Governor Jon Corzine’s election year budget continues the growth of big government while postponing a massive $2.5 billion deficit until after the election.
“Next year we begin the budget season $2.5 billion in the hole, give or take a few dollars,” said Corzine in his state budget message, admitting that this year’s proposed budget attempts to push the problem over to next year.
Corzine will propose two “solutions” to this year’s planned financial disaster: massive state tax increases or the “monetization” of state assets — a scheme akin to taking a mortgage on your home to go on vacation. The proposed spending plan continues the runaway spending and expansion that has plagued the state for more than a decade, undermining the states economy.
Governor Corzine’s budget calls for another reckless expansion of state government that takes a head-in-the-sand approach to the state’s serious fiscal problems. The governor’s budget would increase spending 7.2 percent to $33.3 billion. That’s a 15.4 percent increase over just two years ago. State spending has vastly outstripped the growth of the state’s population over the past decade. If the state had limited spending to a rate of inflation plus population growth starting in 1997, 2008 spending would be about $24 billion, a stunning $9 billion less than the Corzine budget being misleading described as “bare-bones.” Over just the past two years Corzine’s budget increases spending by over $2 billion more than inflation plus population. Where did all this money go?
Corzine’s assertion that employee salaries and benefits are “fixed costs” outside of budgetary control ignores that over the past decade state full time employees have jumped 14.7 percent to over 80,000, while the state population grew at less than half that rate. With government growing so much more rapidly than the population there is ample room for responsible layoffs.
While the governor’s budget presents a chart indicating skyrocketing employee health and pension costs, the minimal so-called concessions he’s received from state employee unions€”a 13 percent raise over four years, a tiny employee contribution of 1.5 percent for health care premiums, and an increase in the retirement age for teachers from 55 to 60 for new hires only€”may actually worsen the situation. These actions to maintain unsustainable benefits will make genuine reforms, such as transitioning to defined-contribution plans more difficult and will continue to make irresponsible promises to state workers that taxpayers will be unable to keep.
The governor’s claim that new revenue sources are needed to pay for school construction is also off the mark. This program is a recent innovation with little justification for state intrusion into an area of traditional local jurisdiction.
Moreover the vast majority of so-called property tax relief is actually aid for education funding €” in practice the gross income tax is a revenue source not for property tax relief but for state consolidation of education. Department of Education Property Tax Relief Fund grants-in-aid swell to over $10 billion under the governor’s budget, an 11.7 percent jump in just one year.
It is profoundly misleading to characterize the budget as a “property tax relief budget” and claim that 50 cents of every dollar are dedicated to tax relief when New Jersey taxpayers will not see lower mill levies. Even the rebate checks they do receive are not a tax cut but a tax shift, because they must be paid for with gross income tax revenues.
An overwhelming body of research shows that, above a basic threshold amount that New Jersey long-ago passed, there is no relationship between higher education spending and better educational outcomes. If the governor were truly concerned with improving educational outcomes he would support tax credits to give parents control over their education dollars and inject market discipline into education.
A genuinely pro-taxpayer budget would cut state payrolls, bring state health and pension obligations in line with the private sector and permanently lower taxes, instead of just shifting them around. This budget fails on all counts.