Gov. Christie’s FY 2011 budget proposes $400 million in cuts to programs that provide critical support to low and moderate income families. When unemployment is close to 10 percent and nearly 450,000 people are without jobs, pulling the rug out from under working families is the last thing one would expect.
New Jersey has long recognized that struggling working families need support if they are to work in a state with one of the highest costs of living in the nation. In the long run, affordable health coverage, mass transit and the benefits of the Earned Income Tax Credit avoid more costly alternatives like welfare, homelessness and charity care at hospitals. These alternatives are bad for families, bad for business and ultimately bad for the economy.
Here are three examples of these bad choices.
FamilyCare – $100 million cut
New Jersey’s FamilyCare program provides affordable health coverage for kids and certain low income parents or guardians. It is for families who do not have employer insurance and cannot afford to pay the high cost of private health insurance which costs between $6,000 and $12,000 per parent. To save money, the state has made the following program changes:
- FamilyCare coverage is no longer available to parents whose income is greater than $23,352 for a family of three. In FY 2011, approximately 39,000 parents will be denied coverage, regardless of their medical needs. NJPP’s research shows that when enrollment is closed to parents, fewer children are enrolled. Closing the door to so many parents makes no fiscal sense. In FY 2011, the state would save $24.6 million but lose about $46 million in federal matching funds.
- Enrolled parents who lose coverage because they can’t pay the premiums (which will be raised) or who do not renew their coverage will no longer be able to reenroll in the program if their income exceeds $23,352.
- About 11,700 legal immigrant parents in this country for less than five years lost their FamilyCare coverage based on an Executive Order issued by the governor that bypassed the Legislature. Under threat of a lawsuit, the Christie administration extended coverage for three months, after which parents will permanently lose their coverage, saving $30 million in the FY 2011 budget.
Getting to work is an essential part of having a job and in New Jersey about 10 percent of all workers use mass transit. At a time now when families can least afford to pay higher transit fares, the funding cuts have forced NJ Transit to increase fares by an average of 22 percent, affecting almost a million New Jerseyans who commute to work on buses and trains. This is the second highest NJ Transit fare increase in history (averaging a $1,000 annually for a train pass).
But according to Gov. Christie these fare increases are preferable to raising the cost for people who drive. For example, the daily round trip fare between New Brunswick and Trenton will increase to $17.00 per day from its current fare of $11.75. Driving will become a cheaper option than using mass transit – IF they can afford it. Either way this will be a huge hit for working people.
NJ Transit estimates it likely will lose another five percent of its riders on top of the four percent it lost last year. All of these decisions, of course, contribute to the downward spiral in transit revenue and add 4,800 pounds of pollution to the air for every commuter who decides to take a car to work.
The fare increase hurts everyone, but it will be hardest on lower income families, the elderly, people with disabilities and college students. Using mass transit will be a greater burden for them because many have no alternative to public transportation-another barrier to work and education, another barrier to independent living.
At the same time the governor slashes transit funding, he has steadfastly refused to consider a gas tax increase, saying it will harm the economy. But gas prices in New Jersey are low relative to most places in the country, largely because New Jersey has the nation’s third lowest gas tax which has not been increased since 1988. This is yet another example of the administration’s unbalanced approach to the budget. Cuts in transit service and fare increases amount to taxes on those who use those services. User fees are acceptable as long as people have alternatives and that’s exactly the problem-many people have no alternative but to use public transportation.
State EITC – $45 million cut
The Earned Income Tax Credit (EITC) is a federal and state credit for people who work but have low wages. Recognizing that New Jersey is an expensive place to live, the New Jersey credit is calculated at 25 percent of the federal EITC. About 485,000 households received this state credit last year. The governor’s budget would reduce that to 20 percent of the federal EITC. This would mean that a family of four with one parent working full time at the minimum wage ($15,000 a year) would lose $251 next year.
The state and federal EITCs are one of the most effective ways to encourage work, prevent families from becoming dependent on welfare and reduce the number of children in poverty. In fact, some of the welfare savings are still being used to fund the state EITC.
New Jersey’s economy is dependent on a diverse workforce, and it is in the state’s best interest to help make it easier for families to continue to work and contribute to an economic revival. Placing more burdens on low and moderate income workers during a recession is not the way to do it, but that is precisely what Gov. Christie’s budget will do.