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Op-Ed: Budget Vetoes -- The Scorpion and the Frog

Venomous cuts to the New Jersey state budget may have unexpected consequences.

A scorpion and a frog meet on the bank of a stream, and the scorpion asks the frog to carry him across on its back. The frog asks, "How do I know you won't sting me?" The scorpion says, "Because if I do, I will die too."

The frog is satisfied, and they set out, but in midstream, the scorpion stings the frog. The frog feels the onset of paralysis and starts to sink, knowing they both will drown, but has just enough time to gasp "Why?"

Replies the scorpion: "It’s my nature..."

This parable has many variations: the scorpion and turtle, the snake and dog, the viper and farmer. What each variation has in common is a bad actor, a character who can’t play fair, even if it means he might perish.

Those who are reading the press these days may recognize certain similarities with the current state of politics in New Jersey. And the Democratic leadership surely is croaking now.

It wasn't a surprise that the governor wielded his ax against the millionaires’ tax and women's health programs. He did it before. He said he would do it again and he did it.

What was surprising, though, were the other cuts that had nothing to do with policy and everything to do with the very nature of his leadership. The cuts are unprecedented and go beyond any reasonable policy and fiscal considerations.

The Legislature

The budgets of the executive office, the legislature and the judiciary have always been sacrosanct; a "gentleman’s agreement" has traditionally given each responsibility for its own budget and spending.

No governor before has chopped 41 percent from the legislature’s staff salary accounts, but that’s exactly what the governor did. And he did it with a dose of venom, saying:

"The budget as adopted by the legislature relied upon exaggerated revenue estimates, flawed assumptions concerning fund balances and ignored the harsh reality of its spending decisions. This reduction, among many others enumerated herein necessitated reductions of known surpluses, imprudent spending and other excesses."

People who have noticed this salary cut haven't made much of it. But the fact is, it has the potential to shift the balance of power in the legislative branch. Here’s how that works.

The salary accounts that the governor cut will not affect the salaries of legislators or those of their district office staff. The ones cut supported the Democratic and Republican legislative committee aides and the people who run the partisan staff offices in Trenton. Money for those salaries is appropriated to the Senate and Assembly in a lump sum and is divided based on which party is in the majority -- the majority party (currently the Democrats) gets more of the money, has a bigger staff and has the larger suite of offices.

Unless the Legislature overrides this veto with a 2/3 vote (which would require the support of both parties), the staff of those offices will be significantly reduced. How these cuts are shared will be up to the majority Democrats in the Senate and Assembly. And as Assembly Speaker Sheila Oliver (D-Essex) was quoted as saying, "I’m certainly not going to shoot myself in the foot."

Whether the governor understands this or not, a greatly reduced Republican partisan staff in Trenton is certainly a possible outcome of this line item veto.

Higher Education

Students and institutions of higher education felt the sting of the governor's veto, which cut full-time and part-time Tuition Aid Grants (TAG) below even his own budget recommendation in March. He reduced the Democrats' appropriation by $48.5 million, even though the amount in the Democrat’s budget was only $21.3 million more than his budget recommended.

In another unusual veto, the governor reduced the number of state-funded positions at each college by nearly 1,200 overall. This veto is an easy one to overlook, and understanding it isn’t straightforward. What it means, however, is that the governor is reducing the state’s obligation to pay fringe benefits costs for these positions and is transferring those costs to the colleges -- all without prior consultation and at the last minute. It is a backhanded way of again reducing the state’s responsibility for its higher education system. For Rutgers University and the Agricultural Experiment Station, this represents a 6 percent loss; for the other colleges, a 5 percent loss.

The veto message was again venomous. He blames the legislature for this cost shift, saying:

"The legislature’s failure to appropriately fund health benefit costs for all state employees necessitated a reduction in the state's support of employee fringe benefits at all public institutions of higher education."

Legal Services to the Poor

If you are poor in New Jersey and have a legal problem, save it until next year -- maybe. Like the TAG scholarship, legal services will be significantly less than even what the governor proposed in his March budget.

His veto eliminated all state funding ($600,000) for the legal clinics at Seton Hall University Law School, Rutgers Newark Law School and Rutgers Camden Law School. In March he budgeted each of them for $200,000 apiece.

He also apparently took umbrage at the additional $5 million included by the Democrats in their budget for Legal Services of New Jersey, which provides legal services to poor people in civil matters. He cut that budget by $10 million -- leaving Legal Services of New Jersey with a smaller budget than he recommended in March.

Cleaning up New Jersey

The governor's veto cut $18.8 million or 16 percent of the amount he recommended in March for Department of Environmental Protection (DEP) programs that safeguard and preserve the state's environment -- for remediation of hazardous waste, underground storage tanks, monitoring water and dealing with diesel pollution. Funding for these programs comes from a 4 percent constitutional dedication of corporate business tax (CBT) revenues. The effort by the governor and some in the legislature to ensure that New Jersey is "open for business" by doing away with regulations and reducing corporate taxes means less money is available to protect New Jersey's environment.

The Moral of the Budget

No one expected the governor to move away from his ideological position on funding healthcare for women or to abdicate his protection of the wealthiest in the state from the millionaire’s tax, which would have added an additional 1.78 percent to their income tax bills this year.

But the veto message went beyond negotiation and fair play. There are consequences to every action. The scorpion’s sting meant death to both the scorpion and the frog. The consequences of this veto message are a less prosperous state and an increase in the chasm that separates the state’s wealthy from everyone else.

Mary E. Forsberg is the research director of New Jersey Policy Perspective (NJPP) and served as the organization's interim president in 2009-2010. Her work focuses on state and local taxation, the state budget and how fiscal policies and the economy interact.

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