Get this. There is actually some good news coming out of the Statehouse these days. Amazingly, there is a lot more money coming in to the state treasury than anyone expected. Specifically, anywhere from $500 million according to the state treasurer to nearly a billion dollars according to the Office of Legislative Services (OLS). Either way, it’s a lot of money, particularly in a state that’s been struggling financially for so long and has been teetering on fiscal chaos and potential insolvency.
Word is, this unexpected revenue comes from the fact that there are a significant number of wealthy New Jerseyans who have benefited from a very strong performance by the stock market. In turn, they have had to fork over more money to the state in taxes. That’s not so great for them, but it’s good for state policymakers who have done nothing but cut programs, services, and look for loose change in order to pay our bills.
Yet, predictably, as soon as word got out that there was some extra money floating around the Statehouse, there were no shortage of ideas as to how to spend it. Gov. Chris Christie said that he’d like to put some of the money into increasing rebate checks to senior citizens and others who qualify for the program. Some Democrats want to reinstate certain programs, particularly important health services in public clinics that disproportionately serve women. Some editorial writers have said we should restore more of the so-called earned income tax credit, which would benefit working people who depend on this tax break.
All these and I’m sure many other ideas for spending this money have merit, but I’m going to propose an idea that is a lot more radical. An idea that I’m sure has never even been considered in state government. Why not actually take this mini-windfall and not spend it at all on anything new? Of course, the state may likely be told soon by the Supreme Court that it has to spend more on urban public education. We’ll see how the governor responds to that. But why not actually pay some of our bills that have only been growing exponentially and causing our credit rating and ability to borrow much-needed capital to be seriously threatened? Why not, as many financial experts argue families should do, actually pay down our debt? Let’s pay some old bills. Let’s put a dent into the between $60 billion and $100 billion that we are in the red for when it comes to pension payments for current public employees. Some policy makers are proposing we use some of the money to do this, but I say virtually all of it should go in this direction.
Now let’s be real. Actually paying down our bills won’t score any big political points with anyone. It won’t make seniors or others who qualify for property tax rebates happy. It won’t make Democratic legislators happy, especially those who want certain programs — disproportionately impacting their constituency — restored. But the fact is if we don’t start paying our bills now, when exactly are we going to do it?
Some will say that putting between $500 million and a billion dollars into the beleaguered pension fund is a drop in the bucket. They say it won’t make a dent. But here’s the problem with that thinking. There is never going to be an extra $5 billion, $10 billion or $20 billion sitting around. There is no magic bullet. There is no magic wand that will solve the massive pension problem we have in our state. It would send a powerful message if we use the lions’ share of this recent income tax revenue to pay some of our old pension bills. It will also send a clear message that our leaders in the Statehouse finally understand that we owe this to our children and our children’s children who ultimately will wind up picking up this massive bill.
If we don’t do this now, it sends all the wrong messages and worse, puts us in an even deeper hole that becomes nearly impossible to get out of.