Opinion: New Jersey’s Short-Term Fiscal Fixes Mean Long-Term Disaster

Carl Golden | September 6, 2018 | Opinion
The ‘Sweeney commission’ has shown that one-shots and other revenue gimmicks can only lead to trouble, but will the pols and the public unions give them up?

Carl Golden
No matter the eventual outcome of the recently released report examining the state’s tax structure and spending policies, it accomplished a long-overdue goal by marching the Legislature to the edge of the cliff and forcing it to peer into the abyss to behold a future in which the state is without resources and unable to meet its constitutional or statutory obligations.

By forcing the issue of how the state raises and spends money onto the legislative agenda, Senate President Steve Sweeney (D-Gloucester), has moved aggressively to focus attention on the compelling need to produce a long-term, stable and sustainable fiscal environment and abandon the historic practice of piecemeal solutions whose only goal is to see the state through one year after another and avoid hard and politically uncomfortable decisions.

The report and recommendations compiled by a Sweeney-created panel of individuals with expertise in government tax and finance issues lays out in stark fashion a future in which government can no longer fulfill its most basic functions, ranging from education to the environment to public safety. Investing in long-term endeavors such as transportation and higher education — two areas that require long term commitments — would be out of the question entirely.

In delivering and placing the weight of his presiding office behind the proposals, Sweeney sent an unmistakable message: Tax increases will not be considered.

He does not believe revenue is in short supply, but that spending it effectively is.

Band-Aids and patches

For too long, legislatures and governors alike, when confronted by budgetary shortfalls and short-term monetary crises, have opted for the path of least resistance, slapping a blowout patch on the leaky fiscal tire and a Band-Aid on spending’s open wound. The result has been a crazy-quilt patchwork of gimmicks, while cooking the books to magically produce additional revenue — on paper at least — to cover a looming deficit.

Shifting money from programs to which revenue has been dedicated and applying it to shore up solvency in other areas has also become commonplace and usually isn’t discovered until well after the fact.

In delivering budget messages to the Legislature, governors have celebrated their success in reducing the number of so-called gimmicks or one-shot revenues, when the reality should be boasting of no such manipulations rather than fewer.

If, as is often argued, government should be run like a business, the state’s history is a model of how not to do it.

While Gov. Phil Murphy welcomed the commission’s report and pledged to work closely with the Legislature to sort through its dozens of recommendations and identify those suggestions on which agreement could be reached, resistance will be fierce on those proposals impacting public employees.

Consequences of consolidation

In what would be perhaps the most radical change in public education in modern state history, the commission recommended reducing the number of school districts by half through regionalizing some 300 K-6 and K-8 districts into K-12 ones.

The report contends that not only would such regional districts result in property-tax savings through a more coordinated and streamlined administrative structure but also would offer a higher quality of education as well.

The steadily growing cost of public pension and health benefits programs was identified by the commission as the principal driver of the state’s budgetary woes and will, if left unchecked, outrun its ability to meet its contribution obligations without significant tax increases or equally significant spending cuts.

The report recommends new employees be moved into a 401(k) program, while healthcare coverage for all employees be reduced from the current platinum level to gold.

The New Jersey Education Association and public employee unions have already made their displeasure known with the suggested changes, insisting that their members are being made scapegoats for the past failures of the state to adequately fund the pension and fringe benefits systems.

Both believe that, in Murphy, they have a governor sympathetic to their views and will remind him of their unwavering financial and organizational support for his candidacy last year.

Familiar opponents

The recommendations impacting public employees will certainly be the most contentious and will again potentially pit the governor against Sweeney and Assembly Speaker Craig Coughlin (D-Middlesex), in a struggle for dominance in tax and spending matters.

The commission also recommended stepped-up efforts to convince municipalities to enter into shared-services agreements to reduce costs while maintaining quality and responsive government. The report sidestepped the issue of municipal consolidation, recognizing that any effort to mandate mergers would be not only futile but also attacks on home rule would be too politically risky to undertake.

The report goes directly to the heart of the issues most troubling to New Jerseyans: the cost of government and the level of taxes — particularly property taxes — to support it.

Sweeney has taken on the task of convincing his colleagues of the seriousness of the problems they face, that what they see when they peer into the abyss is not only a bleak future but one that is real and threatens to overwhelm the system of government.

He must convince them as well that only a program as ambitious and far-reaching as the one proposed by the study commission is vital to survival.

History suggests that legislatures shy away from the ambitious and prefer to tinker instead and preserve the status quo.