When I ran for governor last year I said that New Jersey’s governor had too much power. That power was readily evident in the way Gov. Chris Christie used the powers of his office to close lanes on a bridge and to cruelly inflict line-item vetoes on programs that he thought were important to political opponents.
But I was referring to something less obvious but no less important. It was the governor’s authority under Article VIII, Section II of the New Jersey Constitution to alone determine, or certify, how much money the state will have to spend in the upcoming budget year. While I lost the election, and I doubt that it had anything to do with my position on slimming down the power of the governor, the question remains: What should be done with the extraordinary power of the New Jersey governor when it comes to the budget?
In my 22 years in the Legislature I saw my share of budgets created and confess to having my share of doubts about the reality of the numbers on either the revenue or the spending side of the ledger. Each governor I worked with had the unilateral ability to project how much money he or she would have to spend during the upcoming year. No governor has been immune from the temptation of this absolute power and it generally has created overly optimistic revenue projection and a chronic state of fiscal crisis. According to a 2017 Stockton University study, since 2010 Gov. Christie overestimated revenue by more than $1 billion.
To address this, a proposed constitutional amendment was recently approved by the New Jersey Senate by a 28 to 3 vote that would strip the governor of his power to certify revenues. But since it was first introduced, it has been mistakenly reported on and editorialized as the only possible remedy to rein in a governor who’s overly optimistic about revenue projections. For example, prior to the Senate hearing on this measure one legislator recalled Gov. Christie being criticized for projecting 7 percent revenue growth in one year. He said, “Everyone knew it wasn’t true. Everyone argued it wasn’t possible. But you know something? We couldn’t do anything about it.”
But the Legislature could. First, the Legislature could have tried to adopt this constitutional amendment any time during Gov. Christie’s eight years in office. A good time would have been in response to Gov. Christie’s veto of A-4326 in January 2016. The legislation, which I voted for, would have created a New Jersey Revenue Advisory Board. That aside, the Legislature is not without its remedies when it comes to a governor overestimating projected revenues.
Fundamental failure of math
While the constitution states that the amount appropriated by the Legislature shall not “exceed the total … revenue on hand and anticipated … as certified by the Governor,” it doesn’t require the Legislature to spend all of it. Let’s not forget that no spending can occur without a law appropriating the money. So, the protection from overly optimistic revenue projections by an overly optimistic governor rests with the Legislature which can use its legislative power to spend less than all the money the governor certifies. If the Legislature doesn’t appropriate the money, it can’t be spent.
Unfortunately, that’s what the constitution says right now and it clearly isn’t working out as planned. The problem isn’t just about how much revenue the governor certifies. It’s about a fundamental failure of math. No matter what the governor certifies, the Legislature shouldn’t agree to spend it if it’s not real.
What’s worse is that for the better part of two decades the Legislature has enabled governors of both parties in this bad math. When the Legislature agreed to cut income taxes by 30 percent under Gov. Whitman, New Jersey lost $14 billion over 10 years. When the sales tax was cut 0.375 percent as part of Gov. Christie’s plan to raise the gas tax, it cost New Jersey more than $300 million this year and more than half a billion dollars next year and $5 billion over the next 10 years. When these votes were taken we heard promises from both sides of the aisle that such cuts would spur economic activity and cause a growth in revenues to make up for the cuts. The reality is that logic didn’t work for Ronald Reagan nationally and it certainly hasn’t worked for New Jersey locally.
The state constitution shouldn’t be amended for each new policy problem that comes along. A legislative solution should be tried before a Constructional Amendment and the new version of A-4326, sponsored by Assemblyman Roy Freiman and now pending as A-4162, could provide the accountability in revenue certification that is needed.
However, if a constitutional amendment is going to happen it should be an amendment that recognizes that the problem is with both the revenue projections of the governor and the spending and tax-cutting actions of the Legislature. If I were still in the Legislature and couldn’t get A-4162 enacted into law, I would try to modify the currently pending constitutional amendment. The amended amendment would name the new panel the Revenue, Appropriations and Tax Policy Certification Board. The Board would examine not only the revenue projections of the governor, but the revenue cuts and appropriations of the Legislature as well.
Requiring both the executive and legislative branches to submit their revenue projections, tax cuts and appropriations to equally rigorous review would produce a thorough and objective analysis of the real impact each action would have on state finances. It would provide better transparency into a very obscure process and help end the permanent state of fiscal crisis that our state has suffered under for too long.