ASSEMBLY EDUCATION COMMITTEE
ASSEMBLY CONCURRENT RESOLUTION No. 1
(Amends State Constitution to dedicate a $0.25 per pack cigarette tax
increase for increased public school district facilities aid to provide for
a thorough and efficient system of free public schools)
Committee Room 16
State House Annex
Trenton, New Jersey
July 11, 1996
MEMBERS OF COMMITTEE PRESENT:
Assemblyman John A. Rocco, Chairman
Assemblyman David W. Wolfe, Vice-Chairman
Assemblywoman Marion Crecco
Assemblyman Raul "Rudy" Garcia
Office of Legislative Services
Aide, Assembly Education Committee
mjz: 1-42 (Internet edition 1997)
ASSEMBLYMAN JOHN A. ROCCO (Chairman): Are you ready? Roll call, please.
MS. FAZZARI (Committee Aide): Assemblyman Garcia?
ASSEMBLYMAN GARCIA: Here.
MS. FAZZARI: Assemblywoman Crecco?
ASSEMBLYWOMAN CRECCO: Here.
MS. FAZZARI: Assemblyman Wolfe?
ASSEMBLYMAN WOLFE: Here.
MS. FAZZARI: Assemblyman Rocco?
ASSEMBLYMAN ROCCO: Here.
The hearing we are going to have today on ACR-1, the constitutional amendment Assemblyman Stuhltrager sponsored, will deal with the issue of the proposal for the constitutional change. It is a requirement by law that we do this. As you all know, we have already had one hearing in regard to ACR-1 in our Assembly Education Committee, so this is, in fact, a continuation of our previous hearing in a sense.
Those of you who have testified, we are happy to have you here. We would appreciate it, since we do have your information on file, if you would just indicate your position. If you have anything additional that you might want to add, please do that. Of course, if you would like to say more, that is up to you. However, I am not certain that the repetition is necessary, since most of us are well aware of your positions.
Let's start first with the New Jersey Principals and Supervisors Association.
D A V I D N A S H: Thank you, Mr. Chairman. I promise I will be very brief. We have testified on this issue before.
Our Association enthusiastically supports this proposal. We think this is a major step forward for the State of New Jersey. The statement we have given you provides some statistics on the need we have in the State of New Jersey. It is a multibillion dollar need from all estimates. There is no question about that. There is an absolute, imperative need to have a stable and ongoing source of funding for school construction. This provides that kind of a source. We have estimates from the nonpartisan Office of Legislative Services that provide very reliable information on this that we will have $135 million annually that we can use to generate $4 billion in school improvements for the State of New Jersey.
That is why this is something where polls have shown a tremendous support by a three to one margin. The citizens of New Jersey support this, and they want the opportunity to vote on this. I just applaud you for having the courage and leadership to move ahead on this issue.
ASSEMBLYMAN ROCCO: Thank you very much.
As you all know, this will go on the ballot for the public to make the final determination as to whether or not this will, indeed, be the way the State will go. It seems from all indications I have had that you are correct there.
We appreciate your support in that regard.
MR. NASH: Thank you very much.
ASSEMBLYMAN ROCCO: Let's hear from the League of Women Voters. We have also heard from the League, and know that you are in opposition.
J U D I T H C A M B R I A: I will not repeat that portion of our testimony which we gave earlier concerning our opposition because of constitutional reasons, where we believe it is not right to use the Constitution for this purpose. I will not repeat that.
I would like to add a significant amount of new information which was not available because you held your hearing very quickly after the legislation came out. But this research has been done since then, and I think it is very important.
The League is opposed to the cigarette tax and its dedication because it simply is not going to provide the amount of revenue that is necessary in order to carry out the purposes which it says it will carry out. So I am going to lead you through the actual numbers on some of this.
First of all, we agree that the $130 million estimate is an appropriate estimate at this time based on sales, and there is an appropriate deduction taken for the projection of reduced income. However, given the long life of bonds for capital construction, it is not at all certain that the eroding tax base of cigarette sales will be sufficient in the future both to fund the principle and interest on $1 billion in State bonds, as well as the $50 million shortfall in State debt service aid.
A cigarette tax increase will be required, in our mind, to make up the present $50 million shortfall in State debt service aid as far into the future as can be foreseen. There is no likelihood that the State General Fund or the Property Tax Relief Fund will be able to provide funds to make up that shortfall. The Property Tax Relief Fund will be cut this year by the last installment of the 30 percent cut in the income tax, and again by $100 million for the new property tax deduction. In the following two years, another $150 million will be lost because of the deduction plan. The General Fund is already so inadequate that the State has shifted millions of dollars from legislatively dedicated taxes to the General Fund, and that same Fund will be further depleted by $48 million if voters approve the constitutional question dedicating funds from the corporation business tax. Therefore, there is $50 million that will be needed, as far as we can see.
A large proportion of the remaining $80 million in revenue from the cigarette taxes will be required to pay the principle and interest on the $1 billion in State bonds. I have an addendum which shows some interest rates. I am not going to go over them now.
Assuming that the State gets the lowest rate of 5 percent, uses the longest term of 30 years, State payments annually will be $65 million -- around $65 million -- on that $1 billion. Every increase of 1 percent in that interest rate would raise the annual State payment by $7 million. This leaves us-- If you take $65 million and $50 million, you get to $115 million, and this leaves all of $15 million to help the State pay for the debt service on the new bonding issues. More than 80 percent of those school districts are eligible to receive debt service aid, because they are foundation type districts.
Presently, the State is funding 43 percent of the principle and interest payments on facilities bonds for eligible school districts. You will see that there is an addendum on that as well.
The proposed plan will require local school districts to bond $3 billion in school construction to match the State's $1 billion share. The 113 poorest school districts, for which half of the State money has been reserved, would have to bond $1.5 billion in construction costs. The State would also have to pay debt services on $1.2 billion in bonds issued for the 80 percent of the remaining districts which are eligible for State aid on their debt repayment.
That means that the State is going to be responsible for paying some debt service aid for somewhere in the neighborhood of $2.7 billion worth of funding by local school boards. Assuming that we have the most optimistic scenario possible -- 5 percent bonds, 30 years -- the annual payment by the State on those bonds would be $292 million. Assuming, again optimistically, that the State is only responsible for half of this -- which I doubt, it will probably be more, because we have so many poor districts -- that would mean the State will have to come up with an additional $146 million each year for debt service aid, on top of the $50 million we are already in the hole. As I said, these are the most positive assumptions.
Furthermore, if the State continues to increase its bonded indebtedness and its annual debt payments while reducing its revenue from taxes, we are likely to have our bond rating reduced, resulting in higher interest payments on all of our debts. We do not know how the bond rating companies will react to the reduction of income tax revenues by the new property tax deduction or by the reduction of revenues in the General Fund, if the corporation business tax is constitutionally dedicated.
The cost in local property taxes to voters if they vote for this constitutional amendment and then locally vote for a bond issue could end up being an enormous burden in their local property taxes, when they trusted that the State would come through with its share. It might even be sufficient, given the large amount that is allocated to the poor districts, to put some poor school districts into bankruptcy. It will very likely result in the shifting of spending from education to the payment of bonds, thus undermining the quality of education. Surely, the anger and alienation of New Jersey citizens would be absolutely enormous.
The League disagrees with the reasoning of the sponsors that we should use the cigarette tax because it would raise only as much as is needed and would affect the fewest taxpayers. As you have already discussed, it won't raise what is needed, and the choice of the cigarette tax appears to be political expediency. It would be far easier to get voters to approve a constitutional amendment which increases a tax which does not affect most of them.
The League believes that public education is a cornerstone of our democratic system, and legislators should not be looking for a way to -- I have lost my last page, where did it go? -- for a way to place the burden of the support of school facilities on a small, unpopular, and shrinking group of people. They should, instead, be discussing the importance of education to our social, political, and economic future, and supporting the concept that all citizens are responsible for the preparation of future citizens in up-to-date, safe, and educationally effective school facilities.
The League will be urging the public not to vote -- to vote against this, because it will not do the job and it will leave them with a huge bill to pay for local property taxes.
ASSEMBLYMAN ROCCO: Thank you.
For the edification of all, OLS has given us figures of $135 million, $50 million to $60 million to be used for debt service, and the other $75 million to be used for construction purposes. As always in legislative matters, we will utilize the figures given to us by OLS, as they have always been a nonpartisan and very competent group. However, we do appreciate the League's testimony.
Let us now go to the New Jersey Association of School Administrators.
J O S E P H T. H A N C O C K, Ed.D.: Thank you, Mr. Chairman. In keeping with your request, we do appreciate the fact that we have kind of a second bite of the apple here. We would like to reemphasize the importance of this bill and the need for it.
It has been years that we have been talking about the need to keep up with the facilities needs in our particular State. Just the other day, I met with Ray Farley and a number of other people who are involved in technology. Listening to them, the kinds of advances they are trying to make in bringing technology into our State, taking advantage of the many opportunities that technology has for expanding the scope of educational opportunity for our children, it becomes very evident that we cannot talk about the future in terms of technology. Technology is upon us now. We need to find ways and find the resources so that we can adapt the facilities we have, the technological hardware, the technological operations that are going to be necessary.
We think this is a major step in that direction. We would, therefore, support it, and we urge you to release it today.
ASSEMBLYMAN ROCCO: Thank you, Joe.
I am sure I speak for everyone on this Committee, both Republicans and Democrats -- and if anyone wants to add something, they may well do so -- when I say that today this hearing is truly about the students of the State, the children of the State, and the facilities in which they live for five, six, seven, eight hours a day, depending on the school system's extracurricular activities or whatever else may be involved in their day.
However, there is no more important purpose, in my mind, than to move ahead with this to provide some acceptable, comfortable place in which the students can learn. Right now, too many schools are too old, dilapidated, ruined in so many ways, and graffiti-ridden, to say the least.
This is the right time. This is the program that is with us. There may be other ways to do this, better ways to do this. If so -- since I have been here for 18 years -- I have not seen anything come forward of this nature that would provide such a massive infusion of aid for the children of this State. I can assure everyone here that I am very much supportive. Others may wish to make their statements at another time.
Thank you, Joe.
DR. HANCOCK: You're welcome.
ASSEMBLYMAN ROCCO: New Jersey School Boards Association.
J U D I T H B. P E O P L E S: Thank you, Mr. Chairman and members of the Committee.
The New Jersey School Boards Association strongly supports ACR-1, a constitutional amendment which will dedicate a new revenue stream to finance the construction costs of public school facilities. The bill aims squarely at the important goal of providing our students with facilities that can accommodate essential technological advancements, and with needed laboratory facilities, libraries, and classroom space.
The School Boards Association believes that our children cannot learn and achieve State curriculum standards unless they have the most basic of physical resources -- adequate classrooms and schools. A growing need for upgraded and new school buildings has resulted in a severe educational facilities crisis. These unmet facilities needs have reached a multibillion dollar figure.
Many factors intensify the urgent need to upgrade school facilities. Early childhood education programs and full-day kindergartens, the building blocks of future academic success, cannot expand unless the necessary facilities are available. The increased emphasis on technology in the classroom will require an across-the-board upgrading of facilities.
In addition, the bill addresses a growing problem that many districts face-- At the June 17 Committee meeting on this bill, many representatives from the local boards of education came to testify on the problems they had in meeting local unmet debt service needs from the local property tax. This problem has resulted in school districts having to raise local property taxes to meet the unmet need at the State level with the 58 percent funding.
A safe, well-equipped, and functionally adequate school building is critical to every child's education. The New Jersey School Boards Association commends your effort to create a dependable source of recurring funds for school facilities needs.
We look forward to passage in the Assembly and the Senate and to a successful referendum in November.
ASSEMBLYMAN ROCCO: Thank you very much.
The School Boards certainly, I am sure, are looking forward to better facilities as well.
It may be worth noting in here that the purpose in the constitutional amendment is indicated as paying or financing part of the cost of public school districts -- planning, acquiring, leasing, engineering, constructing, reconstructing, repairing, rehabilitating public school facilities as necessary to maintain support of a thorough and efficient educational system of the free public schools. So it is totally dedicated for those purposes, and for no other purpose.
Let's go to the New Jersey Education Association. Linda?
L I N D A M. K A S S E K E R T: Thank you, Mr. Chairman. The NJEA is also pleased to be here again to testify on this very important issue.
As we testified on June 17, when you first took testimony on the legislation, we have long supported measures that would address the issue of facilities and the necessity and importance of ensuring that our school buildings and classrooms are not only safe, but also enhance learning.
We would like to again thank and recognize the sponsors and those associated with this package and similar legislation in the Senate for this initiative. Speaker Collins, Assemblyman Stuhltrager, Chairman Rocco, we would like to commend you for your courage in addressing this issue. We hope that this issue will become a bipartisan one, and that as this legislation moves through both Houses and on to the voters in November, we will see both parties working to have the constitutional amendment approved.
As you know, support for this initiative comes from a variety of sources. Not only has the educational community fully supported the legislation, but it has the support of organized labor and health organizations as well. And, as I am sure you are also aware, it is important from a number of perspectives.
First, of course, are the current conditions and future needs of our public schools, which must be made amenable to learning and, at the same time, be prepared to meet the core curriculum requirements.
Second is the obvious need to promote job opportunities and growth in this State.
Finally, and probably most importantly, this legislation will result in an ongoing funding source for facilities construction and repair. For too long, efforts in this area have been piecemeal, without an eye toward long-range planning for the future. Obviously, since repairs and reconstruction are ongoing, funding should be ongoing as well.
We would like to thank the sponsors for this initiative. We look forward to working closely with the Legislature in the development of language concerning the particulars of this program once the voters have acted.
Thank you again, Mr. Chairman.
ASSEMBLYMAN ROCCO: Thank you, Linda. We appreciate your support.
ASSEMBLYMAN GARCIA: Mr. Chairman?
ASSEMBLYMAN ROCCO: Rudy, do you have a question for Linda?
ASSEMBLYMAN GARCIA: Yes. I just want to make a clarification.
Actually, this legislation -- ACR-1 -- the constitutional dedication, has received bipartisan support. In fact, I was the one who moved on ACR-1 when it moved out of Committee. So the idea that this hopefully will have bipartisan support in the future-- It already has had bipartisan support.
The idea of the tax-- There may be other ways to fund it. There are still some options out there that some of the Democrats have not made a determination on as yet. That we support the constitutional dedication, I think that goes without saying. I think even in the last voting session, when the Governor raided $20.5 million from the Facilities Improvement Plan-- There are a lot of reasons why we support the dedication, one of which is to assure that in the future those types of raids will not happen, especially at the expense of our children.
MS. KASSEKERT: Yes, I'm sorry, Assemblyman. I should have pointed that out. I am well aware of your support, as well as that of a number of the other Democrats in moving ACR-1 forward, and we do thank you for that.
ASSEMBLYMAN GARCIA: Thank you.
ASSEMBLYMAN ROCCO: Yes, Rudy did move it forward. We still need a definition of "raid."
Let's hear now from the American Cancer Society, Donna Bocco. No relation, right, Donna?
D O N N A C. B O C C O: It had to be a slip of the pen as the alphabet goes down to R.
Thank you very much, Mr. Chairman and members of the Committee. As you may or may not know, the American Cancer Society's mission is sound health education for good lifestyle choices. So, obviously, the prevention and early detection of cancer is sound health education, and the best place for education to take place is in sound schools.
The over 60,000 volunteers of the Society's New Jersey Division are in favor of this 25-cent increase in the cigarette tax to solve the problem of old and unsafe schools. We would appreciate -- do appreciate the efforts made up to this point and what will go on further, so that the people can be heard on ACR-1.
The increase in the cigarette tax is a win/win situation for our State and its citizens because the tax:
* would enable school districts to prepare for the 21st century by educating children on issues surrounding health;
* would provide the net economic gains for New Jersey by an increase in jobs;
* would provide a reduction in smoking prevalence, particularly by preventing nicotine addiction in our youth;
* would provide municipalities with immediate property tax relief;
* would help to reduce the $1.1 billion per year in direct medical care costs incurred by smoking-related diseases;
* and most of all, would raise revenue for New Jersey just as it did after the 1991 increase.
We have some more technical information that I will just hand in, but we are in favor of ACR-1, and we offer our support.
ASSEMBLYMAN ROCCO: Thank you very much, Donna.
The New Jersey Laborers'-Employers' Cooperation and Education Trust.
J O S E P H A. M c N A M A R A: Excuse me, Mr. Chairman.
ASSEMBLYMAN ROCCO: You are Mr. Joseph McNamara, right?
MR. McNAMARA: Yes.
ASSEMBLYMAN ROCCO: Go ahead, Joseph.
MR. McNAMARA: Mr. Chairman and members of the Committee, this afternoon I am representing the Coalition to Build Schools. This Coalition is being formed drawing from representatives from the educational community, the professional health and medical community, and the construction industry in strong support of ACR-1, because we feel it is important to dedicate a stable source of funding from the cigarette tax to fund the multibillion dollar required School Reconstruction Program.
The last time the Committee met on this issue, I testified in support on behalf of the New Jersey Laborers'-Employers' Cooperation and Education Trust. This afternoon, I do have some testimony from our Chairman, Raymond M. Pocino, for the record, also in support of ACR-1. Mr. Pocino is also the Eastern Regional Manager of the Laborers' International Union of North America. Mr. Pocino, in both capacities, is supportive of this resolution and the program which it will provide.
I will be brief. On behalf of the Coalition, I do want to say that this resolution is good for the education of our children, and it is also good for our economy.
As has been said earlier and at the last hearing, schools are a very key element in our State's infrastructure. Last year, a number of firms, or members of this Coalition, were very involved in establishing, or building support for the renewal of the Transportation Trust Fund. That Fund was necessary to put capital investment in our roads and bridges, which is important to the quality of life and the economy of New Jersey.
Our schools -- we do not often look at them -- are also a very important part of our infrastructure. Capital investments in our schools are critical if we are going to provide the kind of environment that is conducive to learning.
As we know, many of our schools, particularly in the urban areas, are old and in need of rehabilitation. I have seen some estimates, and some schools are 50 to 100, maybe 140 years old. They are in desperate need of repair.
It is important in today's political climate that we dedicate a source of funding, because often at the local level, the community level, the State level, there is tremendous competition for limited funds. So it is important that we make these decisions, and it is important that we ask the voters of the State to help us to make some of these decisions.
School reconstruction is very costly. We know there are estimates of $6 billion and more in school reconstruction needs. This program would generate a bond issue that would leverage $4 billion. This is a very big stimulus to the School Reconstruction Program.
Finally, it is also good for the industry I represent, the construction industry. It is an excellent job stimulator. It will help to provide needed jobs for people who have skilled trades and people who have been taught by our schools.
In closing, I just want to say, one, there is public support. Everyone is familiar with the Quinnipiac College poll, which demonstrated that three out of four people in this State, across a broad public spectrum, support an increase in the cigarette tax to fund this needed program.
Capital investment in our infrastructure is a good economic investment. Investment in our schools is good for education. Both are good for our future. So we ask you to move this.
We thank the Speaker for his involvement, or his initiative in putting this together, and this Committee for moving it forward. We look for bipartisan support, as Assemblyman Garcia mentioned earlier.
Thank you for the time. We are here to answer any questions and, obviously, to provide any support we can.
ASSEMBLYMAN ROCCO: Joe, the estimates on jobs would be anywhere from 135,000 to 150,000. Does that sound about right to you?
MR. McNAMARA: Yes. Certainly, there is school reconstruction going on now. We look at every billion dollars worth of construction that is done as generating 20,000 to 40,000 jobs. So that estimate is about right. It is needed in this country; it is needed in this State. This does hit a number of things. It is good for education, and again, it is good for the economy.
ASSEMBLYMAN ROCCO: There is an article in USA Today that clearly indicates that this is not just a New Jersey problem, but a national problem. The deterioration of schools is significant, without a doubt, and we appreciate your support.
MR. McNAMARA: Mr. Chairman, schools are our whole infrastructure. This is something we have to face, and we have to make the dedication of the money that is available.
ASSEMBLYMAN ROCCO: Thank you.
American Lung Association, Elaine Fisher.
E L A I N E R. F I S H E R: Good afternoon. I am Elaine Fisher from the American Lung Association of Mid-New Jersey. We have testified before in favor of ACR-1. We know you are aware of the health issues and concerns. I will not go into them. We just want to show our strong support again today, and encourage you to continue to support ACR-1.
Thank you for your work and efforts on this issue so far.
ASSEMBLYMAN ROCCO: Thank you very much, Elaine. We appreciate it. We have your testimony and we know how strongly you feel with regard to this issue.
Ira Marks, Hands Across New Jersey, Inc.
I R A L. M A R K S CPA: Thank you.
My name is Ira Marks. I am the Education Chairman for Hands Across New Jersey. I am also a member of the Executive Committee.
I have a statement to read. In addition to that, I have prepared a two-page write-up, which I call the "Top 10 Reasons to Vote No on the Cigarette Tax." I hope you will read that.
First, I would be remiss if I did not comment on the speed by which this legislation is moving through the Legislature, if for no other reason but to point out that it is moving with the same speed that the Quality Education Act moved through the Legislature in 1990. Many of you seated behind that table are here today because of that plunder. That in itself should give you cause to pause, but quite honestly I doubt it will.
ASSEMBLYMAN ROCCO: Ira, can we say basically that the QEA did not go before a public vote?
MR. MARKS: Yes.
ASSEMBLYMAN ROCCO: Okay, thank you.
MR. MARKS: With respect to SCR-81, if one were to rely on newspaper accounts of what it is the sponsors are proposing to place on the ballot this November, one would have to conclude they are being afforded an opportunity to vote on raising cigarette taxes, when, in fact, the public will be voting on no such tax increase. What they will be approving or disapproving is the dedication of a tax increase, which has already passed the Assembly, to partially fund the financing of new public school construction and renovation. And if it is to partially fund such construction, the questions beg to be asked: Who pays the other part? What part do they pay? More importantly, how do they pay?
These are just some of the questions that come to my mind and, quite frankly, have yet to be answered to my satisfaction. Sponsors of companion bills in the Assembly have indicated, during news interviews, that these dedicated taxes would pay for $3 billion to $4 billion in new public school construction and renovation. How? How can that be?
The sponsors and Treasury say the tax increase will generate approximately $130 million in revenue, and many would argue that revenue projection is very generous. I might point out in one of my points here on the top 10 reasons that a better estimate of revenues is $79 million. Therefore, if the projection is $135 million and we are only going to get $79 million, that means that we are going to have a $56 million shortfall that has to be covered each year.
Why isn't that information contained in the proposed ballot question within the text of the interpretive statement? Why is it that the sponsors and authors of this proposed ballot question have deliberately withheld information from this referendum that would aid the voters of this State in making an intelligent decision regarding the apparent future indebtedness this proposed amendment will lead to?
I will tell you why. Because if the truth be told, voters will be extending a finger in the voting booths, and it will not be for pulling a lever either. This referendum will lead not only to a revenue shortfall, and consequently higher State taxes, but also to a 15 percent to 20 percent higher property tax. To withhold this information from the voting public is disingenuous at best, and at worst dishonest.
Furthermore, I am baffled and deeply troubled by language within the proposed amendment. I am referring to lines 26 through 30 of SCR-81: "This amount shall be appropriated in a fiscal year only in addition to an amount equal to or exceeding this proposed amendment to the Constitution that guarantees spending the same or more every year, but never less."
My God, why is it I see someone's fingerprints all over this, and I am not referring to Hillary Clinton. There is only one person with the audacity and arrogance to argue that such an amendment should forever prohibit spending less. I am referring, of course, to Dennis Testa, head of the powerfully greedy teachers' union.
ASSEMBLYMAN ROCCO: Let's not get into-- Ira, let's deal with the issue.
MR. MARKS: Let me pose this question: What happens when our task is--
ASSEMBLYMAN ROCCO: Ira.
MR. MARKS: Yes?
ASSEMBLYMAN ROCCO: I am asking you, really, stay with the issue.
MR. MARKS: What happens when our task is complete, our schools have all been rebuilt or renovated? Are we to continue spending more whether we need to or not?
Finally, I am troubled by the constant attachment of the term "thorough and efficient" to the phrase "public school facilities" within this legislation. It is as if the sponsors of this measure are seeking to expand the thorough and efficient definition outlined in Abbott v. Burke to encompass school facilities as well. My concern is for what such an extension, if approved by the voters, may one day come to mean.
For example, if public school students in the Short Hills School District have air-conditioning in their schools, will the court require the State to provide funding for the same in the State's poorest school districts? If Far Hills public school students have an Olympic size swimming pool, must the State's poorest school districts have one, too? In essence, will the State one day be required to maintain facility parity between the urban and suburban school districts?
Finally, I think we need to ask ourselves if this referendum is really necessary? In a recent report from the U.S. General Accounting Office, only 19 percent of New Jersey schools were reported to be in need of extensive repair or replacement, compared to 34 percent nationwide. Obviously, from this data, it appears that the people of New Jersey have been very generous in approving local bond referendums to fund school construction and renovation. The problem, clearly, is not at crisis level.
In conclusion, there is no rush. Our educational system will not crumble before our eyes if we do not act now. I urge you to hold more public hearings, get more public input, and get much more information from the sponsors before moving this ballot question any further.
ASSEMBLYMAN ROCCO: Thank you, Ira.
Let's turn now to Philip Beachem, New Jersey Alliance for Action Inc.
P H I L I P K. B E A C H E M: Good afternoon, Mr. Chairman. I am Phil Beachem, President of the New Jersey Alliance for Action. I am here today to offer our enthusiastic support for this resolution.
For those of you who are not aware, the New Jersey Alliance for Action is a statewide, nonprofit, nonpartisan coalition of over 500 business, labor, professional, academic, and governmental organizations. We are dedicated to economic progress and the creation of jobs as a means to improve the quality of life for every resident of our State.
I will not read all of my testimony, which I have provided to the Committee in writing, Mr. Chairman, but I would like to say three things about this resolution.
In my opinion, and in the opinion of our organization, number one, this is an educational bill. We have kids in today's classrooms walking around in schools that were built when Abraham Lincoln was President, with no hallways, no gyms. This is going to provide the kinds of facilities that our kids need to compete in today's world.
Number two, this is a jobs bill. Some of the trades are suffering double-digit unemployment. This is going to put people to work, and in the process, it is going to create tax revenue for the State of New Jersey by doing that, rather than having people drain from the Unemployment Compensation Fund for unemployment benefits.
Number three, this is a tax relief bill. It will provide substantial tax relief to many of the distressed urban municipalities.
The one point I wanted to make -- which I think should be obvious based on the kind of testimony you are hearing today -- is that this is really a consensus bill. You have the broadest coalition of groups that I have ever seen assembled here in support of this resolution and, I think, assembled and ready to help educate the citizens of New Jersey on why they should pull the lever in support of this once it reaches the public in a referendum question -- groups from the construction trades, from the health industries, from civic organizations, business groups, and the like, some of which have never agreed on an issue before. They are here today in support of this. I think that is something that should be a real eye-opener in terms of the Committee members as far as the kind of support that this particular resolution is going to have in November.
Thank you, Mr. Chairman.
ASSEMBLYMAN ROCCO: Thank you, Philip. I agree with you, it is quite a coalition.
Let's have now Wayne Zanni, Southern New Jersey Development Council.
W A Y N E Z A N N I: Good afternoon.
Mr. Chairman, members of the Committee: My name is Wayne Zanni. I am a member of the Southern New Jersey Development Council's Education Committee. I appear today on behalf of the President of the SNJDC, Marlene Z. Asselta, and the entire 300-member company organization, to support the passage of ACR-1, a proposal to increase the tax on cigarettes to create a $4 billion fund for school construction.
The SNJDC, celebrating its 45th anniversary this year, has during those years encouraged our business community and political leaders to use all available resources to grow and strengthen the economy of South Jersey. One of the most valuable resources we have, as recognized by study after study, is our children and their educational training. Only individuals with the most intelligent and sharpest minds can compete in today's global economy. We believe it is critical that tomorrow's leaders obtain a sound education in a healthy and safe environment. Today, we cannot claim a safe and healthy environment, but today we can take a first step toward providing that environment.
Forty-nine New Jersey public schools are at least 100 years old, and many are crumbling. The old schools have not been replaced, and aging buildings have not been maintained. In one of our own South Jersey communities, students at the Glassboro Intermediate School are forced to learn in an unsafe building where there are leaky roofs and outdated heating and electrical systems.
Is it any wonder why a recent survey showed 74 percent of all New Jerseyans will support the 25-cent-per-pack cigarette tax increase? That same 74 percent said they wanted the chance to vote on the proposed tax increase through a referendum on this year's ballot.
We strongly encourage the passage of ACR-1 to give New Jersey residents the opportunity to vote on this proposal and stand ready to assist the Legislature in any way possible.
ASSEMBLYMAN ROCCO: Thank you very much, and we thank the Southern New Jersey Development Council as well.
Curtis Fisher, Program Director, New Jersey PIRG Citizen Lobby.
C U R T I S F I S H E R: Thank you for coming out on such a beautiful day. I appreciate the opportunity to speak on this issue. The New Jersey PIRG Citizen Lobby is the State's largest watchdog organization. One of our obvious goals is to protect people's lives in the State of New Jersey and to try to promote public health. We join today to strongly support this venture.
We know, based on all of the evidence that is in the record, and, I am sure, spoken to very effectively on the record by the American Heart Association, the American Cancer Society, and other public health groups, that raising the price of tobacco will result in a reduction in the incidence of smoking.
I have enough copies here to distribute to the entire Committee, but I am going to focus my testimony specifically on-- I actually just got hold of today's Trenton Times, and there is another article, among many articles, about the fact that the tobacco industry is targeting our youth. This is an onslaught that continues, the fact that our children are the target of the largest tobacco industry in the world, and are the largest market for cigarettes. Our children are the replacements for the people who are dying from the effects of smoking. We know that raising the tobacco tax will result in a reduction in the amount of children in New Jersey who begin to smoke. The fact is, 90 percent of the new smokers in New Jersey are people under the age of 16. I think we have to provide every public policy issue possible, which we are obviously not doing. The fact is, the tobacco tax is another tool to use. That is what this proposal will do. That is why New Jersey PIRG supports it.
Of course, there is the extra benefit of the added revenue. I would just like to make one comment about the added revenue. New Jersey PIRG really does not have much of a decision about what the added revenue is used for. I think it is obviously something--
As every member here knows, we are definitely concerned about education in the State of New Jersey, and the other organizations have spoken directly to that issue. But I think the bottom line is, the tobacco industry makes the argument that, "Well, those revenues are not stable," that by raising the price of tobacco, you will see a drop in the usage. What better proves the point? What could be better to send a message to our youth that we do not think they should be smoking, and we are using this tool as a way to reduce the amount of smoking in New Jersey.
ASSEMBLYMAN ROCCO: Curtis, before you get off that topic, and for those in the audience, OLS has absolutely taken into account, through the appropriate mathematical means, the fact that there will be a decline. That was taken into account in the formula, and the determination was basically that the $135 million would be generated.
So, although we have heard arguments in the past, and I am sure we will hear more today, that it is not going to generate the income as indicated by OLS, we know historically that OLS, for the most part, has been relatively accurate.
MR. FISHER: That's right.
I have to mention here that there are still some people from our organization who took the time to come down here to Trenton to actually speak up and demonstrate their support. Some of those people are high school students, some of them are college students. They took their personal time to come down here to present their side.
ASSEMBLYMAN ROCCO: Curtis, do you have one or two high school students -- not all of them, but maybe one or two who would be willing to come forward?
MR. FISHER: There are two high school students. Why don't you come up?
ASSEMBLYMAN ROCCO: Yes, one or two of you just come up. We just want to see what you think the impact might be. We really don't need your names or anything. Just relax.
MR. FISHER: They are seasoned veterans. They already spoke to Gene Dillard (reporter), so they are professionals.
D I A N A D U M P L E: Not really.
ASSEMBLYMAN ROCCO: I don't know what district you are from or what your schools are like now, but try to just reflect back to your elementary and middle school life. Of course, a great deal is determined by the district, but as you have gone around just through your friends, etc., what are your thoughts with regard to the existing schools in the area in which you live.
Who wants to start it off?
D A N I E L S P E A R: I would be very happy to start.
I am going to enter my senior year at Princeton High School. I spent four years at the John Witherspoon Middle School. Just recently, they had to take out a carpet. People were getting sick because it was rotting. There were leaks in all the ceilings when I was there. It has been fixed, but it did take a lot of money.
Princeton High School only passed inspection because the principal spent hours and hours of his own time fixing cracks and painting ceilings. You know, Princeton is probably one of the better funded districts in the State, but even there we have a lot of problems with repairs to the building.
MS. DUMPLE: I am from Nottingham High School. If you think that Princeton has those kinds of problems, just think about what the rest of the State has -- worse than that even. I mean, with this, not only will it give funding to schools, which is definitely needed--
There is also a big problem in the schools with smoking. With this, it will not only give money to the schools, it will take away some of the problems with the smoking.
ASSEMBLYMAN ROCCO: Do you think 25 cents will make a difference?
MR. DUMPLE: I think every little bit counts. Everything we do works toward stopping it. It might not change everybody, but even if it is only one or two, it can help.
ASSEMBLYMAN ROCCO: Of course, our major focus is on the building of new schools with some $4 billion from this, and whatever the other benefits are, they are. But we are looking at school facilities. I think both of you have indicated that in your trip to reach your position in high school now, that some of the facilities were just not acceptable. Is that correct?
MR. SPEAR: Yes, sir.
MS. DUMPLE: Yes.
ASSEMBLYMAN ROCCO: Any questions? Rudy? Any one wish to ask any questions?
ASSEMBLYMAN GARCIA: Mr. Chairman, I would like to thank New Jersey PIRG, especially the high school students for testifying today.
Maybe in Princeton and maybe in some of the other areas there may be problems with a few rugs and stuff, but I know that in many school buildings that I have been in, some in my home district, the entire walls have had to come down. There is overcrowding, and there is a great need for new facilities, in addition to replacing old facilities.
I didn't say this before, but it has been on my mind since the person from Hands Across New Jersey testified saying that this is bad for the taxpayers. If a school district does not build another building or does not even bond, they will be getting an additional 42 percent of the bond debt paid for, which is direct property tax relief. So if an organization that is supposed to protect the taxpayers is coming here to testify against this bill on the grounds that it hurts the taxpayers, I think that is totally ludicrous.
But what really bothered me more than that was his statement that some students, in Far Hills or wherever he said, should have beautiful buildings with swimming pools and air-conditioning, but the rest of the students in the rest of the State can basically be taught in a hut for all he cares. That is the most troublesome aspect of his comments, because regardless of where his children may go to school, I think it-- I know the members of this Committee have certainly expressed their views that all children -- I am glad you're back, because I am talking about you (addressed to Mr. Marks) -- in the State should be afforded an equal opportunity to attend clean buildings that are conducive to learning. If your children go to a nice high school or a nice middle school, good for you, but I think that all children should be afforded the same opportunity throughout the State.
If that thorough and efficient component does not cover educational facilities, then shame on us as legislators, because as we go forward, we cannot have this antiquated fear of the bogeyman, the tax man. What we have to look out for are the interests of our children and the interests of the State as we go forward.
That is all I have to say, but I think those comments, and some of the statements in here (Mr. Marks' testimony) about how all the money is misallocated or misappropriated-- I think it is just shameful that it was even put into writing.
ASSEMBLYMAN ROCCO: Thank you, Rudy. Spoken from the heart.
David, did you want to say anything?
ASSEMBLYMAN WOLFE: Yes. I do not have the tenure in office as do many of my colleagues, but I think -- as has been said today by speakers and also by the legislators here -- this is obviously a nonpartisan issue. The fact that we have high school students, labor representatives, professional organizations, and parents' organizations involved I think really speaks to the issue that the overall focus and concern are the future not only of our nation, but also our State, and the students and the education they receive and the facilities in which this education takes place.
I am not overwhelmingly in favor of a tax. I really do not look upon this as a tax. I don't really want to raise that issue again, because I think that has been sort of beaten into the ground. I think what we are saying is, give an opportunity to all the residents to voice their concern over an issue that we all have to face. We cannot run away from it anymore. When the school budgets are defeated, the condition of the schools, the maintenance, is usually the first thing to go. I think this is certainly a very fine opportunity.
Obviously, we do not vote on this today, but again, I just really want to say that I am very impressed by the ingredients that are coming forth and the people speaking on behalf of this. I think this will be very, very good not only for the State government, but also for the residents of our State.
Thank you very much.
ASSEMBLYMAN ROCCO: Thank you, David.
For our students, since I started here before you were born, I guess, it is worthwhile to mention to you that we have only had--
MR. FISHER: I wasn't going to say that, Mr. Chairman. (laughter)
ASSEMBLYMAN ROCCO: --a few small bond issues, $250 million or so, and it just wasn't enough to meet the needs for you when you were going through the system to have the appropriate types of facilities that you deserve. Hopefully, this will move in that direction.
Having been a teacher for many years, I know it is very difficult to come up here before a Committee, take a position, and sit down and answer questions. So we appreciate your coming forward. Curtis, thank you for bringing them.
MR. FISHER: I just want to say one last thing: I appreciate Assemblyman Garcia's comments. We will continue to work on this, and to watchdog it, to make sure that real people, people in the public, get the right information about this issue. We will do the best we can to make sure, because we have to understand that there will be opposition to this. A lot of it will come directly from the tobacco industry. We will be watchdogging that process as we move forward.
Thank you very much for giving me and the students here the opportunity to speak.
MR. SPEAR: Thank you very much, sir.
ASSEMBLYMAN ROCCO: Okay, thanks again.
I just want to note that Enid Torok, of the New Jersey Podiatric Medical Society is in favor, but Enid is not going to testify. We appreciate that, especially if you don't mean it. No, I am only kidding, only kidding.
Steven Bishkoff, New Jersey Association for Health, Physical Education, Recreation, and Dance, is also in favor. Steven does not want to testify either.
Ray Kalainikas. Ray does want to testify.
R A Y K A L A I N I K A S: I would like, first of all, if I may, to offer a possible alternative to the spending of more money toward school construction, rehabilitation, and so forth.
Because of a background, at one time -- having studied to be a priest many, many years ago with the Maryknoll fathers for three and a half years -- it was not uncommon in Europe-- We often see pictures of cathedrals, Gothic cathedrals, majestic, towering cathedrals. These cathedrals, in large part, were constructed with free labor and, oftentimes, material given at cost. It was a situation of voluntary, you might say, cooperation for one purpose, whatever their purpose was.
Then we had what was called the barn-raising concept of the Amish, which we know about. If an Amish farmer has his barn burnt, for whatever reason, or destroyed, for whatever reason, the entire community will freely put up another barn without asking for compensation and the materials are often given at cost for this particular purpose.
It would seem to me that maybe for the first time in our society -- particularly with regard to public schools, which many people hold with the same regard that people in Europe at one time held cathedrals, or perhaps an Amish barn -- for the first time we ask our citizens to offer their skills, their labor, and, if they can, materials at cost to any new construction.
For instance, I was listening before to a student say they had a carpet that was rotting, and so forth, and had to be replaced. I can see a person who sells carpet in a community saying, "I will give the carpet at cost for this particular building." I can see carpet layers saying, "We will put it in for nothing," to keep the cost of property taxation down and to be of assistance to the educational process. That is one possible alternative.
Then there is another one that is not so obvious. I attended a private school for two years in high school. We had no janitorial service paid for. We had no maintenance, by and large, paid for. We, the students, took care of the entire school. It was called morning duties. We each had a particular chore, and the school was spotless day in and day out. In the afternoon, we were given an hour or so for manual labor, during which we did the hard work of keeping the school in shape. So there was very little required in terms of outside paid maintenance. We, the students, upkept the building. I suspect there would be very little graffiti and destruction if it were the students who were responsible for taking care of the building.
We do not ask students to give in any part toward the cost of their education. This is one way that it could be done. It was done in my situation, and it was a private school. It cut the costs down.
These are two possible alternatives already to what you are offering in ACR-1. But there is something else that bothers me. I have always been in favor of referendum. When the Ciba-Geigy pipeline in Ocean County became an issue, I was able to get 18 or 12 towns to put the issue on the ballot. When the mass-burn incinerator in Ocean County became an issue, again it was either 12 or 18 towns that agreed to my request to put the issue on the ballot.
The reason I am against statewide referendum-- This is a very important issue. Take note of this, please. When you have a situation where it is a State referendum and we are talking about millions and millions of people, I, the average citizen, cannot get my message out to every citizen, but the high-powered groups, organized groups, well-financed groups can get their message out to every citizen via the newspapers, TV, radio, and so forth. And I have no response to that, because I do not have that kind of power.
But if the referendum is a municipal referendum, meaning that if it fails at the municipal level, it fails in that municipality and there will not be a 25-cent increase on a pack of cigarettes in that municipality, if the people of that municipality decide to be against that 25-cent increase. I, as an individual, have an even playing field with those who have money. If I am in a community of 3000, 4000, I can literally go to every household and present my case. Sure, the people with money can present their case, but no better than I can if I can reach every citizen.
So I would like to see, because I know this is going to move-- I can see all the high-powered groups moving on this, and it is going to go. I can see what is going to happen. But I would like to see you, in some way, include language in ACR-1 that effectively says that if a municipality defeats this 25-cent increase to a pack of cigarettes, there will not be a 25-cent increase on a pack of cigarettes in that municipality. Naturally, they will not get the benefits, but so be it. They may see it more beneficial not to have a 25-cent increase. They may actually say, "Maybe we like the idea of the barn-raising concept, or the way the Gothic cathedrals in Europe were put together, with labor given, so to speak, out of love and out of devotion to whatever their religious understanding."
Perhaps that is the way it should be, but I would like to see-- I am thinking of Point Pleasant Beach, for instance, which has 3000 or 4000 people. I could walk the town and confront every individual with my case and my message. But at the State level, I am no match for the groups behind me, who have the power, the money, and the organization to get their message out. I cannot win, so to speak, on that playing field.
That is why a statewide referendum is really not a good referendum. It benefits those with money and power, not the individual citizen. He has very little to say. Municipal binding referendum is the way our society is eventually going to have to go if the citizen is really going to have a say where he can confront his fellow citizens in his municipality and get the message out, the way the groups behind me can get the message out across the State.
So will you consider putting language in ACR-1 that says that if a municipality defeats this, it is defeated in that municipality; if a municipality supports it, then it is okay with that municipality to add the 25 cents to a pack of cigarettes?
I don't know if you have any questions. That is all I have to say.
ASSEMBLYMAN ROCCO: No questions. Thank you, Ray. We appreciate your analogies. As a citizen, we are happy to have you here. Your thoughts are appreciated.
MR. KALAINIKAS: Thank you.
ASSEMBLYMAN ROCCO: As always, you have made yourself known here in Trenton, and I think that is a great credit to you.
MR. KALAINIKAS: Thank you, Assemblyman.
ASSEMBLYMAN ROCCO: Don Scarry, New Jersey Economics.
D O N A L D M. S C A R R Y, Ph.D.: Good afternoon, Mr. Chairman and members of the Committee.
I want to try to focus down here-- I have no comments about smoking. I have no comments about education. I want to comment on one thing, and one thing only, and that is, will this tax raise revenue sufficient to do the bond service?
I don't think there is any disagreement between OLS' first-year estimate and our first-year estimate. It is out in the future where we have disagreement. The price elasticities we use are slightly different. Ours are slightly higher. I think we take better account of the current downward trend in smoking that is not price sensitive.
On Exhibit 2 -- which has been handed to you -- you can see the per capita consumption of tax-paid cigarettes in the State of New Jersey. The high point was 1966 at 124.9 packs per capita. That is an amazing number. The newest data is 81 packs -- in 1995, I'm sorry -- is 81 packs per capita. Our own projections bring us down to 60 packs--
ASSEMBLYMAN ROCCO: Don, may I interrupt you for clarification?
DR. SCARRY: Sure.
ASSEMBLYMAN ROCCO: The 81 packs you are indicating per capita?
DR. SCARRY: Per capita.
ASSEMBLYMAN ROCCO: That is astounding.
DR. SCARRY: Are we both on Exhibit 2?
ASSEMBLYMAN ROCCO: Yes, Exhibit 2. The high point was 144 packs per individual?
DR. SCARRY: The high point was 1966. It was 144.9 packs per capita. That is a very, very large number. Even 81 is an astounding number, but cigarette sales in total-- I think if you have Exhibit 1 in front of you, there were 640 million packs of cigarettes sold in New Jersey in 1995, a very, very large number. But if you take a look at it, what is really interesting is that the Surgeon General's report came out in about 1964. With some time for it to impact the public, we get an almost immediate -- two years later -- decline in the general trend for cigarettes, and from 1966, with some bumps and some flat points in there, and so on -- I think those are probably just data anomalies, and I don't know how to deal with them -- the trend is clearly downward.
ASSEMBLYMAN ROCCO: From 1950 to 1995, though, they are pretty close, in fact, a slight increase, but I guess you have the population increase that would drop the rate factor down.
DR. SCARRY: Correct. That line, by the way-- Let me be clear. That line is not a trend line. That is a line I drew in just as a reference line. A trend line would look different. I wanted you to see that--
ASSEMBLYMAN ROCCO: However, it does clearly indicate, between 1950 and the present, we are selling relatively the same packs.
DR. SCARRY: Yes, that was the thrust of the graph, that we are selling relatively the same number of packs.
ASSEMBLYMAN ROCCO: Your spelling of cigarettes is--
DR. SCARRY: My spelling of cigarettes is probably an error. (referring to misspelled word on Exhibit 1)
ASSEMBLYMAN ROCCO: That is a common mistake.
DR. SCARRY: My question is: Is it misspelled the same way everywhere? I am not quite sure.
What I wanted you to be aware of, though, in Exhibit 2, is that the underlying trend is downward facing. So even if everyone does start off next year with 130 million, or 135 million, or whatever that number is, it is as you get into the out years when you are doing debt service that you are going to have difficulty with this issue. I think you may disappoint some people.
What you will have to do on the dedication-- The dedication is really the first 25 cents, it is not the incremental 25 cents. So what you are going to find is that each time the revenue goes down, you are going to be eating a hole in the General Fund, which you are going to have to deal with in some other way. I think that is my point.
Are there any questions?
ASSEMBLYMAN ROCCO: Are there any questions from the Committee members? (no response)
DR. SCARRY: All right. Thank you for your time.
ASSEMBLYMAN ROCCO: Thank you.
We have Steven Bishop, from the Garden State Land Surveyors Alliance. He does not wish to testify, but this Alliance is in favor of ACR-1.
We have our well-known John Torok, from the New Jersey Optometric Association, also not wishing to speak. That Association is also in favor of ACR-1.
The last speaker will be Louis Coletti, Lehrer McGovern Bovis Inc.
L O U I S C O L E T T I: Thank you, Mr. Chairman, members of the Committee.
I come this afternoon not only to represent Lehrer McGovern Bovis, a construction management firm located in Princeton which would obviously appreciate the opportunity to compete for some of this work, since 200 of our employees do live in New Jersey and make their careers here, but I also come as a former member of the Linden School Board.
In listening to some of the testimony today, I would like to suggest to you that the physical conditions of the schools-- You have heard enough testimony on how terrible they are. ACR-1 would provide us with the only viable alternative that I have heard of in the last couple of years. The U.S. Accounting Office has just released a study talking about the terrible conditions of the schools nationwide. In my community, as Chairman of the Finance Committee, when we tried to deal with this issue, it really left us very little alternative.
If we went for a bond issue, it had a tendency to polarize our community, seniors against those younger parents who wanted to send their kids to public schools. If we then chose to use operating money to finance some of the renovations of the schools, it would then take away from the programs.
This Legislature is now dealing with a financing plan for the entire public school system. I think what we have to do is take the context of ACR-1 within the total context of trying to equally distribute moneys across the State of New Jersey.
I thank you for the opportunity to speak. This is a viable alternative. There are no alternatives. Either the schools will not get fixed, or money will be taken away from programs to fix the schools inadequately.
Thank you very much. I hope we will be able to get this on the ballot. I will close by saying that the citizens of the State of New Jersey have shown that they are, in fact, willing to spend money when they understand where the money is being spent. I think they deserve that opportunity.
ASSEMBLYMAN ROCCO: Thank you, Louis.
I think you sum it up well simply on the point that there have been no other alternatives out there. This is the only ball game in town, so to speak. If we do not move on this, the schools are just not going to be built, and our children are going to continue in unacceptable environments.
MR. COLETTI: It is an intelligent viable alternative. You should be commended for taking this step forward in some very difficult financial times.
ASSEMBLYMAN ROCCO: Thank you.
David, as Vice-Chair, do you have a comment? Then we will hear from Rudy.
ASSEMBLYMAN WOLFE: No comment. I just want to thank all the people who testified. I think this is a very important issue, as we have already heard.
Thank you very much.
ASSEMBLYMAN ROCCO: Rudy?
ASSEMBLYMAN GARCIA: I'm fine, Mr. Chairman.
ASSEMBLYMAN ROCCO: Assemblywoman Crecco?
ASSEMBLYWOMAN CRECCO: No, thank you.
ASSEMBLYMAN ROCCO: I have said all I have to say.
That pretty much concludes the hearing today to meet our constitutional requirement for this to move to the ballot. It will go to the floor of our House, and then to the Senate for their vote. I would urge all of you who are in support of this to spend a great deal of time on the Senate side, because I think that would be most helpful in moving this ahead.
For the children of the State of New Jersey, we thank you for your support.