- Election of 1989 and Transition to the Florio Administration
- Dealing with the Budget Crisis
- Public Reaction to the Florio Tax Plan
- The Continuing Question of School Funding
- Impact of the 1991 Midterm Elections
- The Florio Legacy
- Back to Contents
Election of 1989 and the Transition to the Florio Administration
Congressman Jim Florio, after unsuccessfully challenging Brendan Byrne for the Democratic nomination in 1977 and narrowly losing the general election to Governor Kean in 1981, ran and won in 1989. With Kean ineligible due to term limits, the Republicans also nominated a Congressman—James Courter. Florio led throughout the campaign and on November 7, 1989, won the governorship with 61% of the vote. The Democrats also recaptured the Assembly and held control of the Senate. During the campaign, Florio said he would not raise taxes as governor, but even during the transition, it became clear that the State Budget needed immediate attention. With the state and national economy entering a recession, New Jersey faced a $600 million deficit in the current year’s (FY ’90) budget and an even larger one—up to $1.4 billion—for the following year.
Dealing with the Budget Crisis
As Florio took over the governorship in January 1990, he and his administration determined that they would quickly need to address two major budget issues. First, they needed to fill the sizable gap in the current and projected subsequent fiscal years’ budgets. Second, they anticipated that the New Jersey Supreme Court would soon rule once again on the state’s school funding system—this time in a case named Abbott v. Burke—and that the ruling would likely require the state to provide more money to under-funded school districts. In his first budget address—amidst a clear statement of the state’s fiscal challenges—Florio proposed increases in the sales and income taxes. Disagreement arose over the best strategy by which to pursue these hikes—whether to pass both at the same time, or to pass the sales tax increase first (to cover the budget deficit) and wait for the Supreme Court’s ruling (and the crisis it would create) before raising the income tax. Choosing to address all of the issues at once, on May 25, 1990, Florio presented a 15-bill tax package and school funding plan; less than two weeks later, on June 5, 1990, the state Supreme Court declared the state’s school funding system unconstitutional. In late June, the legislature passed and the governor signed the state budget, the Quality Education Act (overhauling the school funding system), and the sales tax increase. The income tax adjustment followed in early July.
Public Reaction to the Florio Tax Plan
The tax increases led to an intense public reaction. Activists organized protests at the State House in Trenton, a new New Jersey-focused radio station known by its FM frequency 101.5 became a statewide focal point for public opposition often expressed as outrage, and anti-tax forces (with help from other conservative groups such as the National Rifle Association) organized as a group named Hands Across New Jersey. While some opposition was expected, the breadth and rhetoric of the opposition was far stronger than New Jersey had experienced in response to proposals and actions of previous governors.
The Continuing Question of School Funding
While much of the public reaction focused on the tax increases, the Florio administration faced other fiscal challenges, as well. Despite the passage of the Quality Education Act (QEA), for example, school funding and the related issue of property taxes remained difficult. Some observers (including Senate President John Lynch) urged a reapportioning of some QEA funds directly to property tax relief. Others questioned whether simply providing equal money to under-funded school districts would even solve the underlying problems. In addition, other serious fiscal issues arose, particularly as revenues did not hit projected levels and it became more difficult to fully fund pension obligations. The administration dealt with these issues in various ways, including by restructuring the pension system and, in the budget Governor Florio signed on June 30, 1991, selling a portion of the New Jersey Turnpike to the Turnpike Authority and reducing the size of state government via layoffs.
Impact of the 1991 Midterm Elections
Governor Florio’s approval ratings remained low as the 1991 midterm elections approached. Democrats paid a significant political price. On November 5, 1991, Republicans not only took control of the Assembly and Senate, they won veto-proof majorities in both. The Republicans immediately began to attempt to roll back some of the tax increases, quickly passing a bill that would lower the sales tax by 1%. Florio vetoed the bill, but the legislature overrode the veto. It was a preview of things to come: on June 26, 1992, after budget negotiations failed, Governor Florio became the first governor in New Jersey history to fully veto the state budget passed by the legislature. Four days later, the Assembly and Senate overrode Florio’s veto, making it the first budget in New Jersey history enacted without the governor’s support.
The Florio Legacy
With economic conditions improving in New Jersey, the budget battle would not be as intense in the election year of 1993. Governor Florio signed the budget on June 29, 1993, with only minor use of the line-item veto. Florio also received the Profiles in Courage Award from the John F. Kennedy Library Foundation in 1993 for his support of assault gun ban legislation in the face of political opposition. But the tax increases and fiscal issues continued to dominate his reelection campaign, especially when his opponent, Christine Todd Whitman, in the closing weeks of the campaign promised to cut the income tax by 30% if elected. Florio went on to lose a close election.
Links to full interviews:
- Governor James Florio
- David Applebaum
- Sam Crane
- Richard Keevey
- Richard Leone
- Cliff Goldman
- Forum: The Second Two Years of the Florio Administration
- John Lynch
- Joe Doria
- Len Lieberman
- Steven Perskie
- Rick Wright
For more information on the James Florio Administration, click here.
Continue to Whitman Administration