowners they will have no property tax. If  they are renters, a payroll credit softens the impact of the higher income tax.

b) Anybody who works for a pay rate or salary above those described in (a) because the minimum wage increase will place an upward pressure on all wages. Inflation of consumer goods is checked by neighboring states as consumers would flock to PA and NY if NJ merchants increased their prices significantly.

c) Homeowners who are New Jersey taxpayers. They will only face the general income tax which is proportional to income. Seniors in particular are among the principal beneficiaries. In cases where a NJ resident works outside New Jersey and does not pay NJ income tax, a prorated portion of the property tax remains in effect.

d) All corporations, regardless of type and size, and professional employers who have employees in the State of New Jersey will not only enjoy zero tax on their earnings but they will pay no property taxes in their sites. Some rural areas of the state may be excluded from this policy as a conservation barrier. Same applies to limited partnerships and limited liability companies (which could be C or S corporations as well.)

e) Farmers and landowners. Absence  of property tax will ease the burden of holding on to large tracks of land.

f) Merchants of all types. Lack of a sales tax and higher wages should increase demand, drawing consumers even from outside New Jersey if New Jersey merchants maintain level prices.

g) Investors, regardless of income, who invest in New Jersey or in corporations which operate in New Jersey would see zero tax rate on their dividend and capital gains. Dividend and capital gains from New Jersey receive “Most Favored Nation” treatment.

About Even

h) People who rent. Generally speaking, the reforms are inclined to stimulate home-ownership. Income tax increase is almost balanced out by automatic payroll deduction (which is paid by rental property taxes) and elimination of sales tax.

i) Owners of residential rental property. Until we design a better method, property taxes will continue to be in effect.

Losers:

j) Investors whose dividend and capital gains are earned in operations not present in New Jersey. By far the biggest losers here although retirement accounts are exempt and there is a threshold (to be determined) below which such dividend is treated as regular income.

k) Land/homeowners who are not New Jersey residents and taxpayers. Their property tax rates are very likely to increase.

l) Career politicians. There will be many less public positions available for them once they get out of political office.

Note that there may be exist niches not included in the compilation above. For instance, some workers of current local boards of education could be displaced as result of consolidation although the number could be much smaller than expected. Another example is commercial rental property: If it is occupied, there will be no property taxes on it but if it is vacant, property taxes will apply.

Property Taxes for New Jersey Taxpayers Have to Go

To be able to reform our tax system we must reform government itself: We must give a good haircut at the top.

I did my tax appeal in 2010 and settled without going to the tax court. It means that I probably got a bit less of a reduction in the valuation on my home but got it earlier as proceeding to the court would have taken a while. The County Board of Taxation (CBT) used arguments like “the land never goes down in value” which is completely nonsensical. It was really a kangaroo hearing but I got a reduction because they sensed I could go on to court. I could live with the reduction I got and left. As it happened, I was preparing the initial steps of this challenge of running for office.

The prospects of being involved in the side show of the tax court was out of the question. I had to do with what I got at the CBT.

The assessors are given a tremendous leeway with the statutory ability to exclude sales that are considered “distressed” from the price comparison. They are marked with the #26 in the code box of the sales recordings at the CBT. The list of similar properties and their final sale prices are the basis for the entire appeal. By eliminating the lowest priced sales, the assessors, as agents of the municipalities, essentially deprive homeowners of their right to conduct a successful appeal or at the very least they make it as difficult as possible. When one goes to the CBT office and searches for comparable properties, more than half of the listed are labeled code 26.

More tax appeals denied as North Jersey towns reject data on low-priced homes – NorthJersey.com.

So, property taxes for New Jersey taxpayers have to go. They are driving people out of their homes. One never gets to really own one’s property. The drag on the economy is horrendous. The different forms of taxation in New Jersey allow for a shell game that politicians have been playing to perpetuate themselves in office for decades.

In the end, when we add property taxes to all the other taxes we pay, the two political parties are siphoning $58 billion out of New Jersians  every year. That is $58 000 000 000 and still the government is so leveraged that we got our bond ratings reduced last year.

New Jersey’s GDP is $497 billion. Accordingly, the New Jersey State government and its political subdivisions take 11.7% of the GDP and devour it.

The democrats just sounded the idea of having a constitutional amendment to raise the so-called “millionaires tax” raised in spite of Christie’s opposition. If we put aside the fairness issue – the entire tax system in New Jersey is unfair and skewed – the tax raise would amount to about $600 million per year which is about 1% of the total amount of money the state government and all its political subdivisions suck out of us under one pretense or another every year. It is insignificant.

This issue of the millionaires tax is just a gimmick of the two parties to keep everybody distracted from the real issues facing New Jersey. Whether it passes or not, it won’t make much of a difference for the reasons explained in the paragraph above. Now the governor will oppose it and we will have both sides talking about this for the next 18 months. They try to get everyone all flustered about this thing so that we don’t look at the big picture. I we looked at the big picture we would throw both parties out of office and start anew.

Of Home Rule in New Jersey

Home Rule is as old as New Jersey and the concept was borrowed from mother England and perhaps Holland. England had the counties and their respective counts which probably dated back to the Norman invasion of 1066. The system in turn was copied from the French who were the inventors of feudalism. In New Jersey, a colony with its vastness only sparsely populated by natives and even fewer colonists, small towns surged from the first settlements and by the time independence was gained from Great Britain in 1783, most of the system we have today was already in place.

Jump to 1947 and the Framers of the last State Constitution chose to maintain what we call Home Rule.

Jump to 2010 and I introduce my program which among other things, calls for the elimination of county governments, transferring all the taxing authority from the municipalities to the State (thus eliminating property taxes), consolidation of police forces and boards of education.

A few months later, governor Christie floated the idea of municipalities sharing services. He might not have been the first one who proposed this but he probably was the loudest. Nonetheless, with minor exceptions, his call fell on deaf ears and his tool-kit aiming to facilitate the process was for the most part ignored by the N.J. Legislature However he managed to pass a property tax cap of 2% although such cap caps nothing: It has a number of exceptions – the expensive ones – so it is pretty much meaningless as homeowners have discovered to their chagrin.

I don’t believe for a minute that I invented the idea of government consolidation nor was I the first discovering that the current system is untenable and that it places a tremendous burden on the people of New Jersey and the state economy. But I believe I am the first who has approached the issue with a radical plan which eliminates entire layers of government rather than executing flimsy unions of 2 or more DPW’s, fire or police departments, or some other local functions.

But moving on: The N.J Senate leader, Mr. Sweeney, has gone one step further and proposed an approach more Draconian that Christie’s although bland compared to mine: He has introduced a measure that would force local governments to share services or face a loss of state aid equal to the amount of the consolidation savings they passed up.

Sweeney has been pushing the shared-services agenda for some time. In October 2010, Sweeney spoke on the subject at a press conference with Assembly Speaker Sheila Oliver about arbitration reform, hammering away at municipal government. Quite simply, he said, there was too much of it. And he was ready to turn towns “upside down” to bring about some changes.

Such unions, where they have occurred, have clearly shown that they do not save much if anything at all.

But from Sweeney’s – or any other member of the political establishment – point of view, that is the ideal diversion because it places all the onus on the taxpayers, focuses on the lowest workers rather than on the political hacks, and maintains the huge mantle of government layers intact. No one; Not Sweeney, or Christie, or anybody else talks about doing away with the medieval relics of county governments. They know that the more government layers, the more opportunities to place political appointees in public jobs. For the two political parties, their ability to dole public jobs is the very essence and foundation of wealth and power.

What I propose is the only plan which would yield significant results rapidly: A constitutional amendment that would not touch the independence or identity of municipalities except for the fact that they would not collect property taxes any longer and their police stations would be manned by Police of New Jersey rather that the local police department, although the officers will be the same individuals.

I would propose the unification of all boards of education into a New Jersey BOE. If New York City can do it, so can we.

I would propose the elimination of county governments and the takeover by the State of New Jersey of county schools and hospitals. The county DPW’s would go under the NJ-DOT. The counties divisions of Taxation would remain as state agencies of the Department of the Treasury to collect some property taxes which would remain (Example: property owners who are not New Jersey taxpayers.)

With the abolition of property taxes and a tax credit for renters, inevitably, income tax would increase and so would be the tax on dividend that does not originate in economic activity in New Jersey. For more information please refer to my pages relevant to this topic in my website.

The typical property tax pie is roughly 25% for the town, 25% for the county, and 50% for the local board of education. If we want to achieve big relief, we must be willing to take big steps. For the political class, that is rocking the boat. But there is no choice: We must cast at least part of the political ballast over the side.

The Rutgers-Rowan Affair

The second set of hearings on the shotgun marriage of Rutgers with Rowan  began at Rowan University yesterday, in front of the Legislature’s higher education committee. The balance of speakers was essentially the same as in the first set of hearings with opponents of the merger exhibiting much more reason and asking many more questions that the supporters had answers.

The cost of this concoction of a plan will be enormous, in terms of money, for all of us. For Rutgers, it could bring irreparable harm. No one can create a great research university – as governor Christie is claiming he will – just by changing the name at the entrance gate and on the stationary.  Both medical and scientific researches are expensive, require state-of-the-art laboratories, and above all they require researchers who do not come cheap. Frankly, when I hear the governor explain this plan, I always get the impression that he does not know what he is talking about.

That has not always been the case: He knew what he was talking about when he called for pension reform. In fact, I supported the plan although it affected me personally (freezing COA) but my position was and still is that we can not stop there but must go on to reform the entire State of New Jersey. Otherwise, what the pension reform accomplished will be reduced to gain a few years before fiscal meltdown. All the sacrifice will be in vain.

Christie gained the support of numerous democrats led by senator Sweeney in the pension and benefit haircut. Was that support for the good of New Jersey or was there a price attached to it? Is Rutgers-Camden that price? It seems I am not the first to think that way.

NJ Spotlight | Rowan Replay: Criticism Continues at Second Hearing on Rutgers Restructuring.

The entire merger plan is a house of cards and the cards are blank. Apparently, the only written records of the UMDNJ Advisory Committee are its preliminary and final reports. There are no notes, no minutes of the meetings!!! And 21 of the final report’s 57 pages are the preliminary report, with six of those pages repeated twice.

In other words. There is no paper trail of the discussions and the final product of such discussion was exactly what they started with. This is the plan that governor Christie is pushing down the throat of New Jersey. The governor is trying to coerce this one through. Do I believe that he cares about education at all? Certainly not: He uses education like like he may use an elevator.

To say the least: This is a very goofy way of breaking up the best public university of New Jersey: They created a doctrine and plastered some  quasi-justifications onto it. It seems it was all a political deal between Christie, Sweeney, and Norcross (the democrat political boss of South Jersey) which involved the swap of pension reform for Rutgers-Camden.

NJ Spotlight | Who Decided to Give Away Rutgers-Camden?.

An appellate court ruling this month, barring the governor from eliminating the state Council on Affordable Housing, applies directly to the state’s higher education system. So he may be trying to scare the Legislature into folding. However, if the governor still has the power to do this with an executive order or if the legislature goes along with the merger, I believe the Rutgers trustees have the ability – and perhaps the moral responsibility – to take all the original Rutgers facilities and revert them to be the  private university that it once was. Rutgers-Camden is part of the original Rutgers – before it became state university.

Perhaps previewing this, the governor has proposed a 6% increase in aid to higher education in his proposed budget of 2012-13. That is the bait in the hook.

I would support the secession of Rutgers as s stop-gap measure until Christie is out of office and till such moment when Rutgers can return to its public status safely.  If the State University is going to be downgraded and such a disaster is going to additionally cost a tremendous amount of money (taxpayers’ money) I would support Rutgers to move into the private field and them welcome the university back into the State higher education system if I am elected governor in 2013. The escape for Rutgers may ultimately be to self-privatize and stay so until there is a governor with common sense in New Jersey. It would be better for New Jersey to a have a great private Rutgers than a diminished public Rutgers.

Report Shows Increase in Number of U.S. High School Graduations

Nonetheless, 1 out of every 4 American teens drop out of high school before finishing. That is the finding of a report released by the Alliance for Excellent Education, America’s Promise Alliance, Civic Enterprises, and the Everyone Graduates Center at Johns Hopkins University on March 19.

The report is titled  Building a Grad Nation: Progress and Challenge in Ending the High School Dropout Epidemic and the portion published today is the 2012 update.

Main findings were:

a) The national graduation rate increased by 3.5 percentage points between 2001 and 2009 from 72 percent to 75.5 percent in 2009.

b) The South and the suburbs saw the largest declines in the number of “dropout factory” schools with 410 and 171, respectively, between 2002 and 2009.

c) Contrary to 2008-09, progress in towns and rural areas stalled in 2009-2010.

d) Despite, and probably because of, all the upheaval in the state public schools under the Christie administration, New Jersey is among the states that lost ground.

High school graduation rate rises in U.S. – The Washington Post.

The WP writes:  “One of the success stories highlighted in the report is Washington County, Md., which increased its high school graduation rate from 78 percent in 2000 to 92 percent in 2010.

Recognizing that it faced a problem, Washington County devised a strategy in 2001 to turn around its sagging graduation rates. Teachers adept at working with struggling students were assigned to those most at risk of dropping out. Intervention specialists were hired. Support was offered to at-risk students before, during and after school. Summer classes and evening high school were expanded to help students complete graduation requirements.Designated staff at a special learning center focused on teen parents.”

Some of the above are among the steps I propose, notably the lengthening of in-school time. One point that I do not find – although it is probably somewhere in the report – is the issue of when we start with the enhanced program. I gather from the report that the expanded school year is only used where the lagging students are detected. Stressing on the fact that I am not an educator, I am fairly sure that the fate of a student is sealed as early as 3rd or 4th grade if a deficit in knowledge begins to build up with respect to class level. Such deficit accumulates and prevents further progress particularly in subjects where advance builds upon previous lessons.

Mathematics is possibly the best example of the above.

The part of working with the parents appears fundamental although it is not something that I had identified. At the very least, parents must send their children to school regularly. Absenteeism is certainly a factor in falling behind. Addressing cases where students are in danger of falling behind on an individual basis also seems to make a great deal of sense.

I have no doubt that we must start as early as 1st grade to see the benefits at the end of high school. But then there must be, as I have said before, a point where career paths separate. Not everyone is college material and there are great opportunities in non-college fields.

Trade-school grads in hot demand for manufacturing jobs – Mar. 14, 2012.

All developed and most if not all developing economies have such dual approach to education. We had it and seemed to abandon it as manufacturing moved overseas. It is time to undo the damage.

It is clear to me that one of the main factors in governor Christie’s drive against teacher tenure is motivated by revenge for the attacks the NJEA launched against him during the gubernatorial campaign of 2009. The problem with Christie’s agenda is that it robs a great deal of time and resources from the measures that really work. The governor and his accomplices in the education reform business have the potential to do a great deal of harm to an entire generation of children.

New Jersey Politicians Have Broken N.J. Civil Service Law

I propose to strengthen Civil Service Law rapidly. Why?. Because this is one area which does not require a constitutional change so, technically, the executive branch of government can present a revised law to the legislature. Both political parties have gradually degraded the C.S. Law to the point where it does not work any longer: It is broken. I expect considerable resistance to the changes and I will attempt to explain why.

New Jersey has the New Jersey Statutes Annotated or NJSA and the New Jersey Administrative Code or NJAC. The first is the actual laws passed by the legislature. The latter is the set of laws and rules which implement the laws of NJSA. Thus, when we talk about civil service, the pertaining title in NJSA is 11A and the corresponding title in NJAC is 4A. NJAC4A enforces NJSA11A.

http://www.nj.gov/csc/nj_title4a/index.htm

Civil service was created in New Jersey to shield the state government employees from political pressures and influences. At the core of the system, the rationale followed the principles of the British civil service throughout the empire – notably India – where servants would perform their functions honestly and efficiently without fear of retribution because of local influences or after a change of government in Simla or London.

Our civil service has three categories of servants: 1. Senior Executive Service; 2. Career Service; and 3. Unclassified Service.

Furthermore, Civil Service is divided into State and Local services. Local service includes counties, municipalities, and independent authorities and commissions.

1. The Senior Executive Service is limited to 1200 persons in the State service and 85% of those must be from the Career Service.

2. The Career Service included all the positions (positions have and are known by their titles, i.e. Senior Maintenance Worker) for which applicants must take examinations and are rated according to score. This is the category which I intend to expand, at the expense of the last one:

3. Unclassified Service. It is here where the bulk of the political patronage and nepotism occurs. Individuals are hired at the discretion of the employer, without even advertising the job opening in any form. Often there is no need for a position but someone needs a job and knows a politician who then asks an agency to create a position for that person. No one else has a shot at that job even though it is a public position. Often, the appointees lack the qualifications for the positions or worse, the positions have no genuine work attached to them. Appointees may show up every day on time and still do nothing. Of course, this person is an unconditional political supporter and often a donor to his “benefactor.” Unclassified appointees serve at the discretion of the Appointing Authority and that is why, with every change in government we see a multitude of changes everywhere.

However, at times politicians of the two parties make a “gentlemen agreement” keeping each others’ appointees employed> It is then we we see the ranks of an organization swell because with every new administration a new wake of hacks comes in but nobody leaves.

Political patronage is a powerful instrument of political control which the two political parties will loathe to give up. Most if not all the appointments that governor Christie has made at the Port Authority of New York and New Jersey have been in the unclassified service.

It is this category – Unclassified service – which I intend to reduce to a bare minimum. Governor Christie has put up a show in a few instances, firing some political appointees here and there. But for everyone fired there are 100 who remain. He knows it very well. To close this bleeding of the fiscal resources in both State Service  and Local Service, we must tighten the law. That is what I plan to do.

Christie also attempted to mislead the public by closing some authorities and commissions in 2011.  But they had been empty for years. They were paper agencies. Not a single job was eliminated.

Governor Christie has proposed in his tool kit to allow Local Service municipalities to opt out of Civil Service. This, undoubtedly, would increase the abuses. teachers tenure, although not part of Civil Service, works in a similar way and is also a target of the administration with the complicity of a number of democrats in the Legislature.

The myth frequently used by politicians to justify the further dismantling of the barriers to political patronage is that both Civil Service and Tenure make the firing of a bad employee impossible. “It is employment for life” – they say.  That is an absolute lie. The two systems provide due process. Discipline must be for just cause. And employment must be granted through a system of exams and vetting; not by “connections.”

Some politicians have been very able in exploiting the frustration in the private sector with the recession (that they created), high unemployment, and stagnant wages to instigate the private sector workers against the public sector. But I do believe that most people are beginning to see the truth through the smoke.