DISPATCHES by Hank Kalet: Short-term solutions won’t, and haven’t, solved the state’s budget.
By: Hank Kalet
"Anyone who says we can save $3 to $4 billion dollars from eliminating waste, fraud and abuse is selling snake oil." Gov. Jon Corzine, The Asbury Park Press, March 22
Anyone who expected Gov. Jon Corzine to have all the answers Tuesday was destined to be disappointed.
That’s because the state has been on fiscal life-support for so long that it would be foolish to expect a cure in one budget.
Gov. Corzine is proposing a $30.9 billion budget that calls for cuts in several state programs, the elimination of 1,000 jobs, a near-freeze in state aid to towns and schools and a hike in the sales, cigarette and other taxes.
Republicans have been quick to point out the obvious that the budget is 10 percent larger than the one signed by then-Gov. Richard Codey in 2005. And they don’t like the new taxes.
But so far, anyway, they seem unable to offer much of an alternative especially with the state facing a $4.5 billion budget hole that is expected to grow by about $1 million a year in the future.
So what to do?
The first thing, I think, is for everyone to get off their partisan soapboxes and be honest about what the state is facing. Fixed costs in the budget such as debt payments and pension costs have been growing and will continue to grow, limiting any governor’s ability to rein in spending.
Health and pension costs, for instance, will grow from 8 percent of the budget last year to about 21 percent by 2010, according to The New York Times on Sunday. There is a need to pump $8 billion in state cash into the public employee pension fund, the Times wrote, plus another $3 billion in local money to offset the damage done by 10 years of neglect.
Add to this the need to increase aid to the state’s 30 poorest school districts and cover millions in planned school construction and you can see that this was not going to be an easy budget to put together.
As it is, keeping spending from growing more than 10 percent might be considered a victory. Consider this: Of the $3.5 billion in new spending proposed, $1.1 billion goes to the pension fund (which will not even meet current obligations); $300 million goes to the state’s woefully underfunded unemployment fund; $358 million is for new Medicaid spending and $483 million will cover an increase in state debt payments. That’s $2.24 billion right out of the gate.
On the other side, the governor is planning to wean the state from its addiction to one-shot revenues and budget gimmicks. As it stands, the proposed budget calls for about $500 million in so-called one-shot revenues, $1.3 billion less than the 2005 budget.
In an attempt to offset some of this, the governor has proposed what he calls $2 billion in cuts. Among them are $169 million in aid to the state’s colleges and universities, the elimination of 1,000 state jobs (out of a workforce of about 54,000) and cuts in grants and aid to arts, health and other groups. He also will continue to freeze aid to towns and schools.
Few of these cuts will be popular, especially when placed alongside a penny hike in the sales tax and an increase in other taxes that could cost the average New Jersey taxpayer somewhere in the range of $300 a year.
Democrats and Republicans were both stunned by the tax hikes which is rather amazing, considering that Gov. Corzine has spent the better part of the last month talking about them. And few said they were prepared to move forward without a full and in-depth review.
Perhaps we can avoid the tax hikes, though I doubt it. Finding more spending to cut seems unlikely, no matter what the folks in the Legislature are saying now. And one-shot budget gimmicks are likely to be vetoed, if the governor’s very pointed comments are to be believed.
"Every time we use a gimmick or a trick to pay for this year’s expenses, all we’re doing is making next year’s problem worse," he said. "This addiction to short-term solutions to long-term problems has continuously compounded the deficit hole for succeeding years’ budgets and eroded the state’s credit rating as a result. These practices must end. And they will."
The simple fact here is that the state budget has been ticking time bomb for a long time as politicians from both parties avoided making hard decisions and taxpayers refused to press for real reform.
We’ll be paying off the bill for those failures in the coming year’s budget and long into the future.
Hank Kalet is managing editor of the South Brunswick Post and The Cranbury Press. His e-mail is [email protected].