Business organizations liked what they saw in Gov. Chris Christie’s budget proposal the past week.
The New Jersey Chamber of Commerce praised the governor for continued fiscal discipline, focusing on the $32.9 billion budget being $70 million less than the state spent six years ago, rather than the $754 million increase in spending from last year’s budget.
Thomas Bracken, president of the N.J. Chamber of Commerce and formerly president and CEO of Vineland-based Sun National Bank, was impressed that Christie’s budget increases education funding and makes a $1.7 billion pensions payment without raising taxes.
He said the budget also maintains the business incentives and tax reforms, previously set in place by the governor and Legislature, intended to make the state more business friendly and encourage job creation.
Those measures include allowing businesses to eventually calculate their corporate tax based on sales alone rather than a formula that also includes property and payroll; letting businesses that pay income tax rather than corporate tax to carry losses into subsequent tax years; and eliminating a “temporary” 4 percent tax on energy.
The New Jersey Business & Industry Association praised the governor and his opposition for staying the course on these measures, which add up.
“The proposed budget includes another $200 million in business tax relief as Christie continues to phase in bipartisan tax reforms enacted three years ago,” Philip Kirschner, NJBIA president, said in a statement.
The chamber and the association also praised the state for its dual commitment to fiscal responsibility and recovery from Hurricane Sandy.
“Even after an unprecedented natural disaster, New Jersey is able to move forward with its economic development plans. I believe this positive budget is possible because of the difficult spending decisions and the bipartisan reforms enacted in the past that put New Jersey’s fiscal house in order,” Kirschner said.
Govern like a business
How would a business go about cutting its spending if it faced the same requirement that began Friday for the federal government?
A lot more quietly and routinely, for one. Businesses adjust their budgets to reality all the time. Judging by the histrionics accompanying the $85 billion in federal spending, you’d be forgiven for thinking this is the first time reality has intruded upon the government.
From a business point of view, the required cut is quite small — just more than 2 percent. The total federal outlay for this budget year, as estimated by the White House, will be $3.8 trillion.
Some parts of the vast federal budget will be reduced more than that, but only because that’s where the leaders of the two political parties agreed to cut — after failing numerous times to agree to reduce most other parts of the $3.8 trillion in spending. They could at any time decide to do otherwise, to take this tiny step toward fiscal responsibility in any direction they wish.
A business cutting its budget by 2 percent would do so in ways that its customers would never notice. Indeed, a business would make every effort to ensure that none of its customers were adversely affected.
I’ve talked to business owners many times about belt tightening and have seen reductions carried out. I’m convinced they are almost always successful in ensuring that their customers’ satisfaction isn’t impaired by the need to spend a little less.
The federal government seems to be taking a different approach, with its many branches raising loud alarms about the dreadful deprivations citizens will feel as a result of this 2 percent budget cut.
Getting on airplanes will take 90 minutes longer, teachers will lose their jobs, border security will lapse and illegal aliens already in custody will be let loose, an aircraft carrier’s mission will be canceled, national parks will be less enjoyable … who knows how long this list will grow.
For the government, the goal in cutting the budget seems reversed from that of a business: Reduce the budget in ways that most affect the customers, if you think of us mere taxpayers as such.
So many people in the business world would say this is one of those ways we’d be better off if government worked like a business.
Not so fast.
The business spares its customers to the extent possible because that is what maximizes revenue and profit for the business.
Government likewise wants to maximize its revenue and profit (for individuals as pay, benefits and perks), so it afflicts its customers until they agree (or perhaps even beg) to pay more in taxes.
So government already operates like a business — in its own self-interest — as far as budget cuts go.
The difference is that businesses must compete and win customers, while government has a monopoly and can impose upon its citizens.
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