- [Announcer] Funding for "Governors' Perspectives with Kent Manahan" has been provided by NJM Insurance Group serving the insurance needs of residents and businesses for more than 100 years, Seton Hall University, Seton Hall School of Law and by Connell Foley LLP.

[upbeat music] - [Kent] Overall, new Jerseyans tend to think the state is a good place to live, with quality schools, family-oriented communities, mountains, beaches, farmland a rich history, and cultural activities.

But according to a Monmouth University poll, while the quality of life index here is stable, the desire to leave New Jersey generally continues to tick up.

The survey shows more Republicans want to leave, which was not always the case.

Yet according to Patrick Murray director of the independent poll, the areas with the least positive views on the quality of life here are heavily Democratic urban areas and heavily Republican rural counties.

- It was once as high as 84% back in the 1980s.

Through most of the past decade, it was in the mid-60s, but it has been definitely on the decline over the past few years.

- [Kent] When asked directly, residents say the state needs to do more to address key issues, particularly... - Taxes, taxes, and taxes.

- That's always the issue.

- [Kent] The poll, one of the most respected in the country on national and local issues has been tracking New Jersey residents and how they view the state's quality of life since 2010.

- To keep those older residents happy and be able to afford to live here, they require that that tax base that's generated by those younger wealth generators, and those are the folks that could get up and leave at any time.

- [Kent] Governor Murphy thinks his ANCHOR Property Tax Relief program will help keep New Jerseyans anchored here in the garden state.

- We are proud to say that a total of nearly 1.7 million New Jerseyan homeowners and renters are signed up and in the queue to get their ANCHOR relief.

- With us now to discuss that dreaded word, taxes, former US Senator from New Jersey and Governor Jon Corzine.

Welcome back to the program, Governor.

- It's good to be here.

Thank you for inviting me.

- Well, we're happy to have you here.

Governor, you know, I think, and you'll agree that elected officials political candidates don't like talking about taxes very much.

And residents, they don't really wanna pay more, but they want the services.

I went back a little bit to find Benjamin Franklin's words.

The only two certain things in life, death and taxes.

1789, I think two centuries later or so, he was right on target with that.

- Another certainty in New Jersey is people are gonna debate property taxes during any political season, so it's almost as certain.

- You're laying the groundwork.

Well, Governor, certainly, you know about that issue.

You were inaugurated in 2006, and shortly after, in your administration, you had to deal with taxes and it was a tough time.

Tell us about that.

- Well, actually, I had the best of worlds because the first two years of my administration, the economy was very strong and we had good natural flow of revenues, and we had a solid rebate program, and the homestead rebate for seniors, and it worked well, and we were able to do more funding for school, finance at the local level, and that was great.

But then the Great Financial Recession came along, crisis of 2008, 2009.

Revenues fell off a cliff and we ended up, as all states do, they have to balance their budget cash in, cash out.

- You know that well.

- I knew it well, and we had to make a lot of really tough choices.

We didn't change our growth in expenditures on school funding, but we had to cut back on rebates, and it was not a popular decision, and I think it created a serious vulnerability, which national economic events do for whoever's in office, whether they're a Republican or a Democrat.

And the great financial crisis was certainly not the best way to go into the 2009 election.

- Well, governor, help us to understand.

What, from your perspective, are the elements that make New Jersey's property taxes so high?

They are the highest in the country.

- They're high because we have a high degree of services that we give.

You know and I think the public understands and why I think New Jersey's still gonna be a great state to live in.

We have probably the best performing school system statewide, and we're making very serious progress in some of our urban communities as well, and that's a real plus.

We have a very large infrastructure that I think supports commerce.

We're a transportation state.

We've got enormous amounts of investment that need to be maintained, whether it's ports and other places that are expensive.

And we try to have a social safety net that makes sense for a broad group of people.

And so that has created a demand that is there.

If you tried to cut a number of our social services or the amount of funding that we do for schools, you'll get almost as much pushback as you get by having property taxes go up, which are a local decision that can be helped by the state, either through rebates or through funding to help fire and police and, most importantly, schools, which we do.

But those are tough choices that have to be made when you put a budget together.

- Let me pick up on the school issue because research shows that in most municipalities and almost all in New Jersey, and there are right now 564 municipalities- - That's down two from what I- - It's down two.

Progress.

And some 600 school districts.

But back to the point for municipal governments, they have to appropriate approximately, across the board, 50% of their budgets to fund schools.

And there are those in this state who have been pushing for on both sides of the aisle, Democrats and Republicans, to look more closely at income taxes and sales taxes to dedicate more of those funds to help with the school expenses and municipalities.

Do you subscribe to that?

Is that a good idea?

- You may recall, Kent, that, my first year in office, I didn't feel like we had proper funding of the state, and I proposed an increase in the sales tax, which ended up leading to a shutdown in government because the legislature didn't agree.

Ultimately we got to a compromise, which did raise taxes and gave us greater ability to fund our school formulas.

But it's not easy and there are people that believe that we should do what you're suggesting, raising taxes.

But I can give you a number of examples, including somebody we'll talk about later, Jim Florio, who took tough decisions in a tough economic environment to try to make sure that we maintain the great school system that we have and the services that we have in the state and it was a huge political liability.

And so there's a trade off here.

Short-run thinking versus long-run thinking, and I think it takes a lot of courage.

Governor Florio showed that by making the decisions that we need to make those tough decisions if we wanna have a long-run commitment to educating our kids, keeping our our communities safe.

New Jersey's actually one of the safest states in the country, probably has the lowest crime rate, violent crime rates per 100,000 in the country.

It's certainly in the top five of the lowest numbers.

We do a lot of things right, but it comes at a cost, and I just have to say one other thing.

We're getting absolutely ripped by the federal government with this inability to deduct state and local taxes.

- You're talking about the SALT tax.

- SALT tax.

And it didn't solve our property tax problems, but not having that ability has been a very painful reality- for our working- - For New Jersey.

- Folks and professionals in New Jersey and needs to be pushed back on.

We do have the advantage in 2025 that that SALT tax deduction will revert back to state levels that it was before the 2017 tax law.

And we have to make sure that that doesn't come back on the books.

- Well, the congressional delegation, as you well know, has been pushing for that.

We have to mention that.

But Governor, getting back to the high taxes in New Jersey.

Polling shows that residents leave this state because their property taxes are so high and, generally, that's the elderly.

They want lower tax rates, warmer climate.

They leave New Jersey.

That affects the bottom line.

But you know, that polling also shows that young people are leaving this state in search of an economy that they can afford.

What does that bode, in your opinion, for the future of the state?

- I do wanna emphasize that if you look at the demographics, at least the most recent research I've done, which is a little dated, it is primarily people who are approaching retirement and wanna protect as best they can their savings as they see it by lowering both income tax and estate taxes, and they've chosen other places.

The census, most recent census, actually showed our population grew.

So there are people coming in to New Jersey- - [Kent] To make up that difference.

- Make up some of the difference.

I think it's people who are searching to educate their children in the best possible way in a public school environment, and I think New Jersey is winning that competition.

- We are said to be number one in the country in terms of public education.

- And we're always right at the top.

- But what about businesses in this state?

With such high property taxes, bringing business in, bringing employees in, briefly, what's the impact that that's going to have from your vantage point?

- Well, it makes it a tougher sale.

No, there's no question.

We brought businesses here.

You have to work on not only American businesses.

You need to be trying to attract businesses from overseas.

They, more than many of the American companies, look to the educational system as a draw, but it's an argument you have to make on the quality of life, access at this great northeast corridor that is pretty attractive, I think, in many, many ways.

I know I grew up in the Midwest, and I like it here a hell of a lot better.

There's more to do.

We've got the great shore there.

There are so many advantages to New Jersey.

- And certainly that's what people like about this state.

So you're a New Jersey chauvinist.

- Yeah, I am pretty chauvinistic about it, and I think that we have to defend that.

There were times when we didn't protect our shore, and it began to suffer.

Some people can even go back and say the problems of Atlantic City began because we weren't doing the work that needed to be done.

And a lot of governors, both Republican and Democrat, have committed to make sure that we have a pristine shoreline, that we have the capacity to do things that make living in New Jersey attractive- - And affordable.

- Except for maybe those property taxes.

- I pulled this book out because I wanted to just remind our audience and you, Governor, just to make a few comments.

Back in the day, assembly speaker, former Assembly Speaker Alan Karcher wrote this book, "Multiple Municipal Madness."

- Madness.

- We mentioned how many municipalities in New Jersey- - The three Ms, right.

- How many school districts.

That means fire departments, police departments, municipal governments, unions to be paid, all kinds of expenses.

And in this book, he concluded maybe 200 would've been the perfect number of municipalities for this state, but that's long gone, never going to happen.

But consolidation is talked about and the need for consolidation.

You were part of that effort during your administration with incentives, combine services, get local towns to combine some of these services to cut expenses.

Where are we on that today, in your view?

- Well, I don't think there's been significant progress.

I used to beat my chest because Princeton Township, which surrounded Princeton Burrow actually merged using our program.

- [Kent] It happened, it happened.

- It happened, but you have to ask me for the next two mergers that occurred.

- It happened, but it took 25 years.

- It did.

- It's not easy, but go with it.

- And it actually took the resources that we were encouraging, the incentives that we put down on the table.

that needs to be done.

This is a problem that's neither Republican or Democrat.

And actually, Karcher's book is brilliant because he describes all the political trades and reasons why we have this madness of multiple municipalities.

And it was pure politics then and meeting the need of getting the consolidated services or merged elements.

And we have multiple levels too.

We have county governments.

we Have city governments.

We have townships.

We have- - Bergen County has 70 municipalities, one county.

- And they have more firetrucks than the city of New York, or at least they did during my administration.

But it gets at a very fundamental point of politics, and I learned this the hard way.

When you make tough calls that are not necessarily the prettiest package on the surface trying to solve long-run, long-run problems- - And convince the people of the benefits.

- Right, you have one of the great tasks, and politics, not only in the politician's mind, but often in the public's mind, is much more short-run-oriented than long-run.

And it is absolutely the essence of leadership to take on those problems with some perspective, other than, "How am I gonna get elected in the next go round?"

- Governor, we have had in New Jersey a long time history of rebate programs to give back to homeowners, but those are kind of relief efforts, but they're not reform.

What could real property tax reform look like in New Jersey?

Could it ever come about?

And what would it take in terms of leadership?

- It takes governor and a legislature to make real reform the priority, and they have to tell the truth about it.

we often talk about property tax reform about capping rates.

Well, that's fine, but if you have reassessments of the value of the property, the rate may not change, but your property taxes go up.

And that's been one of the sort of bogus elements that occur.

We need to address both issues at the same time, and we need to, again, go back to the Karcher element.

We have to consolidate services.

economies of scale are a ECON 101 solution to a lot of things that we do.

We need to put technology into so much of what we do in the state, and that could help municipalities lower costs.

But there are a lot of vested interests that are gonna push back on all of those kinds of initiatives.

I, by the way, just wanna say that I don't think rebates or patchwork.

I think what needs to be had is consistency of rebates over an economic cycle, and that's why people look at it as being more of a gaining response as opposed to a long-term response.

If there were income-based or means tested way to apply rebates and stick with it the same way you have to stick with financing the school funding formula, which we worked so hard to produce.

- Very briefly, Governor, in the time we have remaining, a big legislative election year in New Jersey, all 120 seats in both the Assembly and Senate up for grabs.

20... What is it?

About 20% of the legislature is not coming back for reelection.

Republicans think they can take one of the houses.

Of course the Democrat controlled at this point.

What are the odds do you think?

Governor Murphy's reelection bid was a lot closer than people thought, and Republicans picked up seats in the last legislative election in both houses.

Briefly, what does it look like for Democrats do you think?

- I think we have in this country and we will have it in New Jersey.

Very serious unease on the macroeconomic environment people live in.

They go to the- - Affordability Will be the message.

- Affordability, yeah.

People go to a gas station, and if we're in one of those periods when gas is over four bucks or whatever, you're gonna have the parties in power, and Democrats are gonna have a harder sell than they would have in other circumstances.

We talked about property taxes.

Whoever's in office gets the blame for those circumstances.

- Goes with the territory.

- It goes.

And again, it gets you have to have a long-term view if you're gonna be a good servant of the people in my view, and that sometimes means you have to really work to sell good ideas on what it is that would actually change those.

So the Karcher book is a must-read for anybody that really would like to resolve those.

I think those kinds of issues, I hope, will be debated.

Not just it's their fault 'cause they're in office.

We need to talk about fundamental reform in the state.

- Could there be more effort on the part of both Democrats and Republicans to resolve this budget from both sides of the aisle?

Because it is a legislative election year, because so many are not returning the legislature, so many open seats, and those people who are running wanna get elected.

Is that possible?

- With so many people not running for reelection, there's a little more jiggle room on the negotiations, particularly because somebody may have something that they're looking to have as their Legacy, as a part of their careers in the legislature.

So I think it gives the governor a little more flexibility, if you will, in negotiations.

I do think that budgets in election years and New Jersey has won every four years where everybody's up for election at the same time.

Those are a little tougher.

- You mentioned Governor Florio earlier in this interview.

In your opinion, Governor, what will his legacy be for this state?

- Well, first of all, he is an example of what a courageous politician looks like.

He did the right things because he took on the NRA on assault weapons.

He took on the reality that you have tough decisions you mapped to make on budgets in a recession and stayed with funding schools.

He was a hero on that.

I ran against Jim Florio for the US Senate in our primary in 2000.

And I have to tell you, as tough as he was as a competitor, the minute that race was over, he was absolutely a gentleman of the first order.

He was the first person to call and say, "How can I help you be successful in the United States Senate?"

and he did that again as governor.

So he's a class act, and you'll know that every governor, every sitting governor was at his funeral.

He had the respect of his peers for how he behaved and how he led the state.

Even though we all can have disagreements about one policy or another.

This was a man that brought character to the office.

- And as you know, Governor, he has been a frequent guest on this "Governors' Perspective" series for many years.

He sat here and gave his views on important issues.

We have prepared as "Governors' Perspectives" team a tribute to Jim Florio.

He passed away last year, and a look back at his time here.

- Pulaski Skyway is in need of repair.

There's a whole bunch of things that we have in the water field, in the electricity field, bridges, tunnels, highways.

It yields great numbers of jobs.

And the jobs that are related to tourism don't necessarily get thought of.

There's a whole line of jobs that flow from tourism.

For example, people are starting, I think, around the nation.

You get tired of beach restoration.

I mean, how many times do you keep restoring the beaches and only have it washed away?

It makes it very complicated, but that's not to preclude it being done.

I think there's lots of things that are very fundamental in terms of just basic management systems.

The answer is you do your best.

I mean, the fact of the matter is Green Bay does this on a regular basis.

So we try and do it- - True.

- Put it together.

- And New England.

- And New England, that's right.

One hopes we get a break.

We've kicked a lot of stuff into the next ballgame.

Many things have not really been addressed.

We still have a 90 billion shortfall.

New Jersey, the governor is sort of the key cheerleader for getting things done and getting them initiated.

[gentle music] [gentle music continues] [gentle music continues] [gentle music continues] [gentle music continues] [gentle music continues] [no audio] - [Announcer] Funding for "Governors' Perspectives with Kent Manahan" has been provided by NJM Insurance Group, serving the insurance needs of residents and businesses for more than 100 years, Seton Hall University, Seton Hall School of Law and by Connell Foley LLP.

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