When Democrats Control Government

For the first time since 1994, Democrats appear poised to take control of at least one House of Congress in the upcoming fall election. While many regard this as a cause for elation, my experience as a summer staff intern in the largely Democratic New Jersey Assembly fills me with trepidation about this prospect. One of the major advantages of the American system of dual Federalism is that political experience at the state level often predicts what will happen at the federal level. So, if the ineptness of the Democratic Party in the recent budget fiasco of New Jersey is our guide, the possibility of increasing Democratic control in Congress is a troubling prospect for the nation.

In New Jersey, Democrats currently control both Houses of the Legislature and the governorship. The New Jersey Constitution requires the Legislature to pass and the governor to sign a budget each year by midnight June 30 for the fiscal year beginning July 1. If the Legislature fails to pass a budget, the government is prohibited from spending any public money, (unless the governor arguably violates the state Constitution by authorizing “essential” expenditure). On March 21, more than three months before the Constitutional deadline to pass the budget, New Jersey Governor Jon Corzine spoke to a joint session of the Legislature laying out his budget of $30.9 billion, an enormous $2.6 billion increase over the previous fiscal year. His proposed budget contained several tax increases, including an increase in the sales tax from 6% to 7%, a new hospital bed tax, a tax on fitness club memberships, and a water tax.

Between March 21 and early June, the Senate and General Assembly of New Jersey held numerous Budget Committee hearings, where testimony was taken but no substantive budget negotiations were held. Fearful of a voter backlash, Democratic members of the Legislature by mid-June convinced the governor to rescind his hospital bed and water tax proposals. The powerless Republican minority put forth a budget proposal containing $2.2 billion in cuts to the governor’s proposed budget, which would have eliminated the need for tax increases and provided a small budget surplus to give the state flexibility for future budgets. With less than two weeks before the budget deadline, an impasse arose between the Democrats in the Assembly and Senate, as the former rejected the governor’s proposed sales tax increase, while the latter supported it.

By midnight on June 30, the Legislature was not even close to a budget agreement. On July 1, Governor Corzine signed an executive order calling for the “orderly” shut-down of state government. By July 5, all non-essential staff had been laid off and most government services were shut down. This caused over 120,000 state employees to lose their jobs temporarily. Of all the disruption the closure of state government caused, the media focused most of its attention on the Atlantic City casinos. Because New Jersey law requires that state regulators be at the casinos at all times when they are operating, the casinos were forbidden to allow gambling while the regulators were laid off. Not only was this devastating to casino profits, but it cost the state nearly two million dollars a day in lost tax revenue.