Back during the 1990s, then-Gov. Christie Todd Whitman used an accounting trick to balance the state’s budget while slashing state income taxes.
She revalued the state’s pension accounts, saying the booming stock market of the Clinton years meant that the pension accounts were worth more than the state’s actuaries were saying. That allowed her to reduce the amount that the state — and municipal governments and school boards — were required to pay into the pension system.
The move created the appearance of a state spending cut — the state put less money into the pension accounts and cut aid to towns and school boards, telling towns they didn’t need as much from the state because of the pension changes.
Everyone was happy — except for the state’s unions and a handful of good government groups who saw in the Whitman scheme the potential for disaster.
Critics of the plan were right, of course. The revaluing of the pensions was little more than a shell game and a decade later the state was forced to scramble to make up for a massive shortfall in what was going to be needed in the not too distant future.
In each of the last four budgets, Govs. Richard Codey and Jon Corzine bumped up payments into the three major pension accounts — for public employees, teachers and police and fire personnel. It also billed municipalities and school boards for their share of the shortfall, which pinched budgets.
And still the pension shortfall grew.
It is in this context that we have to question Gov. Corzine’s proposal to “temporarily defer” half of next year’s local and county pension payments until 2012.
The governor, who announced his plan at last week’s state League of Municipalities convention, called the deferment a “necessary step” that will “help our municipalities get through this recessionary period at the same time we dramatically reduce the pressure on property taxes.”
He likened his plan to restructuring mortgage obligations or corporate debt, actions taken during crisis situations designed to give homeowners and corporations financial flexibility.
The alternative, he said, is for municipalities to either “raise taxes unbearably at precisely the wrong time or potentially break a basic covenant with the public by compromising the quality of public safety, education, or in providing a safety net for the most vulnerable.”
But deferring payments only pushes problems down the road — a grand New Jersey tradition that has helped create most of the state’s fiscal woes. As the governor said, municipal and county governments and local school boards will still have to pay into the pension system, just not now and with interest.
In the end, what Gov. Corzine is proposing is a bit of fiscal sleight-of-hand, the kind of budget gimmickry he promised not to resort to when he took office.

