Twenty-five years ago this month, New Jersey voters delivered a stunning rebuke to Democratic Governor James J. Florio, despite his extraordinary record up to that point: auto insurance reform, in a state where drivers had long endured the country’s highest premiums; the Quality Education Act, which provided $1.1 billion in additional state aid to education; the Clean Water Enforcement Act and creation of an environmental prosecutor with statewide jurisdiction to go after polluters; mandatory financial disclosures by public officials; pioneering health care reform; $360 million in local property tax relief; and a toughest-in-the-nation assault weapons ban. Unfortunately for Florio, his progressive agenda had also included tax increases. When the legislature stood for reelection in November 1991, halfway through Florio’s term, it was the tax increases that the public remembered, resulting in an electoral debacle of unprecedented proportion for the Democratic Party.
“[I]t was a slaughter,” one Florio staffer later remarked.
Democrats lost 10 Senate seats and 21 Assembly seats, giving Republicans veto-proof majorities in both houses – a mandate, in other words, to roll back much of what Florio had accomplished, with the governor seemingly helpless to stop it. The loss was fueled by a grass-roots taxpayer revolt that may have been secretly funded by the gun lobby, in retaliation for the assault weapons ban. But Florio, himself, had set the table for his own downfall by making a campaign “semi-pledge” – one that circumstances made impossible for him to keep.
During the 1989 gubernatorial election, candidate Florio, who went on to trounce Jim Courter, his Republican rival, said that he saw “no need to increase taxes” if elected. But shortly after his inauguration, Florio did just that, ramming through the Democrat-controlled legislature the biggest tax increases in state history. The $2.8 billion package included an income tax bump in the top bracket, from 3.5 percent to 7 percent, and a sales tax increase, from 6 percent to 7 percent but broadening its scope to include items not previously taxed, like paper goods and other non-food products consumers bought every week at the supermarket checkout counter.
Florio’s statement about not increasing taxes, though politically expedient, was based on outgoing Governor Tom Kean’s projected $300 million surplus in that fiscal year’s budget, six months of which would carry over into the next administration. Kean’s surplus turned into a $600 million deficit after the November 1989 election but before Kean left office. What’s more, analysts warned of a $1.6 billion structural deficit in the following fiscal year’s budget. Without bold action, a financial disaster awaited New Jerseyans.
The Florio transition team urged Governor Kean to push the lame-duck legislature into enacting a one-percentage point increase in the sales tax before the January change of administrations to help cover the looming deficits. Kean was at the height of his popularity and could have expended some of his considerable political capital to help his successor, and New Jersey, through difficult straits. But the outgoing governor refused, leaving the matter for Florio to deal with.
“[Y]ou inherited a mess,” was the way one former Kean administration official put it, in 2013.
The budget shortfall was just one-half of a fiscal double-whammy facing Florio. A decision was imminent in the Abbott v. Burke case, wherein the Supreme Court was expected to order the state to provide significantly more funding for 28 poorer school districts, soon to be known as “Abbott” districts. The annual cost would likely approach $500 million, funds that could only come from an income tax increase.
A debate among Florio staffers and Democratic legislative leaders ensued over whether or not to pursue the sales tax and income tax increases simultaneously. State Treasurer Doug Berman, perhaps the most influential advisor, argued that it was best to get the unpleasantness out of the way early, so as not to be fresh in the public’s mind four years later, when Florio would be campaigning for reelection.
Assembly Speaker Joseph V. Doria, Jr., went along with the plan out of loyalty to the governor, as did Senate President John Lynch, although both Democratic leaders had misgivings. Lynch wanted to wait for the Supreme Court to act, so the legislature would appear to have been dragged “kicking and screaming” to the income tax increase, because of the Court’s ruling. “You need to choreograph this in a way that makes sense to the public,” Lynch told an interviewer in 2013.
Speaker Doria also had second thoughts. “[L]ooking back, we probably should have waited and created some type of crisis,” he said, in 2014. “Rather, we decided that we would be proactive and being proactive I think we politically hurt ourselves.” Later, Doria added, “We were trying to act responsibly, but there was a perception problem.”
Gordon MacInnes, the Morris County Democratic Chair in 1991, may have been the only political prognosticator who got the electoral outcome right. MacInnes, who now heads New Jersey Policy Perspective, a progressive think tank, recently told an interviewer that he won lots of election bets that year. Democrats should have “waited for the Court to rule,” he said, and then “blamed the income tax increase on them.”
The sales tax increase, dubbed the “toilet paper tax” by marketing-savvy opponents, and the income tax increase, which affected just 17 percent of taxpayers, spawned the movement known as Hands Across New Jersey, led by John Budzash, a postal worker from Howell Township. Budzash called into a talk-radio program on WKXW, 101.5 FM, and complained. The rest was history. On-air personalities took up the fight, blasting Florio mercilessly and promoting two separate marches on Trenton that drew thousands of protestors. But there was a ringer in this massive anti-Florio outpouring – the National Rifle Association.
The NRA was incensed over Florio’s successful initiative to ban assault weapons. As Hands Across New Jersey gained momentum, the nation’s most influential gun lobby secretly financed its operations, according to Florio insiders. The movement, which some have called a forerunner to the national Tea Party uprising of 2010, was “aided and abetted by NRA money,” according to Rick Sinding, a Florio policy advisor. Former Communications Director Jon Shure agreed. “This outfit called Hands Across New Jersey,” Shure told an interviewer in 2013, “[had] help behind the scenes . . . from the NRA for sure.”
It was an ingenious political strategy by the NRA, which probably could not have defeated Democratic legislators over the gun issue. Seventy-seven percent of New Jerseyans supported Florio’s stringent assault weapons ban. Instead, the NRA went after Florio and his legislative enablers over the one universal pocketbook issue – taxes.
Florio readily admits that his administration did not handle the politics well, although he did meet with Hands Across New Jersey leaders in an effort to tamp down their opposition. The governor painstaking explained the need for the additional revenue and the fact that 83 percent of New Jerseyans, including everyone attending the meeting in his office, would be unaffected by the income tax increase, which applied only to the highest tax bracket. But organizers were adamant.
“One day I want to be a millionaire,” Budzash told the governor, “and I don’t want to pay taxes.”
In the new legislative term, which began in January 1992, Republicans were successful in moving the sales tax back to 6 percent, overriding Florio’s veto, but their attempt to quash the assault weapon ban was a different story – one the former governor, looking fit at 79, recounted to an interviewer over coffee and muffins at the Metuchen Diner, not without a measure of pride.
In September 1992, Florio vetoed the bill repealing the assault weapons ban. The Republican-controlled Assembly overrode the governor’s veto with little trouble in February 1993, but instead of taking up the matter right away, the Senate delayed its override attempt to mid-March, giving Florio and gun control advocates time to mount a counter-offensive. The assault weapon ban, however repugnant it was to the NRA, was popular with the public and civic leaders: educators, doctors, clergy, and law enforcement officers.
Former Republican Governor Donald DiFrancesco, who now numbers Jim Florio among his friends, was a 16-year veteran of the legislature in 1991 and became Senate President in January 1992, when his party took control. In a recent interview, DiFrancesco said that Assembly Republicans soon regretted their successful override of Florio’s veto and began calling to ask that he not post the Senate’s override attempt for a vote.
Taking a page from the NRA’s own playbook, Florio had begun marshaling anti-gun forces to pressure Republicans, all but one of whom had previously voted for repeal, into letting the veto stand in the Senate. Caught between the “rock” of public support for the assault weapons ban and the “hard place” of NRA opposition, every Republican senator who had voted for repeal now abstained on the override vote, leaving the assault weapons ban in place. It still stands today as the toughest gun control law in the nation.
“Had Jim Florio waited until his second term to deal with the gun issue,” DiFrancesco said, “he would have won that second-term election with no problem.”
These events a quarter-century ago may provide an important lesson for Governor Chris Christie and today’s state legislators, as they grapple with school funding issues yet again and a bankrupt Transportation Trust Fund that likely will require significant gas tax hikes to become solvent. Tax increases, no matter how necessary, will not sit well with the public unless voters are educated on the benefits they can expect from such increases, like more effective inner-city schools that truly deliver on promises or safer roads and bridges that stimulate economic growth. Still, if personal ambition and partisan tomfoolery overtake the process, the likely result will be government inaction, allowing problems to fester and become more intractable.
An interesting postscript to this story is how much Governor Florio was able to achieve, even after his party’s November 1991 defeat. In his last two years, Florio signed into law an act banning discrimination based on sexual orientation in employment, housing, public accommodations and public contracts. He also passed a welfare reform law and added almost $300 million in funding for public education. Florio was the last governor to fully comply with the state’s pension and health care obligations for retirees. Every subsequent governor has reneged on those obligations, creating a shortfall that stands at $50 billion . . . and growing.
Ask New Jerseyans who were around in the 1990s to do a “Jim Florio” word association and you’re likely to get “toilet paper tax” as the answer. Yet, when Florio left office (he was defeated by Christine Todd Whitman in November 1993 by just 26,000 votes), New Jersey had one of the strongest financial ratings in the nation, in stark contrast to our present fiscal condition – the 48th worse among all the states.Click here to leave a comment