As the process of evaluating the governor’s proposed FY16 budget gets underway in the Legislature, we need to consider what it really means to have a balanced budget. We know what the constitution requires: that the annual budget be balanced. In simplest terms this means the state cannot spend more than the revenues it collects. But when the budget achieves that constitutionally required balance on the backs of working families, as FY16 budget proposes, the budget is, in reality, a budget out of balance.
Consider the words of Gov. Chris Christie just one month before he delivered his sixth budget address. In January of this year at the Freedom Summit in Iowa, Christie said:
“You see, the rich are doing fine. That’s great. But nor should we cater to the wealthy at the expense of our middle-income workers and the working poor, who are the backbone of every American community. Every policy we advance, every decision we make should be focused on making their lives better, renewing their future, renewing their faith, their belief in this country.”
Given this mandate, it is not only fair but in fact appropriate that we analyze the FY16 budget according to the measures set forth by the governor himself.
A balanced budget, in this context, would ask no more from the average New Jersey resident than from the wealthiest. It would invest in economic plans that would lift up everyone, focus on tax fairness, and find the resources to fund essential state services. But that is not at all what this budget proposes. Not by a long shot. This budget perpetuates years of unbalanced sacrifices that are being forced upon people who can least afford it, but whose prosperity is essential as the true drivers of economic recovery.
Every economic indicator tells us we are out of balance with the needs of our residents and with the national economic recovery. Poverty is on the rise in New Jersey, while nationally it is declining. The uppermost income brackets have gotten tax breaks, while working families pay more due to cuts in property tax rebates, cuts the Earned Income Tax Credit, and increased fees. The only income bracket in New Jersey that is better off now than before the recession is the uppermost income earners. Let’s be honest, in New Jersey the rich are getting richer and everyone else is struggling more and more just to get by.
Eight credit downgrades under this administration is a window into how New Jersey is viewed nationally. An unprecedented number of high-dollar tax incentive deals to corporations have neither helped our economy grow nor improved our outlook in the eyes of rating agencies. As we start year five of corporate tax cuts, we see tax revenues from corporations decreasing, contradicting the notion that lower taxes will spur increased economic activity and revenue for the state. Let’s be honest, the tax breaks to corporations and millionaires have reduced revenue and failed to create growth.
This revenue loss results in an inability to fund programs that help middle class and working families -- as our governor said we should be doing. We have chronically underfunded K-12 education, failed to invest in early education expansion, divested in higher education, decreased women’s access to healthcare, all but abandoned affordable housing, decreased food assistance to struggling families, and so many more programs that are consistent with the governor’s mandate in Iowa.
After five years of failed fiscal policies that have caused New Jersey to lag behind the nation in recovery, we have to rebalance our budget. For example, leading economists recommend that restoring the EITC to 25 percent of federal level, or even better raising it to 30 percent as our neighboring states do, would help lift people out of poverty. Raising the revenues necessary to do this would not be a step back, but a step forward. Restoring the millionaires tax would allow the state to restore this tax credit and thus be a step toward meaningful balance in our budget.
We can no longer afford to buy into the narrative that the governor has met his obligations to the state by providing another constitutionally required balanced budget with no new taxes. Our state is in a fiscal crisis because this budget, like those of the past five years, is fundamentally out of balance with the needs of New Jersey. The budget proposed for FY16 is another step away from the goals the governor himself says we must achieve and as such must not be accepted by the Legislature. Rather, we need a budget proposal that restores balance and puts us on the path to recovery.