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A Leader's Success
Originally appeared in the Investor's Business Daily on June 8, 1993
Bret Schundler has on his desk a bowl of chocolate coins wrapped in gold foil, a gift from Van Leer Chocolate Corp. That seems to be the extent of his political patronage.
Schundler, a 34-year-old Republican, last month was elected mayor of Jersey City, a town where the GOP has only 6% of the registered voters.
Democrats had maintained a stranglehold on City Hall since 1917. But more than voting out the Democrats, townspeople wanted to get rid of the machine that had run the city for three-quarters of a century, beginning with Frank Hague, the city's undisputed boss for 32 years, and ending last November with ex-Mayor Gerald McCann, now sitting in jail on federal fraud charges.
The machine was associated with political patronage, cronyism, nepotism and every other ''ism'' that results in higher taxes by funneling government money where it doesn't belong.
Today, the machine is run by Hudson County Executive Robert Janiszewski. Louis Manzo, Schundler's Democratic rival in May, was Janiszewski's pick.
Schundler pledged to lower taxes, reduce crime and improve the school system. The acting Democratic mayor wanted to raise taxes and cut spending by laying off 10% of the city's work force.
The city's 89,000 registered voters, 30% of whom are black, 25% Hispanic and 19% Asian, must have liked what they heard from Schundler, because they voted for the clean-cut, white Republican who had worked on Wall Street.
''If you're in a city where the people could be categorized as desperate for change and desperate for hope, you're not going to elect somebody who's backed by the county machine,'' said Jack Finn, Jersey City historian and former chairman of Jersey City's Democratic committee.
Schundler originally was voted in last November to finish McCann's term, but most observers considered that win a fluke. There were 18 Democratic candidates running, splitting the vote, and Manzo's brother jumped into the race, siphoning votes from his sibling.
But Schundler, by most accounts, put on such an outstanding performance once he took office that he won by more than 2-to-1 margin when he ran head-to-head against Manzo in May.
''There was no fluke about it that time,'' Finn said.
Schundler's accomplishments included raising the tax collection rate and taking police officers out of desk jobs and putting them on the streets.
Some say Schundler is really a Democrat himself, perhaps even more of one than the previous mayor, who was an important ally of former President Reagan.
In fact, Schundler was a registered Democrat until November 1991, just before he ran for the state Senate, a race he lost by a narrow margin. ''The Democratic Party was too wedded to bureaucracy,'' he said. The way he tells it, the two parties have converged over the years. Since he believes more in market solutions to social problems than in expanding government to solve them, he aligns himself with the Jack Kemps of the GOP. Cynics say Schundler could find no way to crack into the Democratic machine's clubhouse, so he became a Republican. At the centerpiece of Schundler's campaign was innovative municipal financing. The proposed financing would take the city's portfolio of tax liens that it receives when people can't pay their property taxes, bundle them together and use them as collateral in a bond deal. The deal would raise about $25 million in cash. Investors accept lower rates for collateralized bonds. In this case, an investor in the event of a default could seize the underlying lien, entitling him or her to tax money or, if the taxpayer couldn't pay, to the property itself. Schundler wanted to raise cheap money so he could wipe out the city's deficit, avoid layoffs and reduce, rather than raise, property tax rates. Budget Spiral Jersey City has been caught in a spiral in the past few years, running budget deficits and raising property taxes to fund them. By raising taxes, Schundler says, more people are pushed into the delinquent category, resulting in a lower collection rate -- and thus another deficit -- the following year. ''If you don't collect on the money owed, you keep having to increase tax rates. That's like saying if there's a shortage of organ donors, let's kill everyone so there are more organs,'' Schundler said. Last year, the collection rate fell to 78% from 94%, leaving the city with a $40 million fiscal 1993 deficit, the same size as that of much larger Philadelphia. The previous administration wanted to increase the municipal property tax by 54% to fill in the gap. ''If we had raised the tax rate, it would have driven people away, and we'd have ended up with an abandoned city,'' Schundler said. So far, Schundler's plan is working. He has aggressively pursued businesses that weren't paying their taxes, pushing the collection rate up to 90%. He even sued the Resolution Trust Corp., which owns a building in the city. Those efforts enabled him to get a balanced budget passed a few weeks ago. Since a large part of the deficit reflected payments the city was required to set aside in a reserve when tax collections slumped, raising the collection rate helped balance the books. With the expected proceeds of the tax lien deal, Schundler also was able to reduce municipal property taxes by 14%. Former Bond Salesman The youngest of nine children, five of whom work for the family's mineral processing business, Schundler always wanted to be in politics. He started out on Wall Street as a bond salesman at Salomon Brothers Inc. and then sold equities at C.J. Lawrence Inc. He participated in local government from the periphery. While commuting to Wall Street from Jersey City, where he has lived since 1985, he co-founded the Coalition for Fair Taxation, a group formed in 1988 to protest a tax revaluation by then-Mayor Anthony Cucci. What's next? The rumor is Schundler has his eye on Democratic Sen. Frank Lautenberg's job in Washington. Schundler denies any such plans. ''Congress provides a nice lifestyle,'' he said. ''But I don't see my calling being a legislator, saying 'yes' or 'no' to someone else's initiative.'' |
