NJ’s Supreme Injustice

Court feeds political machines

By Steven Malanga, In today’s NY Post

New Jersey’s Supreme Court ruled last week that the cash-strapped state must send another $500 million in aid to urban school districts — the latest in a long series of decisions disconnected from economic reality and wise public policy.

Over the last 40 years, Jersey’s high court has commandeered tens of billions of dollars of state tax money that has largely been wasted on schools, forced taxes higher and undermined the tax base of whole communities — in the process, driving the state to the verge of insolvency.

Basing its original decision on a vague clause in the state Constitution that says the state must ensure “a thorough and efficient system of free public schools,” the court made the state responsible for funding urban school districts — regardless of whether the money was well spent.

Courts in other states, including New York, have interpreted similar language to mean that states should provide more aid to urban districts. But Jersey’s high court essentially ruled that schools in 31 poor “Abbott districts” should be funded at a level equal to the states’ wealth iest school districts — making Jersey’s among the most expensive urban school districts in America.

Newark spends $23,000 per pupil; Camden, $22,000; Asbury Park, $27,000. Most of that money comes from the state — 82 percent of Newark’s school budget, for instance.

So residents in many suburban towns essentially pay for two school systems: their own, through local property taxes, and urban schools, through their state taxes — costing state residents a staggering $37 billion since 1998, according to estimates in The New York Times.

Even if this spending produced stellar results, it would be hard to justify this system: The steep property taxes it requires have helped make homeownership unaffordable even to many middle-class residents. But the results have been the opposite of stellar. As the education reform group E3 observes in a study of Newark, “Money For Nothing”: “Given the extraordinary expenditure on schooling, students are not receiving a meaningful education.”

Despite claims that it wanted to ensure “thorough and efficient” schools, the court has done nothing but feed dollars to a patronage-laden Jersey political culture.

For example, when the court ruled that Jersey had to spend heavily to build schools in urban districts, the state floated billions of dollars of debt through a construction authority it created to get around the requirement that voters must approve all borrowing. The court not only allowed the scheme — but when the construction authority proved so corrupt and inefficient that it only finished half the job with the money it got, the court forced the state to spend billions more.

The court has also reshaped the state’s map with decisions known as the Mount Laurel cases, by taking local zoning powers away from towns and cities and requiring municipalities to build affordable housing, often at great cost.

In one infamous case, it ordered the tiny township of Greenwich, with only 520 housing units, to add 810 homes, sending property taxes soaring. The burden fell especially hard on middle-income residents; later court rulings gave big property-tax breaks to the lower-income units.

The latest ruling has spurred Gov. Chris Christie in his pledge to remake the Supreme Court. Last year, he outraged the state’s political establishment by refusing to renominate Justice John Wallace, breaking with a tradition in which Supreme Court justices are automatically reappointed. The Democratic-controlled Senate refused to consider Christie’s nominee for the job, allowing Chief Justice Stuart Rabner to appoint a temporary replacement judge, who was the key swing vote in the decision to spend $500 million more in school aid.

That’s money the state doesn’t have — Jersey can’t even afford to contribute to its severely underfunded state pension system.

New Yorkers, beware. In 2007, the Empire State agreed to boost state education spending by an unrealistic $7 billion over four years in response to a lawsuit brought by the Campaign for Fiscal Equity. But facing a $10 billion budget hole, Gov. Cuomo has cut education aid by $1.5 billion, prompting threats of another CFE lawsuit — even though New York still leads the nation in per-pupil spending.

The courts shouldn’t become a permanent substitute for our elected officials in managing state spending. As Jersey has taught us, when judges seize that power, taxpayers wind up big losers.

Steve Malanga is a senior fellow at the Manhattan Institute; his new book is “Shakedown: The Continuing Conspiracy Against the American Taxpayer.”