Moody's Investors Service, the important credit-setting agency, recently issued a scathing 10-page report calling New Jersey's fiscal situation untenable and in dire need of a radical course correction. Moody’s Vice President Baye Larsen wrote, "Any plan to stabilize New Jersey's finances is not feasible without implementing significant fiscal policy changes,” and asserted that, "a multi-pronged approach is more likely to close the sizable $3.6 billion gap by fiscal 2023."
This shocking forecast follows New Jersey’s Office of Legislative Services’ predictions of revenue shortfall between $274 million and $527 million for the current fiscal year ending in June. The projected budget gap through June 2018 is between $336 million and $687 million.
This is alarming news but the Better Choices for New Jersey Coalition has been sounding the alarm for some time. To change the fate laid out by Moody’s, our coalition of labor, healthcare, environment, and progressive advocates has proposed a Revenue Road Map, showing how New Jersey can course correct and put our state on sounder financial footing. Solving our state’s budget woes is possible but it requires state legislators to demonstrate guts and a strong sense of fairness.
The Better Choices Coalition’s Revenue Road Map details how the state can recoup close to $3 billion in revenue by focusing on closing loopholes and reinstating commonsense tax policies. The Road Map, which we’ve shared with state legislators, can be implemented to avoid austerity measures that will otherwise befall New Jersey’s 9 million residents.
Make no mistake, legislators and experts aren’t surprised that years of escalated tax-incentive programs to the tune of over $7 billion, combined with the elimination of tax obligations on everything from wealthy estates to yachts, have left New Jersey unable to meet its obligations to its residents, old and young alike.
Can’t fund projects to build new schools or remove lead from drinking water? You can thank bloated tax giveaways to billion dollar corporations for that. No funds to address our crumbling infrastructure that makes makes commuting unreliable and exasperating? Thank the prioritization of eliminating taxes on the wealthy and dead instead of investing in us working stiffs.
Legislators must stop giving preference to the state’s wealthiest over the rest of us. Lawmakers must reverse the wrongheaded tax giveaways that were part of the TTF funding deal, namely undoing last year’s one-third percent sales-tax cut and restoring the estate tax at a $1 million threshold. Restoring these two revenue sources alone would bring nearly $1 billion to state coffers.
At the same time, we must implement more equitable income-tax structures, so that the burden and benefits of living in the Garden State are more equitably shared. Effective immediately, we should move to close corporate business-tax loopholes and rein in tax giveaways that have siphoned billions from state coffers with little to show in return. Finally, we must reverse Gov. Chris Christie's 2011 business-tax cuts and reassess the sales-tax structure so that it is more reflective of a service economy. Together, the above measures could recoup $3 billion in revenue and savings without harming the needy or perpetuate the underfunding of our schools, roads, or safety net.
The time for action is now. The only question is whether New Jersey legislators will focus on fixing this problem or ignore it at our further peril?