By State Street Wire Staff | December 13th, 2012 - 12:00pm
| More

TRENTON – A State Budget Crisis Task Force issued a report today that painted a grim picture of a state that can’t continue  to support growing expenditures on health, educational and social programs while maintaining an “eroding and volatile tax structure.”

The task force, created by former New York Lieutenant Governor Richard Ravitch and former Federal Reserve Board Chair Paul Volcker, examined several states, and concluded that in New Jersey’s case, two areas, education and Medicaid, dominate state spending, and along with underfunded pensions will conspire to help drag down the economy unless addressed.

The report said that education aid to school districts in fiscal year 2013 totals $11.7 billion — 37 percent of all state spending. “In just the last two years, spending on school aid, including retirement benefits for teachers, has increased by $1.7 billion or 16 percent.”

For pensions, the combined unfunded liability for these retirement obligations is $84.8 billion, the report found.

The state budgeted $1.02 billion for pension contributions in FY 2013.

“The annual contribution will have to increase by as much as $4.5 billion between 2013 and 2018, to an estimated $5.5 billion, depending upon investment returns and other factors. This estimated increase equals nearly 40 percent of the state’s annual spending on education aid,” the report said.

On the other side, 64 percent of all revenue comes from sales and income taxes.

“When the economy suffers from a recession, income tax revenue falls sharply. The sales tax has a very narrow and eroding base: food, clothing, and many services go untaxed, and tax revenue from expanding internet sales is difficult to capture, damping revenue growth.”

Gordon MacInnes of N.J. Policy Perspective reacted to the report:

“This report provides an essential service by documenting in striking detail the road New Jersey traveled to put itself in such a fiscal mess. It also strikes the right tone of urgency that is too often ignored when budget and tax issues are addressed by governors and legislators.

“The takeaway here – that New Jersey is in danger of not being able to sustain essential services like public safety, education and transportation – is distressing. It is plain that New Jersey cannot continue to conduct business as usual without devastating effects.

“Moving forward, this report makes clear that New Jersey needs to not only heed the lessons of past mistakes, but also needs to reorient the focus of policymakers from tax cuts and smaller government to a new path, one that focuses on investment and opportunity. From partnering with federal and local governments to restore infrastructure, to improving access to education, to renewing New Jersey’s status as a hotbed of innovation, we have to invest real dollars in programs and projects that will bear future fruits for New Jersey’s economy.”

The report warned that federal deficit reductions threaten New Jersey’s economy and budget. The 2013 state budget includes $12 billion in federal funds.

“If the federal government cuts aid to state governments — as seems likely, eventually, if it makes any serious effort to reduce the deficit — the state could have a large and immediate loss of resources. A 10 percent reduction, for example, would cost the state $1.2 billion,” the report,.said.

In addition, the report raised warning signs related to the state’s high property taxes and its growing needs with aging infrastructure.

The Back Room

Asbury Park Press corrects Williams error in Christie report

The Asbury Park Press last night mopped up after NBC anchor Brian Williams overreached when he said the feds had cleared Gov. Chris Christie of wrongdoing in a federal investigation, according to the U.S. Attorney's Office.

Read More >

Wake-Up Call

Morning Digest: September 19th

NBC News: Federal charges ruled out for Christie in Bridgegate scandal NBC News tonight is reporting that federal investigators say after nine months of investigating Bridgegate there is 'no evidence" that Gov. Chris Christie had advance knowledge about any politically motivated scheme around the bridge lane closures at the...

Op-Ed

Legislation needed for publicly financed gubernatorial elections

By JEFF BRINDLE It is critical that the Legislature soon enact a pending bill that would ensure the state’s Gubernatorial Public Financing Program is available in the event of a special election for governor.  Not only is there no current legal... Read More >

Contributors

(9-17-14) Viral Video Prompts Questionable NJ Municipal Ordinance -  Socrates said, “While I might disagree with what you say, I will defend to the death your right to say... more »
The Correct Foreign Policy – Neither Fortress America Nor Pax Americana      Last week marked the 75th anniversary of the beginning of World War 2.  It started with the... more »
(Asbury Park, NJ) -- There's a word for someone who says one thing and does another: hypocrite.  There's no shortage of 'em in Trenton -- from ... more »
 The following letter was sent today to Republican state legislators, county chairs, state committee members, and New Hampshire... more »

Quote of the Day

quote of the day

“The fact is that they’ve been digging around for eight months now and have found absolutely nothing. Wrap up your work. Do your job." - Gov. Chris Christie

- PolitickerNJ

Poll

Should the Joint Legisaltive Committee investigating Bridgegate 'wrap it up?':

Blogroll

Visit the PolitickerNJ.com/resources page for links to the best collection of information on New Jersey state government.

 

  • Polls
  • The best blogs
  • Columnists
  • State election results
  • Assembly election results
  • Local party websites
  • And more.

PolitickerNJ.com/resources