JERSEY CITY
Even on a cloudy day standing in Manhattan, one can look clear across the Hudson and see the skyline of Jersey City. Dwarfed as it is by New York City, its economy, so close to the capital center of the world, should have been booming during the '80s and early '90s.

It wasn't. Instead, Jersey City was becoming as synonymous with urban decay as the Bronx. Taxpayers and the middle class were in flight, corporations shunned the available office space, eyesore buildings and vacant lots proliferated, and crime and racial problems grew.

Remarkably, the same city today leads the Northeast in job creation and in the decline of poverty, and is on track to overtake Newark as New Jersey's largest city.

Even more remarkable is its mayor, 37-year-old Republican Bret Schundler, a onetime Wall Street whiz who engineered the turn-around by unshackling the city from old-style Democratic ward politics in favor of Jack Kemp-style Republicanism: privatization, tax cuts and school reform.

Schundler is an anomaly, but he is not alone. In Indianapolis, Mayor Steve Goldsmith is running for governor after five years of proving that conservative Republican politics can work in big cities with entrenched unions and special interests.

But Schundler has so far done more with less, and in less time. In late 1992, Schundler, a Harvard graduate who once considered becoming a Presbyterian minister, decided to take a Don Quixote challenge to the status quo. In Jersey City there was much to challenge: The registration was almost 10-1 Democatic, no, Republican had controlled city hall in almost eight decades, and even the city demoraphics seemed tilted against Republicans. Minus a 10 percent Asian population, the remaining 90 percent of Jersey City's population of 230,000 breaks almost into thirds: black, hispanic and white.

A special election was called in late 1992 to replace the mayor, as the previous occupant of the office had been convicted on federal coruption charges. In a close race, Schundler won with a simple plurality. The local party chiefs saw it as an aberration to be corrected in the next election. They were wrong. After promising voters that in six months he would lower their taxes or they could throw him out, he won a full four-year term with a landslide 68 percent of the vote.

Schundler won over Democratic converts by beginning to reform city government, and the people liked it. As Schundler tells it, Jersey City was a "kleptocracy" in which "the machine worked not for citizens, but for members of the club. Everything in government was geared to help members of the club."

One of the chief backers of this club was the local teachers union, part of the National Education Association. According to the Wall Street Journal, Schundler's willingness to challenge the teachers union earned him the title "The NEA's Public Enemy #1". His original sin, from the union's standpoint, was proposing a private school voucher. Failing to clear that with the state Legislature, he initiated a program funded by private donations to encourage students to go to private schools. His calls for reform have earned him the respect of lower-income voters, traditional stalwarts of the Democratic Party.

With his Wall Street skills, he was able to get a grip on city finances and expose the machine's finagling. To continue spending even when finances did not allow, the machine had thought up a nifty idea: double commercial tax assessments to artificially increase the power to issue bonds. From 1989 to 1992, as real estate values plummeted and business avoided the city because of the high assessments, the city shouldered an additional $100 million in bond debt.

Schundler says that had he not had to pay back this debt, taxpayers in Jersey City would have had whopping tax cuts. Instead, Schundler held the line on taxes as he pared down the budget. Thirty percent of the city's non-uniformed job positions were cut -- not through layoffs, but rather through incentives and attrition. He instituted the first public employees' Medical Savings Account program -- one that became so popular it is now preferred by city workers even as it saves the city money.

Schundler likes to tell the story of when he first became mayor, he discovered that two police officers were assigned full time to deliver interoffice mail among the precincts -- at a cost of $175,000 a year. Those cops are now assigned to the streets, and clerks do the mail job at a fraction of the cost.

Much of what Schundler has done follows the footsteps of the mayor of Indianapolis, Steve Goldsmith, ho took office in 1992. Like Schundler, Goldmith is a Republican who was faced with a falling economy, heavy tax rates, a fleeing middle class, and entrenched unions. Like Schundler, Goldsmith turned to innovative strategies. His efforts cut spending by $100 million a year.

Goldsmith, 48, is trying to turn his success into higher office, and is running for governor. At packed luncheon hosted by the Manhattan Institute -- a think tank dedicated to free-market solutions -- Goldsmith last month laid out the sweeping innovations he has accomplished, some of which mirror Jersey City's strides:

• Contracting Out:
  Almost every city service has been scrutinized to see if it would be better and more cheaply done by private firms. So far, more than 50 services have been contracted out, from repairing potholes to managing swimming pools and public golf courses. ("What business does government have running a golf course?" Goldsmith asks.) In Jersey City, Schundler has pared the city's non-union work force by contracting out. Work such as fixing broken traffic signals is now handled by a private firm, which does the job cheaper and more efficiently.

• Privatization:
  As Goldsmith says, privatization the selling of city-owned assets to private companies "is not an end in itself, but a means to improving quality of life." Goldsmith successfully privatized the city's airport. At the time he was criticized, because the airport was considered one of the country's best run, most efficient public airports. Statistics show that with a private firm, the airport is even better run -- and now it saves taxpayers money. In Jersey City, Schundler has had greater difficulty in getting unions to agree to private changeovers, but his office did do the largest privatization of a water system in the country. The deal calls for the city to make a windfall of $38.5 million from the sale, which will result in lower costs for the city's taxpayers and the water system's customers.

• Crime and Infrastructure:
  Both mayors have emphasized the need to spend money to reduce quality of life concerns, notably crime. Despite budget problems in both cities, putting police on the streets was a high priority. In Indianapolis, the economy has been booming lately. Goldsmith has held the line on taxes and used increased revenues from other sources to fund infrastructure improvements including roads, parks and other public facilities.

How have these Republicans succeeded in cities normally considered bastions of the Democratic Party? Simple, they say, because they focus on people and services rather than Draconian spending cuts and layoffs. Jersey City, for example, has been able to cut the number of citizens receiving public assistance in half since Schundler took over, largely due to increased job opportunities. By emphasizing the better delivery of public services through private means, the mayors have been able to reduce spending, cut taxes, revitalize business activity and improve the quality of life in their cities.

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Hudson County, New Jersey is a place of many firsts - including genocide and slavery.
Political corruption is a tradition here.
First in a series by Anthony Olszewski – Click HERE to find out more.

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