Nearly 25% of N.J. Residents Lived in Poverty in 2010

This report is more realistic than the federal standard for measuring poverty – which I believe is outright ridiculous no matter where you live in the U.S. – N.J. defines being poor as making less than $36,620 for a family of three — twice the federal poverty rate. New Jersey has a higher cost of living than most other states particularly because our exorbitant property taxes, which also reflect on rental costs.

Nearly a quarter of N.J. residents lived in poverty in 2010, study shows | NJ.com.

There are a number of factors which have contributed to this imbalance in one of the richest states in the nation. But all the factors, fundamentally, find their roots in the complicity of the two dominant political parties in holding wages stagnant and fleecing the public. In other words: A lot of people, even those not comprised in the low 25%, are making too little money and paying too much to the political octopus that rules New Jersey.

Note that the 2000 or so government entities of New Jersey devour more than 10% of the state GDP of about $650 billion. And we do not even have defense expending!

This reality has had two major consequences after two decades or so:

1. A lot of people borrowed beyond their means to maintain the illusion of prosperity.

2. Disposable income plummeted and with it went aggregate demand, thus pushing the economy into an endless period of anemic performance.

Since government – and all its local subdivisions –  also borrowed left and right, New Jersey has entered a period when the high degree of leverage has the effect of quasi paralyzing both the public and private sectors. There are budgetary problems and people are taxed out. Even if millionaires are taxed, as the democrats call for, that additional revenue would amount to considerably less than $1 billion.

The millionaire surtax has become more like a political football to keep the masses distracted and pretend that there is a major difference between the two dominant political parties. It is theatre.

The democrat-proposed increase in the minimum wage – possibly to blunt my message because I am the first who has mentioned minimum wage in the last decade – would be the first in I-don’t-know-how-many-years and it is clearly insufficient to have any economic impact.

Both parties have proposed tax reductions: Christie his ubiquitous income tax across-the-board cut, which of course favors his political base, and the democrats their property tax cut. Both plans are better than nothing; the democrat plan slightly better. But the grand problem is that the state is not in a sound enough fiscal position to – responsibly – adopt either plan.

If a tax cut – any of them – is implemented, it will amount to a tax deferment rather than a tax cut. When such tax becomes due, 10, 20 years from now, it will also come with accrued interest so we will end paying more for this meaningless relief today.

While both political parties endeavor in buttering up the voters in back-to-back election years, I am presenting  – in this website – my program of reforms, which I believe are the minimum essential to save New Jersey.

Citizens of New Jersey beware: Our problems are complex. Any politician that presents a simple solution to a complex problem is eminently dishonest.

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The New Jersey Comeback? Gone With The Wind

Fiscal common sense and sound economic policy have both taken back seats to political demagoguery. The tax cuts – whichever shape they adopt – are a mortgage on the future on New Jersey. Our difficulties are complex and require complex solutions: That means deep structural reforms in both our tax code and in the government itself.

The governor placed a public relations bet and lost. The fact is that objective economic conditions do not follow propaganda. Bombastic announcements do not belong in the realm of economics and fiscal responsibility. New Jersey is trailing the entire Northeast of the nation – with the exception of Rhode island – in almost all economic indicators and notably more so in unemployment. I have the hope that the fiscal fortunes of New Jersey may improve during the Summer with the income and sales tax receipts from the glorious Jersey Shore.

Nonetheless, the economic forecast pushed by the governor is his pony shows also known as town-hall meetings was of 7.3% economic growth for New Jersey this coming fiscal year.

That surpasses the expected economic growth of China! In what planet is the governor living in? I am sure that Christie may have no difficulty fooling some of his most gullible and sheepish supporters, but that does not mean that the wacky figures will become a reality. In view of the world economy sluggishness, there is not even hope that New Jersey could be dragged ahead into prosperity by other economies.

We have to be really smart and reform-bold to move ahead of the pack all on our own.That is what my economic program is all about: Breaking the mold; away with both Keynes and Friedman. We will borrow bits and pieces from all and put it together in a program tailored for New Jersey 2014.

Friedman, in particular, did probably more harm to the United States than the entire North Vietnamese army in a 9 year war.

S1022 – Coming to a Foreclosed Home Near You

One of the sponsors of the bill, senator Raymond Lesniak (D-Union) portrayed the initiative as “a way to support property values and reduce crime by getting people into vacant homes, provide municipal tax revenues while stabilizing the housing market.” The other sponsors of the bill are senators Barbara Buono (D-Middlesex) and Assemblyman Jerry Green (D-Union).

This is the wrong approach to a dual problem: We have many foreclosed homes in New Jersey and we also have many people that for one reason or another can not afford a home. More foreclosed homes are coming down the pipe because the judicial moratorium on foreclosures has been lifted. As more homes are foreclosed, more people will become homeless.

S1022 will authorize the N.J. Housing and Mortgage Finance Agency (HMFA) – an independent authority with bonding capability as all independent authorities have – to create a corporation: The New Jersey Foreclosure Relief Corporation (NJFRC). NJFRC will start up with Council on Affordable Housing (COAH) funds frozen everywhere in the state. The life of this corporation is limited to 5 years but its effects will last 30 years. Its purpose will be to purchase foreclosed homes from the institutional owners (see banks) and…

“(2)   Every eligible property purchased pursuant to this act shall be restricted for occupancy as affordable housing for a period of 30 years.  The restriction shall be set forth in the deed and recorded in the office of the county recording officer of the county wherein the real estate is situated.  Affordability controls shall be imposed upon purchase and maintained upon transfer in accordance with the provisions of the Uniform Housing Affordability Controls promulgated by the agency.”

Municipalities will have the opportunity to purchase the home(s) but…

“8.    a.  A municipality that purchases an eligible property pursuant to this act shall sell and convey or lease the housing unit or units acquired within 60 days of the date of purchase, unless it is not possible to do so due to practical or market conditions.  In the event that an eligible property is not conveyed or leased within 180 days of the date of purchase, or remains vacant for a 180-day period during the pendency of affordability controls, the corporation, or the agency as successor to the corporation, may commence proceedings to take control of the property and to sell and convey or lease the property in furtherance of the purposes of this act and deed restrictions of record.”

And:

“b.    The governing body of a municipality that purchases an eligible property pursuant to this act may, by resolution, authorize the private sale and conveyance or the lease of a housing unit or units acquired pursuant to this act.  Every deed and rental agreement shall contain a provision specifying the requirement that the housing unit or units shall remain available to low and moderate income households for a period of at least 30 years.”

The houses so acquired will be sold or leased to families of low and moderate incomes plus individuals with special needs. They could also be used as half-way houses.

Individuals with special needs are defined in the bill as: “Individuals with mental illness, individuals with physical or developmental disabilities, and individuals in other emerging special needs groups identified by State agencies, who are at least 18 years of age if not part of a household. Special needs populations also include victims of domestic violence; ex-offenders; youth aging out of foster care; individuals and households who are homeless; and individuals with AIDS/HIV.”

I am not politically correct: I prefer an empty house to having bad neighbors. Better to be alone than in crappy company. That is how I think. I would not mind at all some of the categories mentioned in the above paragraph as neighbors but I would mind some of them. So would most people, including the sponsors of this bill. Nor have I much sympathy for the ultra-right wing Koch brothers (who oppose the bill) or for the former candidate for governor of New Jersey, Steve Lonegan (who also opposes the bill) yet I strangely find myself in their camp in this case. I believe the bill, if it becomes law, will have disastrous consequences for New Jersey and homeowners of New Jersey. If senator Lesniak seriously believes that planting a half-way house in an urban neighborhood or a suburb will increase the property values in the area, he should have his head examined.

I understand perfectly well that we have case law on the subject and that all the individuals mentioned above must live somewhere. It is an issue of humanity. But I also know that because most people function on the principle of not-in-my-backyard, property values will plummet wherever this new government “corporation” places one of its 30-year-deed-restricted houses. This will lead to lower property values, more foreclosures, and outright flight.

NJ Spotlight quotes Lonegan referring to this bill as “COAH on Steroids.” He is right. Christie, for his part, only cares about taking the COAH money to balance FY 2012-13 budget. He is seldom in New Jersey anyway.

I fear the HMFA will issue bonds once the COAH funds are used up and de facto this will become another fiscal liability for the State of New Jersey. Then the operation will become a bailout for banks and other investors who hold foreclosed property, all at the expense of taxpayers. New Jersey taxpayers will be hit twice: First they pay for it and second are imposed the neighbors they do not want.

Furthermore, the NJFRC would just become another little nest of political patronage.

The real and sustainable ways to help the housing industry and simultaneously those people of moderate income are to implement the reforms I propose. Among them are: a) Abolishing the property tax on primary residences of NJ taxpayers; b) Structural reforms in the extensive government apparatus of NJ abolishing one or more layers; c) Drastic increase in the minimum wage; d) State income tax code reform.

This is a bad bill for New Jersey. It will be a bad law if it becomes one.

Did Christie’s “New Jersey Comeback” Ever Occur – Outside of His Mind?

New Jersey lost 11600 private sector jobs and added 3000 public positions in March. That is the opposite of the image Christie has been bragging about ad nauseam at every town-hall meeting and radio show since January this year. The March figures, even though reflecting a single month, are egg on his face.

Loss of 8,600 NJ jobs clouds economic picture : page all – NorthJersey.com.

Christie’s office referred questions on the job figures to New Jersey’s top economist at the Treasury Department, Charles Steindel, who admitted that there is a definite correlation between between employment and revenue. He did not say it but there are other correlations – sometimes I wonder if they understand them – such as that of employment and economic growth and with aggregate demand. Some are functions of the others.

Steindel said it is a long term relationship, and one month of bad job figures is not enough to redraw the state’s budgeting plan. Again, I must add, one month of good figures is no reason to open the champagne either.

“Data is volatile from month to month, it jumps up and down,” Steindel went on. “I think it’s a little hard to pin too much on the fact that you had a month where things seemed to go in the opposite direction.”

Mr. Steindel is assuming that the natural direction is forward. But there is no natural direction. The economy will move according to a given set of conditions. Those conditions, in New Jersey, do not favor growth. Steindel’s sentence should be corrected and say that we really do not know where the state economy is heading and should include the word stagnation. 

Although an economic failure of the Christie administration would facilitate my election, I do wish the New Jersey economy to improve. The problem is that I do not see real basis for optimism on such an expansion: Not with the current tax and government structures in New Jersey.

The stubbornly high unemployment rate – remains at 9% – betrays the governor’s portrayal of the state under his stewardship as an example of how to rebound the economy.

Christie is a lawyer who has decided to micromanage both education and the economy in New Jersey: That is a recipe for disaster because he is not qualified to do either. But he is not alone. Democrats are not far behind. In fact, he could not do many of the things he is doing without the complicity of at least some of the democrats in the NJ Legislature.

The loss of jobs is always deplorable. Even more deplorable is the rigidity and selfishness of the two political parties which rather see the state decay that give up their power and perks. We are governed by leeches. Significant structural changes in government and the tax system are desperately needed.

My entire economic revival program rests on the premise of increasing aggregate demand in New Jersey. Demand generates supply and increasing supply creates both jobs and wealth.

Taxation in New Jersey

We do not have a budget for FY 2012 yet (which runs from July 2012 through June 2013.) For FY 2012, governor Christie has proposed a higher budget of about $32 billion and also a 10% income tax cut. He expects that the New Jersey economy will grow as much as China’s. That is above 7%.

The budget which was approved by the Legislature for FY 2011 was about $29 billion and you can see the sources of that revenue and how it was spent in the pies below. The bottom-right pie shows legislature and Judiciary together but the Legislature takes about 2/3 of that amount – that is about $500 million. The Governor’s office consumes a bit below $ 100 million but that I know from a different source and it is not specified here.

I find both Legislature and Governor Office expenditures exorbitant.

If we add to that about $25 billion in property taxes we arrive at the sub-total amount of $55 billion that we New Jersey residents pay in taxes. About 10% of that goes to the counties. But we are not done yet.

Senator Sweeney has just introduced a bill which would include user fees charged by municipalities under the 2% property tax cap which became law last year. The bill is an attention seeker. Why? Because what municipalities will do is to drop those services which are most needed and residents will have to pay directly to the service providers – garbage collection for instance: Either people will have to hire their own private garbage collectors at higher cost and/or there will be more illegal garbage dumping everywhere.  Sweeney may be planning  to run for some higher office.

The total amount of user fees that New Jersey residents pay is near $10 billion per year. Therefore, the total amount of money that we all are forced to give the many governments of New Jersey is the eye-popping figure of almost $65 billion  yearly.

Bottom line: Government – or rather the political class benefiting from it – is financially suffocating the economy and people of New Jersey.

That is what I intend to correct if elected governor in 2013.

New Wave of Foreclosures/Auctions Could Drop Home Prices 10%

After more than a year of relative calm due to the review of lenders practices, the wheels of attrition in the hosing market are beginning to turn again. As many as 1.25 million of America’s abandoned or neglected homes are headed for sheriffs’ sales and auctions.

Home Prices Seen Dropping 10% in U.S. on Foreclosures: Mortgages – Bloomberg.

“Sales of repossessed properties probably will rise 25 percent this year from 1 million in 2011, according to Moody’s Analytics Inc. Prices for the homes could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc.”

Even though New Jersey law allows municipal appraisers to disqualify these homes when it comes to a tax appeal, the flood of distressed sales has an effect on the market and on the value of all houses. Homeowners who are still holding on to their properties are the losers in this picture.

Simultaneously, lenders may begin to move faster to foreclose on delinquent homeowners. Since the delinquent homeowner is typically one who has little money, those houses have for the most part been neglected too. Occupants may resort to short-cuts or temporary repairs when problems arise or do nothing at all. Some homeowners, feeling victimized by the banking system, have actually vandalized their own homes prior to eviction.

“The best measure of the influence foreclosures have on the broader market is the 20-city S&P/Case-Shiller home-price index that tracks deeds, including homes sold directly by banks and deals that don’t use mortgages, said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. The index probably will fall 5 percent to 10 percent this year, a range that depends on the condition of the mothballed homes, he said. ”

Some of the abandoned homes are in such a state of dilapidation that they may have to be bulldozed.

Although the situation involves the entire country, New Jersey may be affected more than average due to the fact that unemployment is the highest in the Northeast (with the exception of Rhode Island) and property taxes are the highest in the nation and can certainly add to the misery of homeowners almost the same as if they had a second mortgage.

My proposal of abolishing property taxes for primary residences of New Jersey taxpayers would have a soothing effect on the housing crisis. People would truly own their homes after their mortgages are paid off. But for that to occur, I have to be elected governor first and that, if you decide that it will happen, will not be until the end of 2013. For some homeowners, it will be too late.

The current administration of governor Christie has little sympathy for property tax relief. We already know that his 2% property tax cap is full of loopholes. The democrats in the Legislature have proposed a modest property tax cut but it would not be sufficient to reverse the tide of bad news. New Jersey needs shock therapy; bold measures, and these will not come from either political party. They are just too comfortable with the status quo and basically don’t care.

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.