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Brian Lehrer: Brian Lehrer on WNYC. I was walking down Fifth Avenue in Midtown the other day on my way to Grand Central to catch a train, when I noticed a sign outside a cannabis dispensary that said, "New York City Residents, 30% Discount." My immediate thought was, "Hmm, oh, I think I get that. The prices are set to milk the tourists." They phrase it as "New York City Residents, 30% off," in an area, of course, where there are a lot of tourists, the prime Midtown area.

Even though that was on Fifth Avenue in Manhattan, it made me think of New Jersey. Why? Because of this story we had on our local news website, Gothamist, by New Jersey reporter Michael Sol Warren. Headline: New Jersey Lawmakers Aim to Boost Local Sales Tax by 45% for World Cup. What does that mean? Well, with the World Cup just two months away, lawmakers in Jersey are looking for ways to cash in on tourists attending the games. One way to do that is through increasing sales taxes for the duration of the tournament.

Now, Trenton lawmakers are pushing to raise their local sales tax by 45% to help cover the state's costs for hosting a global event. The state senate Budget Chair, Paul Sarlo, wants to hike sales taxes in the Meadowlands District from 6.6% to 9.6%, in addition to a host of other specific ones aimed at tourists. This comes in the middle of the New Jersey budget season, Governor Sherrill's first of her tenure. They're debating it right now.

During the course of the campaign, she promised not to raise sales taxes, and Republican lawmakers are reminding her of that promise as these proposals sit on her desk. Does this count when it's just targeted at people coming for the World Cup? With me now to discuss taxes, politics, and the World Cup is Michael Sol Warren, New Jersey reporter for WNYC and Gothamist. Hey, Michael, thanks for coming back on the show.

Michael Sol Warren: Hey, Brian, thanks for having me.

Brian Lehrer: What sales tax would go up, by how much exactly?

Michael Sol Warren: You did a pretty good summary at the top there. Just to run through, we're looking at that 3 percentage point increase in the local sales tax, effectively a 45% increase. That's specifically to what's called the Meadowlands District. It's a legal designation for a 30-square-mile area that's centered around MetLife Stadium, where the games will be played. It includes parts of 14 towns, but it's largely the commercial industrial zones of those towns. That's the headliner. That's a temporary increase from June 12 to July 21, if approved. That's essentially the length of the World Cup with a couple of days on each end.

Along with the sales tax increase, we're looking at potentially an additional 2.5% on hotel fees in every county in the state, except for the shore counties. When you look at, like South Jersey and the communities outside of Philly, which is also hosting World Cup games, those hotel stays could be impacted by this as well. Plus rideshares, if you want to Uber or Lyft to MetLife Stadium, which is a whole other debate, but if you wanted to, a 50-cent surcharge on all rideshare trips in and out of that Meadowlands District. The final part of the bill is for anyone placing bets on the World Cup games, and more, those sportsbooks collecting those bets, they'll be charged a 10% fee for every World Cup related bet that they take in.

Brian Lehrer: Wow, really interesting. That's a lot. You're saying Meadowlands District, but then did I hear you correctly that it's really for every county in the state except the Jersey Shore ones?

Michael Sol Warren: Only the hotel. The big sales tax increase that's taken all the headlines that would specifically apply to the Meadowlands District, but the additional hotel fees would be pretty much the rest of the state, except for if you're going down the shore.

Brian Lehrer: Right. I guess they can't cut it so fine as that it would only apply to tourists. If regular residents are using some of these same services, they would pay the tax too.

Michael Sol Warren: That's right. Now, there is language in the bill that would allow residents at the end of the year to claim a tax credit. They basically would be asking people to save their receipts and add up any of the additional sales tax that they would have paid. I just finished doing my taxes, Brian. I can't imagine going through all that effort if it were me, but technically, that is part of the bill.

Brian Lehrer: Listeners, New Jersey listeners in particular, do you like this, milk the tourists, or do you think you're going to get swept up in this net because it is cast too widely, or any other comment or question you have on this? 212-433-WNYC, 212-433-9692. Call or text and weigh in or ask our New Jersey Reporter, Michael Sol Warren, a question. I guess the other way to do it, prompted by my happening to walk past that cannabis dispensary sign in Midtown, which seemed clearly to me aimed at charging different things for tourists and for residents, because it said it explicitly, New York City residents, 30% discount. That's a different approach right there. There, they're really trying to target the people.

Michael Sol Warren: Right.

Brian Lehrer: Here they're doing it geographically. Was there any consideration given to exactly that kind of thing? Like, if you can show a New Jersey ID of some kind, you get charged one thing. If you're from anywhere else, you get charged something else.

Michael Sol Warren: I think that's a great question, Brian, and I wish I knew more about the deliberation that went into this. We're talking about a bill that was introduced so recently the text isn't even available on the legislature's website yet. I had to get a copy of it from the Senate Majority's office. Senator Paul Sarlo hasn't even said anything directly about it. All the statements have come from his chiefs of staff.

There's a bit of unclearness as to how this all came about. Obviously, we are just a couple of months out from the start of the World Cup now. Some are wondering why, if this idea was so urgent, why it wasn't proposed sooner. New Jersey's known it's going to be hosting the World Cup for a long time now.

Brian Lehrer: Who likes this, who doesn't?

Michael Sol Warren: Well, to start with, Senator Sarlos, this is his bill. He definitely likes it. He points out that New Jersey is taking on significant costs to host these games. They've got eight games, starting with Brazil versus Mexico on June 13th and ending with the big finale on July 19th. That's a lot of security costs. That's a lot of transportation needs. That's a lot of helping local towns cope with or entertain tourists. He wants the state to be made whole.

Governor Sherrill hasn't directly commented on the bill, but she has said generally that she wants New Jersey to realize as much economic benefit from the World Cup as possible. Take that for what you will. Republican lawmakers are staunchly opposed. They came out as soon as this bill surfaced, calling Sherrill, saying it would be hypocritical if she were to sign off on this after she made a campaign pledge not to raise or create new taxes.

As for business groups, they're hedging. They're hesitant to take a position either way yet, and they say they're still evaluating the bill. The New Jersey Restaurant and Hospitality Association's president, for example, expressed some concerns to me that if bills have to be a little bit higher with this increased sales tax, then that's more expense for small businesses when they go to process their credit cards. Things like that, they're trying to work out the impact of.

Brian Lehrer: There's a difference between trying to cover the state's cost because of the things that you were just describing are going to be expensive for the state because of this influx of people for the World Cup, versus, "Hey, this is going to be great. It's an economic boom. Look, we've got the World Cup. People are going to be coming and spending so much money." Of course, even at the usual sales tax rates, that would generate a lot of income for the state. Localities have this kind of conversation around the Olympics as well. Do the Olympics take money from the places that host them, or are they big economic windfalls? I think it's turned out differently in different places at different times.

Was there a projection that even without this debate about temporary increases on sales taxes and other related taxes for the World Cup, that even without those things, that this was going to be an economic boon for the state tax coffers, or was it more like the way I think you were framing it before, oh, no, this is going to cost us a lot of money and extra public services, how do we recoup some of this?

Michael Sol Warren: Yes. That's been the conversation since the World Cup locations were announced. There certainly is a projection. The host committee for New York and New Jersey project a $3 billion economic impact in total for the region. That includes about $432 million in tax revenue to New Jersey and New York combined under the existing laws. Not taking into account any potential increases. It is unclear. There's not a lot of detail, at least that the committee made public. How New Jersey benefits versus New York remains a bit unclear.

A lot of this is perspective, like you were saying, how localities benefit from these sorts of events. I think part of that is how you measure the impact afterwards. I think there's different ways of doing that. I tried to find impact surveys or reports related to the Super Bowl that the Meadowlands hosted in 2014, and got mixed results from that. I talked to Tourism Professor Brian Tyrrell at Stockton University, and he said the whole point of events like this is that the added tourism is the economic bonus. He's not sure he's ever heard of any temporary tax increase like what's being proposed.

Brian Lehrer: Larry, in Brooklyn, you're on WNYC. Hi, Larry.

Larry: Hi, how are you? Foreign visitors to the USA are entitled to equal protection under the law. The Constitution, the 14th Amendment, that is guarantees that no state can deny any person within the state the equal protection of the laws. That protection extends to all individuals who are physically present in the United States, whether they're non-citizens or foreign visitors. I'm not a law professor, but I think it's against the Constitution to charge citizens or local residents, I should say, not citizens, local residents, less tax than visitors. That's not equal protection.

Brian Lehrer: Right. That's why they're doing it by geography rather than by individual. That would pass constitutional muster by your definition, wouldn't it?

Larry: No, because, let's say, an individual pays something in New Jersey, but not to a New Jersey resident. That individual could actually sue the state of New Jersey for--

Brian Lehrer: No. To be clear, and Michael, correct me if I'm wrong, but I don't think I'm wrong, a lot of these taxes are on anybody who's using the particular service in the Meadowlands District. You can be a state resident, or you can be from Italy or wherever, the individuals get charged the same. It depends where you are.

Larry: Well, you can get it back on your taxes at the end of the year, you said.

Brian Lehrer: Right. I see.

Larry: Still, that's an end run. That doesn't sound to me like it's going to comply with equal protection.

Brian Lehrer: Interesting. I don't know if it's come up from anybody else that way, but it's true. It does wind up being a different tax on different individuals if the New Jersey residents can file for the reimbursements. Michael, you haven't heard anything like that before, right?

Michael Sol Warren: No. Like I said, there's still a lot to be sorted out. The bill proposal came out, and the copy was made available to us. There haven't been any amendments made as of yet. I think it's only been around for a week or so at this point.

Brian Lehrer: Linda in Morris Plains, you are on WNYC. Hi, Linda.

Linda: Hi. To dovetail on the previous caller's comment, it's not very welcoming to people to raise taxes, but I want to take it to the nitty-gritty. I don't know if I'm one of those 14 towns in that 30-mile radius, but I would go to the next town to buy my items to avoid the increased tax, and it would reduce the revenues for those 14 towns by the locals knowing, "Oh, don't go to that town, they have higher taxes." I think that that's fraught with issues.

Now, the second thing I want to mention is the tickets are exorbitant. We've gone online to attempt to go. There's no way that those exorbitant ticket prices have something in it for New Jersey. How does this work that you say yes to them and they charge these prices, but it just costs you to have them? I think there should be some kickback to New Jersey.

Brian Lehrer: Linda, thank you very much. This is all about what kind of kickback. Kickback implies something dirty and illegal, but yes, some benefit to the state of New Jersey. I don't know if you've covered the ticket prices. I've heard other people complain about them. Soccer is supposed to be the people's game. That poor people all over the world, you don't need a lot of equipment. You just need a ball and a patch of dirt anywhere, and kids can play soccer. It's the people's game all over the world. Yet look what these ticket prices are to attend World Cup events.

Michael Sol Warren: That's been such a big narrative around this World Cup and the lead-up to it. It's not just the ticket prices. In past World Cups in other countries, they've been able to make public transportation free. We know that's not going to happen here. In some places, public transit will get more expensive temporarily for the World Cup. Likewise, to the caller's point, a little bit, when FIFA awarded the cities the hosting rights, part of the arrangement was pretty much to put the cost of putting it on the locality. FIFA, to my understanding, is not kicking in a ton to help get this thing off the ground.

That comes back to people like Paul Sarlo, the senator, trying to find ways to get more for the state out of this, not just for the economic benefit in general, but because there are significant expenses that are associated with hosting this thing.

Brian Lehrer: FIFA just gave President Trump a Peace Prize, didn't they? The FIFA Peace Prize. They made it up.

Michael Sol Warren: He's the first recipient. That's right.

Brian Lehrer: They're not kicking in to help the people of regular means to be able to afford to go to World Cup games, not to mention people of lower incomes who might disproportionately be immigrants from around the world, where teams from their countries of origin might be coming to MetLife or other places to play in FIFA matches.

Michael Sol Warren: Yes. That point, Brian, sorry, but that's something I've been thinking a lot about lately. That first game in the Meadowlands is Brazil versus Morocco. You're talking about Newark being such a hub-

Brian Lehrer: Perfect example.

Michael Sol Warren: -of the Brazilian community on the East Coast and in New Jersey, and Patterson being a hub for the Moroccan community. How many of those folks are going to be able to attend that game? It's something to think about.

Brian Lehrer: That's right. By the way, a little pushback in attacks to the lawyer who called in concerned about equal protection under the Constitution. Listener writes, I think this is another lawyer, "Equal protection does not require identical taxes in all cases as long as the classification is reasonable." We know how many times the word reasonable winds up in front of judges for interpretation. I don't know if that'll happen here. I'm going to take one more caller, maybe instructive for New Jersey, from Nietzsche in Manhattan, originally from Hawaii, which obviously has so much of its economy based on tourism. Nietzsche, thanks for chiming in. You're on WNYC.

Nietzsche: Hi, Brian. Thank you so much. As you said, I come from Hawaii, and I've been in Manhattan for 60 years, but I go back twice a year to see everyone. The local residents are given discounts all over the place, and people take it in stride. Even hotels, if you're a local resident and you want to travel to another island and stay in a hotel, you get a considerable discount. I think it's a great way to support the people who live there. The tourists, there's a lot of tourists, so all these state parks and local events, they're all discounted. I think that would be great for New Jersey during this time.

Brian Lehrer: Put Nietzsche in the plus column. Thank you very much. To finish up, Michael, and to put it in the context of the larger budget season in New Jersey, Governor Sherrill proposed her first budget recently and is already, from what I read in a standoff with fellow Democratic lawmakers over about $700 million in spending cuts she's proposing. Her treasurer has said she'll negotiate, but only if the legislature identifies offsetting cuts. I see that on the New Jersey Monitor.

Where this money would go, would it go to offset state budget issues, or would it go to the localities? I think is another final aspect of this that I'll bring up because you reported that the East Rutherford mayor, and that's right where the Meadowlands is, supports the goal of the bill, but isn't sure his borough would actually see the money. How would that work between the state and the localities?

Michael Sol Warren: Right. All the revenue from these increased taxes would generally flow back to the state's general fund. Now, the sports betting is a little bit different on how that's collected, but for the hotel fees, the ride shares, and the sales tax, that's all supposed to go back to the general fund for lawmakers to use as they need to craft the budget. It's a great question. There's no guarantees for that money when it gets all mixed up into the big pot like that.

We are looking at a situation where Governor Sherrill has proposed keeping the budget relatively flat, but trying to cut the state's budget gap roughly in half from a projected $3 billion to $1.6 billion. She is looking at significant cuts, but she's also having to fund significant increases from things that are out of her control. To go back to your previous guest, Maya Goldman, when you guys were talking about the Medicare, when President Trump says the states can take on Medicare costs, the states would disagree. That's what New Jersey and every other state is having to grapple with here, is significant costs increase.

Brian Lehrer: For Medicaid.

Michael Sol Warren: Yes. For Medicaid. Sorry.

Brian Lehrer: That are already happening.

Michael Sol Warren: Yes, thanks for the correction there. These cost increases from retreating federal funds is a real problem that New Jersey is having to grapple with as it tries to rein in its own spending. It's pain on both ends.

Brian Lehrer: Michael Sol Warren covers New Jersey for WNYC and Gothamist. We'll see how this turns out before the first ball is kicked on June 13th. Thanks for coming on.

Michael Sol Warren: Thanks for having me, Brian.

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