Codey Can Solve The Budget Crisis If He has The Guts

We have noticed a few references about a potential windfall to the state’s treasury from the conversion of Horizon Blue Cross Blue Shield of New Jersey, a not-for-profit company, into a public corporation. Should Horizon make this conversion, the new, “for profit” entity would be required to repay New Jersey an estimated $1 billion to $ 3 billion for decades of tax exemptions.

The infusion of cash, under these circumstances, would not come in a lump sum, but would be paid to the state of New Jersey over a period of years, in keeping with federal securities law. See references here and here.

Should New Jersey be the fortunate recipient of this windfall, we suggest the folks in Trenton not include the anticipated payments by Horizon as part of the State’s operating budget, found money to be used for additional spending or pet projects. In our opinion the money should be used for retirement of State debt.

Using nonrecurring revenue to fund ongoing state expenses merely kicks the budget problems down the road and doesn’t solve the underlying issue – spending that is greater than normal revenue streams received by the state. We realize Acting Governor Codey is hoping he may be able to save property tax rebates with the windfall but this is not a prudent financial decision.

Casting about for ways to generate new revenue for the state is not the answer. This is just a typical Democrat knee-jerk reaction – raise taxes. Leasing the state’s turnpike to a foreign firm is not an answer. But the fact a company believes it can give Trenton a big bag full of money, run and maintain the turnpike and make a profit, speaks volumes. New Jersey is just not run efficiently, it hemorrhages money due to mismanagement and it wastes money on programs that are not effective. Fraud and corruption in the state only add insult to injury.

Codey is a lame duck, but he has the power of the veto and he should use it to the advantage of all taxpayers. He should submit a balanced budget to the legislature that does not include a single tax increase. He should vow to veto any bills containing a tax increase and we think he’d have enough support within the legislature to sustain his resolve. If he doesn’t have the guts, then we will just need to wait for the new Republican Governor in 2006.