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Center on the American Governor > On Governors > New Jersey Governors > Governors and State Finance: Byrne Administration

Governors and State Finance: Byrne Administration

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A transcript of all interview excerpts on this page is available here. Links to full interviews are also available.

 

1973 Campaign and Election

In part due to his support for a statewide income tax—in addition to allegations of corruption within his administration and the state Republican party in general—Governor William Cahill faced a primary challenge in his 1973 campaign for re-election. On June 5, 1973, Congressman Charles Sandman, who had run in the Republican gubernatorial primary two times prior, defeated Cahill, the first time in the state’s history an incumbent governor lost a primary. In the Democratic primary, meanwhile, former Essex County Prosecutor and Superior Court Judge Brendan Byrne defeated two other candidates (Anne Klein and Ralph DeRose). The income tax would play an important role in the general campaign of 1973; Sandman strongly opposed the creation of a state income tax, while Byrne said he did not anticipate that an income tax would be necessary “in the foreseeable future.” In the end, primarily due to the combination of the shadow Watergate cast over the Republican party and Byrne’s ability to run on an anti-corruption platform as “the man who couldn’t be bought,” Byrne easily won the governorship by the largest plurality in state history. Quickly, however, his statement on taxes would come back to haunt him.

 

Governor Brendan Byrne on the 1973 primary and general elections and explaining his campaign statement on the income tax. Interview on April 4, 2006. (5:04)

Clip includes Assemblyman and State Senator Steven Perskie, Byrne campaign Issues Director Orin Kramer, State Senator (and Byrne's later opponent in the 1977 gubernatorial election) Raymond Bateman, and Assemblyman Al Burstein discussing whether Byrne's campaign statement about the income tax was a mistake. (8:55)

The Byrne Income Tax Proposal

As Governor Byrne took office, the school funding issue—particularly in the wake of the New Jersey Supreme Court’s Robinson v. Cahill decision—became larger and larger. The State would need a mechanism to fund whatever school funding equation it devised to comply with the Court’s order. In May 1974, to help address the crisis, Governor Byrne suggested a state income tax, with the proceeds dedicated to property tax relief and school funding. One month later he called a special session of the state legislature and proposed that it pass an income tax, setting off a complex and difficult two-year fight that, in part, led to major Assembly losses for the Democrats in the 1975 elections.

 

Governor Brendan Byrne on introducing the income tax issue at the beginning of his first term. Interview on August 28, 2006. (8:28)

Governor Brendan Byrne on the first stage of the fight over the income tax: the summer of 1974. Interview on August 28, 2006. (5:35)

State Treasurer (1976-1981) Cliff Goldman describes the specifics of the Byrne income tax plan. Interview on January 11, 2007. (3:16)

State Senator (1967-1978) and 1977 gubernatorial candidate Raymond Bateman on the political challenges of a state income tax and Republican opposition to the Byrne tax plan. Interview on January 11, 2007. (3:43)

Thomas Cochran, Gov. Byrne's special assistant on education finance, on the political discussions that shaped the Byrne income tax plan, including the decision to tie it to property tax rebates. Interview on January 31, 2007. (5:00)

Orin Kramer, special assistant to the treasurer in the Byrne administration, on pursuing constituent support for the Byrne income tax plan. Interview on May 8, 2006. (2:30)

Assemblyman Cary (1978-1982) Edwards on Governor Byrne's problems with his own party on the tax plan, political mistakes, and Byrne's dedication to doing the right thing. Edwards left the Assembly in 1982 to become chief counsel to Governor Kean. (2:50)

The fight continued throughout 1975 and into 1976, with two key developments. First, the legislature passed a school funding formula in 1975, but with no mechanism by which to fund it. Second, after raising a number of small taxes in order to avoid dramatic spending cuts in the annual budget in the summer of 1975, in December 1975 the legislature also agreed on a compromise income tax bill. The Byrne administration, however, deemed the compromise tax insufficient to both cover the school funding formula long-term and provide property tax relief, and therefore dismissed it. The battle would continue.

 

Assemblyman (1972-1982) Al Burstein on the adoption of the Education Act of 1975 and the impact of Robinson v. Cahill on school funding. Interview on June 6, 2006. (7:10)

State Treasurer (1976-1981) Cliff Goldman on the income tax fight between 1974 and 1976. Interview on January 11, 2007. (6:38)

Special Assistant to the Treasurer Orin Kramer on local rule, the limits of taxation, and the challenges of equalizing school funding in New Jersey. (4:00)

Passage of New Jersey’s First State Income Tax

The issue came to a head in the spring and summer of 1976. In May 1976, the Supreme Court declared that if a school funding mechanism had not been passed by June 30th, the state would be enjoined from funding schools and all public schools would be shut down. The deadline passed and, at Governor Byrne’s urging, the Court shut down the schools. Faced with this crisis and after intense negotiations, on July 7, 1976, the Assembly and Senate passed a compromise income tax proposal and Governor Byrne signed it, creating the first state income tax in New Jersey history.

 

Governor Brendan Byrne discusses the challenges of modern government, describes the income tax as an example of using the coordination of branches of government to work towards an objective, and provides specifics of how the income tax was passed. Interview on September 13, 2006. (10:34)

Governor Jim Florio, then a Member of the U.S. House of Representatives (1974-1990), on the income tax fight and the importance of equalizing school funding. Interview on October 8, 2008. (3:26)

Thomas Cochran, Gov. Byrne's special assistant on education finance, on the final passage of the income tax and why school funding has continued to be a significant challenge. (14:24)

Campaign and Election of 1977

Predictably, the passage of the income tax hurt Governor Byrne’s approval ratings, making him an underdog as the 1977 campaign approached. A total of 10 Democrats—including Congressman (and future governor) Jim Florio—challenged the incumbent governor, often referred to as “one-term Byrne,” in the primary. In part due to the vote-splitting nature of such a large field, Byrne won the Democratic nomination on June 7, 1977. On the Republican side, former Senate President Raymond Bateman defeated Assemblyman (and also future governor) Tom Kean. Once again, the income tax would play a key role in the campaign. Byrne, for his part, would this time confront the issue head-on, explaining in an advertisement why he had supported the income tax despite deeming it unnecessary in the 1973 campaign, while simultaneously tying the tax to property tax rebates. Bateman, meanwhile, opposed the income tax, promoting a plan he developed to eliminate the tax. Byrne dismissed the plan, which he (due to the participation of Bill Simon in the press conference announcing it) referred to as the Bateman-Simon—or “BS”—plan. Despite an early deficit, Byrne won reelection on November 8, 1977, in the process ensuring that the income tax would survive.

 

Assemblyman (1978-1982) Cary Edwards on Ray Bateman's victory over Tom Kean in the 1977 Republican gubernatorial primary and the importance of the issue of taxes - particularly the income tax - in the general election. Interview on December 22, 2008. (2:03)

Governor Tom Kean, then an Assemblyman, on his defeat the 1977 Republican gubernatorial primary. Interview on June 23, 2010. (2:16)

Chris Daggett, who worked on the Bateman campaign in 1977, on the mischaracterization of the Bateman-Simon Plan and on why Bateman lost to Governor Byrne. Interview on August 12, 2010. (6:12)

Governor Byrne's opponent, State Senator Ray Bateman, on the 1977 campaign, the income tax issue, and the moment he knew he would lose the election. Interview on January 11, 2007. (9:12)

Governor Brendan Byrne on the importance of a 1977 campaign advertisement admitting that he had previously been wrong about not needing a state income tax. Clip includes the advertisement. (2:16)

State Treasurer (1976-1981) Cliff Goldman on the political importance of timing in the delivery of property tax rebate checks. Interview on February 6, 2007. (3:45)

Governor Brendan Byrne’s Second Term and Legacy

With the income tax secure, Governor Byrne largely turned to other issues in his second term. As the role of government continued to transform, however, the fiscal issues would not disappear. School funding remained an issue as the administration searched for more cost-efficient ways to provide a “thorough and efficient” education and, for the first time, the pension fund arose as a potential future problem. The lasting legacy of the Byrne administration from a fiscal standpoint, however, remains the passage of the first state income tax, a tax that, while revised, remains with the state today.

 

Assemblyman (1978-1982) Cary Edwards, State Treasurer (1976-1981) Cliff Goldman, and Special Assistant to the Governor Tom Cochran on the challenges, successes, and disappointments of Governor Byrne's second term and how politics and governance have changed. (9:17)

Governor Brendan Byrne on the income tax as part of his legacy. Interview on January 25, 2011. (1:01)

 

 

Links to full interviews:

For more information on the Brendan Byrne Administration, click here.

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