A FEW COMMENTS IN RED BUT WHAT ARE
THE LONG TERM PLANS?
Are these New Jersey's 7
biggest financial blunders?
By Samantha Marcus | NJ Advance
Media for NJ.com Email the author | Follow on Twitter
on September 15, 2016 at 7:33 AM, updated September 15, 2016 at 8:55 AM
TRENTON — A new report from
a Trenton think tank provides a critique of 20 years of New Jersey
fiscal policy it says has taken the state from "an economic
powerhouse" to one in distress.
New Jersey Policy Perspective's analysis focuses
largely on officials' reliance on long-term borrowing to
balance budgets.
BORROWING FROM FUNDS PLACED OR
SUPPLIED WITHOUT EXTERIOR, EMPLOYED WORKERS CONTRIBUTING, ENTIRELY OR IN PART.
The left-leaning think tank
argues the "downward spiral" began in the 1990s, and "both major
political parties and all three government branches contributed to the
failure."
In unveiling the report, former
Gov. Jim Florio, former Treasurer Clifford Goldman and New Jersey Policy
Perspective President Gordon MacInnes said once-revered constitutional mandates
were pushed aside, giving way to "bad decision after bad decision."
REMEMBER ONE TERM JIM AND TAX ON
TOILET PAPER.
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"It's good to have a
historic record that is accurate. In and of itself that is a desirable goal.
But equally important is the goal of giving guidance to policy directors as to
what not to do," former Gov. Jim Florio said. N.J. pension system still among worst-funded
Pew
Charitable Trusts ranked the state's government worker pension fund just above
Kentucky and Illinois.
MacInnes said lawmakers have
treated the state's pension fund as an ATM to get them out of tough spots, and
now the state can't afford to pay its bills:
"That ATM became the means
by which
successive governors, Legislatures, abetted by the New Jersey Supreme
Court, avoided their responsibilities under the Constitution and their
responsibilities as leaders of the state to make the payments required, to raise
the money required and to stop promising things that could not be paid
for." ABSOLUTELY A DERILECTION AGAINST TAX PAYING CITIZENS RIGHTS.
1. Income tax cuts
Gov. Christie Whitman in
1994 cut income taxes by 30 percent. But the Republican governor didn't
reduce spending to match. According to the report, New Jersey lost about $14
billion in revenue over the first 10 years.
"Governor Whitman's tax cuts
greatly reduced the funds available to assist local governments and schools and
shortchanged property tax relief programs for senior citizens, veterans, the
disabled and moderate- and low-income homeowners and renters," the report
said.
BUT THE SPENDING INCREASES CONTOINUED
TO COME. Cut spending and cut taxes!
2. Pension holidays and bonds
Beginning in 1994, Whitman's
administration allowed the state and local governments to lower their
contributions to the public employee pension fund. WHY?
According to Policy Perspective,
within three years the pension fund's
unfunded liabilities jumped from $800 million to $4.2 billion.
This, according to the think
tank, "started the failure of all three branches of state government to
make promised pensions secure at the same time they compounded the problem by
increasing future pension benefits without funding the money to pay for
them."
Just two years earlier, Florio's
Pension Revaluation Act included more optimistic assumed rates of returns on
its investments, which allowed the state to contribute less.
Whitman again gets whacked for
borrowing $2.8 billion to pay down newly created pension liabilities and balance
the budget.
Whitman assumed the money to be
made investing those bond proceeds would exceed the cost of borrowing, 7.65
percent.
"State and local government
employers were allowed to skip required pension payments, their Share being
partly made up by the money borrowed from Wall Street," the report said. EMPLOYEES HAD NO
SKIN IN THE GAME!
The state is still paying off
those pension obligation bonds., with a $348.6 million payment due this year.
The state will spend $10.3 billion paying off the loan over 31 years. BONDING RATHER
THAN ADJUSTING BUDGETS AND PLANNING. ANYONE WHO DOES NOT BUDGET ON A CONTINUING
BASIS IS BOUND TO HAVE FINANCIAL PROBLEMS. AFTER 2008 WHO DID NOT ADJUST THERE RETIREMENT
AND SAVING PLANS.
3. Raiding retiree health care
funds
New Jersey once had a $300
million fund to pay for retiree benefits. Policy Perspective blamed Whitman for
raiding that account and changing the rules to require the state to fund
retiree health benefits out of the annual budget.
"By shifting future costs of
retiree health benefits to future taxpayers and raiding the assets in place,
Governor Whitman reduced their costs in her first-term budget by almost $1
billion," the report said, adding the liability has grown from $2.3
billion in 1994 to $65 billion.
4. Court-sanctioned 'bad
borrowing'
The report contends the pension
obligation bonds plainly violated the state Constitution's Debt Limitation
Clause, which prohibits the Legislature from creating new debt without voter
approval. WHO APPOINTED THESE GENIUS JUDGES WHO HAD NO
SKIN IN THE GAME?
In a challenge to the borrowing,
the state Supreme Court ruled the bond sale was legal. "With the pension
bond decision, the New Jersey Supreme Court opened the floodgates for an
unprecedented Sun-up in debt without public approval, which accelerated the deterioration
of the state's financial stability," the authors wrote.
5. Sweetened pension benefits
Former Gov. Donald
DiFrancesco boosted pensions by 9 percent in 2001 without forcing anyone
to pay for it. MORE NO SKIN IN THE GAME!
"This legislation
may have been politically popular, but it accelerated New Jersey's financial
deterioration," the report said.
6. Tobacco bonds:
To balance two budgets, former
Gov. James McGreevey borrowed against money the state was awarded after suing
major tobacco companies.
Policy Perspective cited this as
another example of the state borrowing to plug short-term budget holes. He
likewise borrowed against future revenues from new taxes and fees for $1.9
billion to balance the 2005 budget.
7. ARC tunnel cancellation
In October 2010 cancelled
the Access to the Region's Core Hudson River tunnel
project, reallocating some of its funding to the Transportation Trust Fund.
This, Policy Perspective opined, allowed Christie to avoid "a much-needed
increase in New Jersey gasoline taxes to finance transportation projects."
"The $1.3 billion in ARC
funds reallocated to highway and bridge projects in North Jersey meant the
governor could ignore the pending bankruptcy of New Jersey's Transportation Trust
Fund." THE TUNNEL WAS FOR THE NORTH JERSEY / NEW YORK BUISINESS
AND COMUNTER PRIVILEGE. WHAT ABOUT THE BURDEN ON SOUTH JERSEY?
Samantha Marcus may be reached
at smarcus@njadvancemedia.com.
Follow her on Twitter @samanthamarcus.
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