30 and Counting: Florio Tax Increase

We look back at the notorious tax increase that took effect under Governor Jim Florio’s watch in June 1990, which spawned a citizens’ backlash that forever changed New Jersey’s political landscape.

We look back at the notorious tax increase that took effect under Governor Jim Florio’s watch in June 1990, which spawned a citizens’ backlash that forever changed New Jersey’s political landscape.

The 30-second brief: An incessant campaigner, Florio won two terms in the Assembly; seven in the House, where he authored the Superfund legislation; and his fourth quest for governor. Although he had opened his 1989 gubernatorial campaign railing at polluters, by the time he trounced Republican congressman Jim Courter, the big issue was how to tackle the budget deficit. His first six months as governor defined Florio’s career and became an abject lesson for a generation of politicians.

What might have been:
Let’s say that instead of blowing a late 15-point lead and losing the closest governor’s race in state history, in 1981, Florio gets 1,797 more votes. He serves eight years instead of Thomas Kean, enjoying the nation’s leading budget surplus entering fiscal year 1986.

Reality: Florio finally wins in a smear-filled race against Courter, just as the economy tanks and the budget deficit spirals above $1 billion.

Block those bucks: In his last days in office, Kean boosts pensions 5 percent for 25-year police officers and firefighters, which the League of Municipalities predicts will cost $2.7 billion through 2019. One week later, Kean bows to Florio’s wishes and freezes spending and hiring.

Buddy, can you spare a billion? Florio’s inauguration speech never mentions the deficit, but his budget speech two months later goes for the jugular. Proposals include a sales tax increase from 6 to 7 percent, an income tax hike for those making $55,000 or more, bumping up the gas tax by as much as a nickel, and slashing the payroll for 104,000 state workers.

The reaction: Howls, gnashing of teeth, fervent denials—and that’s just from Florio’s Democratic brethren.

Quotable: “Ronald Reagan used the right rhetoric for the wrong policies. There is no such thing as a free lunch. But I sense there is now a tremendous desire out there to have somebody make some hard decisions.”
—Florio to the New York Times Magazine, May 20, 1990

Let’s make a deal: Three days before the budget’s deadline, Florio signs legislation that includes a $1.5 billion tax increase. The package features a 7 percent sales tax on telephone calls, disposable paper products—the infamous “toilet paper tax”—soaps, detergents, and alcoholic beverages.

Collateral slammage: The biggest winner? Ewing’s WKXW-FM, a hapless adult contemporary station bought in early 1990 by a sister group of the Asbury Park Press. Rebranded as New Jersey 101.5, its hosts stoke Florio hatred, fomenting a taxpayer revolt in the form of grassroots group Hands Across New Jersey.

In other news: Six days after the state Senate approves Florio’s plan, President George H. W. Bush breaks his “Read my lips: no new taxes” campaign pledge.

Florio’s approval rating, March 1990: 42 percent.

September 1990: 18 percent.

Roll back the barrel: Democratic U.S. senator Bill Bradley lands a second term in 1990, edging out Christine Todd Whitman by 3 points. But in 1990 Republicans regain their first veto-proof cushions in the Legislature in twenty years and proceed to emasculate Florio’s tax hikes. Their 1 percent sales tax rollback helps add $1.7 billion to the state debt by 1992, the year Florio becomes the state’s first governor to veto a budget.

Enter Christine, stage right: Whitman stumbles through the 1993 campaign, getting spanked for, among other things, hiring illegal aliens and never voting in her local school board elections. In September, trailing Florio by 9 points in a Star-Ledger/Eagleton poll, she promises that if elected she’ll cut middle-class income tax rates by 30 percent.

What could have been: The electorate realizes that a 30 percent cut would spawn huge state debt. Florio wins. For the next four years, he leads against the background of the blossoming economy and zooming stock market.

Reality: Whitman becomes the state’s first candidate to defeat an incumbent governor in a general election. She achieves her tax cuts by 1995, rolls up billions in debt, and is hailed in some circles as a Reagan-style fiscal genius.

Waiting in the wings:
Florio joins a Parsippany law firm. In 1995 he decides against a U.S. Senate run, then five years later loses the 2000 Senate primary to Jon Corzine.

Lessons for politicians:
1. Never raise taxes. 2. When in need, borrow. 3. In dire straits, cut taxes. 4. Never raise taxes. 5. Never.

 

JUNE IN NJ, 1976–2006

JUNE 2, 1983: Tests reveal that 4 acres of the former Diamond Shamrock site near the Passaic River in Newark’s Ironbound section, where the company manufactured Agent Orange during the 1960s, are laced with high concentrations of lethal dioxin.

JUNE 8, 1987: The Kids World amusement park and several arcades and shops are destroyed when wind stokes a massive fire that engulfs the 800-foot Long Branch pier and about ten buildings on the adjacent boardwalk.

JUNE 10, 1996: More than 4,000 rail riders celebrate the debut of Midtown Direct service, which runs trains directly into Manhattan.

JUNE 12, 1985: Governor Thomas Kean signs four bills to restrict smoking on buses and in restaurants, supermarkets, and workplaces, ending ten years of wrangling in the Legislature and making New Jersey America’s trendsetter.

JUNE 15, 1993: A study published by the Journal of the American Medical Association cites Elizabeth as leading the nation in 1990 in the proportion of deaths among 25- to 44-year-old men and women related to AIDS (51 percent), while Newark led among women aged 25 to 44 (43 percent).

JUNE 22, 2001: Two tractor-trailers and a gas tanker collide on a Route 80 bridge in Denville, sparking explosions and 100-foot-high flames that necessitate months of traffic-snarling reconstruction.

JUNE 24, 2005: After two frantic days of fanning out in a citywide search for three Camden boys, the father of one missing boy discovers their bodies in the trunk of a car parked near the yard where they were last seen playing.

JUNE 27, 1988: Before a sellout crowd of 21,875 at the Atlantic City Convention Center, Mike Tyson drops Michael Spinks to the canvas twice in 91 seconds, ending the fourth shortest title bout for the world heavyweight championship.

 

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