State budget a familiar tune.
By: Hank Kalet
There’s a hole in the budget,
dear voter, dear voter
There’s a hole in the budget,
dear voter, there’s a hole
New Jersey taxpayers could be forgiven if they feel like Liza in the traditional children’s folk song, "There’s a Hole in the Bucket."
After all, our bucket in this case, the state budget has a huge hole in it and Henry the governor and state Legislature is dithering away, seeking to plug it with half measures and questionable schemes.
And like the folk song, the argument about how to fix the budget and the state’s dysfunctional tax system runs in a huge circle.
The governor is proposing a $33.3 billion budget that includes $2 billion for a 20 percent property tax credit that he has yet to sign into law, additional money to pay for public employee pensions and little else in the way of new spending.
On the surface, it is a relatively conservative budget. But the revenue side is a time bomb, built on leftover sales tax revenue raised in 2006 for what was then an undefined property tax reform plan. The problem is that the $600 or so million carried over from last year into 2007 leaves a rather large hole in the 2008 budget even before it can be crafted.
And it leaves much of the hard work of budget and tax reform for another day: The new $9 million comptroller’s office, empowered to "root out waste, prevent fraud and reduce spending," will have little real power, while the new $20 million consolidation fund and panel, designed to "provide meaningful incentives for schools and local governments to share services and reduce costs," is advisory and unlikely to result in much real streamlining.
Then came Monday’s news, unveiled during a state Assembly Budget Committee hearing, that "New Jersey’s economy is growing, but not as fast as Governor Corzine’s administration hopes it will," which could leave the budget $653 million short this year. (The Record of Hackensack)
That’s about 2 percent of the proposed spending plan, but doubles the budget’s built-in shortfall and that doesn’t take into account the massive pension deficit that is only growing larger every year.
To paraphrase our children’s song: With what shall they fix it, / Dear voter, dear voter? / With what shall they fix it, / Dear voter, with what?
The governor’s answer has been "asset monetarization," or using state assets to generate short-term cash to pay down the state’s debt. He says it represents the only way the state can raise the kind of revenue necessary to provide the programs desired while also offering property tax relief.
The way he explains it, it is not a one-shot placeholder like the sale of northernmost stretch of Route 95 to the N.J Turnpike Authority under the Florio administration, which generated money to cover daily expenses. Using the sale or lease of assets like the Turnpike or the state lottery to pay down debt would reduce spending in future budgets but still leave the state scrambling for new revenues down the road.
This brings me back to the old children’s song. Henry is told to fix the bucket with a straw, but the straw is too long. He’s told to cut the straw with an ax, but the ax is dull. He’s told to sharpen the ax on a stone, but the stone is dry and needs to be wet. And he needs water for that.
The question is how to get it. The answer?
"In the bucket, dear Henry, / Dear Henry, dear Henry / In the bucket, dear Henry, / Dear Henry, in the bucket."
And so we’re forced to start the dance all over again just like with the state’s budget.
Hank Kalet is managing editor of the South Brunswick Post and The Cranbury Press. His e-mail is [email protected] and his blog, Channel Surfing, can be found at www.kaletblog.com.

