Florio’s Liberal Reforms Put New Jersey in Spotlight

James J. Florio, a cocky young seaman who had learned to use his fists at the Brooklyn Boys Club, was a promising amateur light-middleweight fighter--until the day he agreed to take on a Seabee from Louisiana who outweighed him by 16 pounds. As best Florio can recall of that bout, Sherman White hit him six times--and managed to break something different with each blow.

More than 30 years later, Florio’s left cheekbone is still flattened from the reckless match that ended his career in the ring. But those days as a boxer also left him, he often tells people, with the philosophy he now applies to governing New Jersey.

“You don’t win every fight that you get involved with, but you don’t get any points for being chicken,” says Florio, whose boldness in his first seven months as governor has stunned both his supporters and his critics.

Florio has turned the state’s taxation system on its head, signing into law earlier this month the most crucial piece of a package that will raise billions from wealthier New Jerseyans and pour the money into poor school districts, social services and property tax rebates for those who are not so well off. The 52-year-old governor’s program has been described as nothing short of class warfare; some of his detractors are calling him “Robin Hood.”

Such unabashed liberalism seems all the more radical after a decade in which the conservative movement has dominated the economic agenda in New Jersey as it has throughout the nation.

But at a time when many perceive the right to be adrift without Ronald Reagan at its helm, Florio’s success or failure will be watched closely across the country. Will the New Jersey governor prove to be one of the first politicians to recognize a sea change that has people wanting a bigger, stronger government--one that uses its power to remedy social ills and redistribute wealth by forcing the rich to take care of the poor? Or will he simply be seen as the latest in a long line of failed, left-leaning Democrats whose solution to every problem is spending money?

“If it works, he’ll lead the Democrats out of a 10-year wilderness,” says George Sternlieb, founder of Rutgers Unversity’s Center for Urban Policy Research. “If it doesn’t, he’ll be seen as a Xerox copy of Mr. (Michael) Dukakis,” the embattled Massachusetts governor and defeated presidential candidate who has become a national symbol of Democratic failure.

Over the howls of New Jersey’s powerful gun lobby, Florio also muscled into law the nation’s stiffest ban on assault rifles, going well beyond the statute passed in California last year. He moved ahead of the state’s supreme court in ordering that unequal funding for rich and poor school districts be evened out.

Only days after his inauguration, he announced that he would straighten out the state’s messed-up automobile insurance system by forcing big insurance companies to cough up money to pay half of a $3-billion debt racked up by high-risk drivers. The Legislature quickly passed his insurance program, but the companies have challenged it in court.

And that is just the beginning. Florio has promised that government will clean up New Jersey’s environment, solve its health care crisis, unclog its highways and revive its devastated inner cities.

New Jersey has never seen anything like it, even in the early part of the century when Woodrow Wilson, the legendary reformer, controlled the Statehouse.

From across the Hudson River, New York Gov. Mario M. Cuomo has called Florio “an instant national hero.” Time magazine says Florio is “giving lessons to politicians across the country--and in Washington--not only about smart government but about leadership.”

At home, however, thousands of angry protesters came out earlier this month to show what they think of Florio’s agenda. One hastily formed citizens group, Hands Across New Jersey, claims to have gathered almost 400,000 signatures on petitions that demand, among other things, the right to hold elections to recall public officials. The move is clearly meant as a threat to oust Florio from the office that he won in a landslide last November. Only 23% of the citizens say he is doing a good job, the lowest approval rating of any New Jersey governor in more than a dozen years, according to a poll released a week ago by the Newark Star-Ledger newspaper and Rutgers University’s Eagleton Institute of Politics.

The governor, a former congressman who worked his way up in politics through the local Democratic organization in Camden, maintains that all he is doing is facing up to difficult problems that had been ignored by his enormously popular GOP predecessor, Thomas H. Kean.

During most of Kean’s eight years in office, Republicans pointed to New Jersey as the test case that proved the wisdom of the GOP’s pro-business policies. The economy surged, creating more than 600,000 new jobs and giving New Jersey one of the nation’s lowest unemployment rates. State coffers overflowed, providing Kean the funds to expand popular social programs and cut state taxes at the same time.

In the last year or so, however, the economy slowed here, as it has in much of the Northeast, and those healthy budget surpluses evaporated. Long-festering problems became more apparent. New Jersey’s large cities, where about 10% of its population lives, had never shared in the boom, and remained among the nation’s poorest. Untreated sewage floated onto New Jersey beaches; its highways were the most crowded in the country, and its automobile insurance rates were the highest. Property taxes, riding rising home values, had about tripled since 1980.

By the time Florio took office, the state faced a budget deficit, the exact size of which remains in dispute.

To close the gap he estimated at $3 billion, Florio first cut $2 billion out of the budget proposal he had inherited from Kean, holding state spending to only 2% higher than what it had been the year before. He froze most spending, allowing increases primarily in areas over which he has no discretion, such as prison and welfare costs.

Florio wiped out the remainder of the deficit with $1.5 billion in sales taxes, partly by extending them to items that had never been taxed before, including soap, non-prescription drugs and toilet paper.

Though the toilet paper levy means only pennies to the average taxpayer, it has taken on enormous symbolic value. A few weeks ago, when the protesters converged on the Statehouse here, many drivers mounted rolls of it on their automobile radio antennas.

“The roll of toilet paper is going to become to Jim Florio what calling ketchup a vegetable was to Ronald Reagan,” predicts one worried Democrat, who asked not to be identified. John Budzash, the 39-year-old Howell Township mailman who organized the Hands Across New Jersey protest, notes that the American Revolution was spurred by a British tax on tea. “When they taxed the toilet paper, they did the same thing here,” he says.

Florio’s program, however, is a revolution in itself, one which goes far beyond balancing the state budget. The most controversial part of his package--a $1.3-billion increase in income taxes--was needed, he said, to meet a challenge posed by the state supreme court, which ruled that New Jersey’s system of financing its schools largely through property taxes was unconstitutional.

The inequities were apparent. Under the old system, rich suburbs could easily raise as much as they needed, while the already under-funded systems in poor cities were hard pressed to get any more out of their eroding tax bases. Poor cities could offer teacher salaries only in the $20,000 range, while rich suburbs only a few miles away were paying more than $50,000.

“I want to be the governor of one New Jersey,” Florio said in an interview in his office, its walls decorated with photographs of boxing matches and a portrait of Franklin D. Roosevelt. “We don’t have one New Jersey at this point. You can take a five-minute ride from the most extreme of affluence to the meanest urban slums. . . . We have two New Jerseys. Nothing brings that home more than the educational-funding controversy.”

Even before the court ruled last month, Florio jumped out ahead on the issue with a radical proposal. The state would slash aid to rich districts, and pour hundreds of millions into poor and middle-income ones. The additional money would come from raising income taxes on families earning more than $70,000 a year and individuals earning $35,000. Families earning more than $150,000 and singles earning $75,000 would see their state taxes double.

Some of the remainder of the tax increase would go toward easing the burden of property taxes on middle-income people, including rebates of up to $500 for families earning under $70,000. The state would also take over much of the social service costs previously paid by local government, with the city and county officials required to pass along the savings in the form of property tax relief.

Florio points out that 83% of all New Jersey taxpayers will see no increase in their income taxes.

But others see what Florio is doing as plain, old-fashioned liberal social engineering. “He took the opportunity of a relatively modest deficit, as East Coast deficits go, and a potential threat to the school systems by the court to launch a tax revolution,” Sternlieb says.

Politically, many see it as a play to win back the loyalties of middle-class voters, who throughout the 1980s had leaned increasingly toward the Republican Party.

Conservative political analyst Kevin Phillips, who argues that Republicans may soon suffer from the fact that their policies of the 1980s took wealth out of the hands of the middle class and gave it to the rich, thinks that Florio may be on the right track, but that he has gone “a bit too far” because many families earning $70,000 do not consider themselves wealthy.

“Florio is thinking in some of the critical strategic terms for a Democrat. The larger question is whether he may not be a bit ahead of himself,” Phillips says. “He may be in a situation where he had to go too far down into the middle class” with his tax hikes.

Florio’s nervous supporters agree. “If people remember this year as a time when the country began to face some of its serious problems, Jim Florio will be remembered as having started the process (but) whether or not Jim Florio has arrived at the proper formula or is administering too heavy a dose remains to be seen,” says Rep. Robert G. Torricelli (D-N.J.).

Still others--including his predecessor Kean--say Florio could be playing with dynamite in putting through the biggest tax increase in state history at a time when the economy is already weak.

Perhaps the biggest problem for Florio is that those he claims will benefit from his policies--middle-class people--appear to be the most skeptical of them. They are already paying higher sales taxes, but will not see any of the property tax rebates that he has promised until well into next year. Nor have their car insurance rates fallen, as Florio has vowed that they will.

“The one thing people actually understand is that everything has gone up in price. In New Jersey, that’s the only way things are going,” said Alan Merrill, a 30-year-old moving company worker who was having breakfast in a Princeton diner.

What is more, few have forgotten that during the gubernatorial campaign, Florio specifically told voters that he saw no reason to raise taxes.

Pat Ralston, a 46-year-old grandmother living in the coastal town of Belmar, works five days a week as a title searcher and tends bar on weekends to cover her bills. A registered Republican, she says Florio was the first Democrat she had ever voted for, largely because he promised to cut her car insurance rates.

“It’s too much,” she says of Florio’s tax program. “And then (President) Bush (who recently backed off his no-taxes campaign pledge) turns around and says: ‘I’m going to get you, too.’ I don’t know what they expect from us.”

The tax issue dominates the listener calls to Trenton’s 101.5-FM radio station, which has become an outlet for much of the frustration. On one recent show, a caller named Sal, who identified himself as a small-town police chief, complained that his property taxes rose to $5,500 from $3,200 in the past year. “The bottom line is this: I’ve lived in this state all my life. Between my wife and me, we don’t make $50,000 a year,” he said. “All of a sudden, they’re telling me that I can no longer afford to live here.”

Florio insists that he is the solution, and it is only a matter of time before voters understand that. “They say there’s a tax revolt here in New Jersey,” he says. “There is. I’m leading it.

“I think the real deficiency in the political arena has been that political leaders have not been willing to trust the wisdom and judgment of average people. We have almost literally been pandering to people, assuming that people can’t understand that there are hard decisions that have to be made. . . . My job is to go out and explain these things, and I will.”