Report: New Jersey Is A Financial Basket Case

“The fiscal health of the state of New Jersey has plunged perilously close to ruin”, begins a “politically explosive” report from Corzine's “budget and re-engineering government” policy group. The Press of Atlantic City obtained a copy of the report Wednesday.

The report portrays a grim picture of state finances, estimating the accumulation of $30 billion in debt and another $30 billion in unfunded liabilities to retirement and health care programs. The group warns that without changes the problem will get worse as the state continues to spend more money than it takes in.“

[T]he state has gone from a financial powerhouse to a financial basket case,” the report states. “Make no mistake. Failure to implement fundamental change will have grave consequences, including a further downgrading of the state's debt rating and therefore higher borrowing costs, skyrocketing property taxes due to a reduction in state aid and rebates, and reduced state services in order to pay for mandatory debt service, pensions, health care costs and more.”

The “budget and re-engineering government” report includes these recommendations to Governor Corzine:

• An increase in the gas tax to help replenish a bankrupt state Transportation Trust Fund
  
  A “temporary tax-rate surcharge” to plug a $5 billion hole in the 2006-07 budget. (See Assemblyman Louis Manzo (D-Hudson) income tax surcharge plan here.)
  
  Add a sales tax on clothing
  
  Tax tanning and massage parlors, limousine services and cable television
  
  Reduce state operating costs by requiring all departments to cut current budgets through hiring freezes
  
  A mandated vacation week without pay for state workers
  
  A "symbolic “across-the-board symbolic salary cuts for employees not in a collective bargaining unit (The majority of state employees are represented by unions and covered by collective bargaining)
  
  Gradually eliminating the state's pension program by offering defined contribution plans, such as 401(k) accounts, for new hires
  
  Immediately move members of the legislative and executive branch not covered under collective bargaining to a defined contribution plan

The Corzine agenda was clear from the beginning of his campaign for governor – raise taxes. Corzine ran on an “affordability” platform which amounts to taking money from taxpayers to give to his tax receiving supporters.

New Jersey is a “financial basket case” because government has spent more than its citizens can afford. Look at those clamoring for taxes increases – politicians that have purchased votes with your hard earned money and those on the winning side of the tax and spend ledger.

“Symbolic” state spending cuts may fool some into believing Corzine’s budget plans call for a shared sacrifice, but these token cuts are all mere window dressing. Look no further than Corzine’s pledge to increase state spending by one-half billion dollars in just one of his steps along the path to “universal healthcare.”

The key to revitalizing New Jersey’s financial health is to:

• Roll back the McGreevey/Codey state spending increases
  
  Reduce benefits to all government workers in-line with private sector employees and not just new hires (New government hires should be few and only as replacements for essential positions)
  
  Revise the property tax relief funding formula to bring about greater parity in aid to municipalities and per student spending in the state’s public schools
  
  Place a moratorium on state funded school construction
  
  Cut taxes to stimulate the state’s economy and high-paying job creation.

It’s not possible to tax people or the state into prosperity. Many have tired, all have failed. And if you need an example, just remember New Jersey.

Update: A Blog For All - You Were Warned: “Indeed, throughout New Jersey, retail is doing quite well. But don't expect it to last if the taxes go up. That rosy retail picture can quickly change if the imposition of sales tax [on clothers]drives off consumers to other places.” “Make no doubt about it. No matter how much any of those taxes are increased, it will not solve the budget woes.”

Dynamobuzz - That Didn’t Take Long: “Jon Corzine inaugurated as New Jersey governor: January 17, 2006. Plans to increase taxes on the already over-taxed New Jersey residents: January 26, 2006. I think Jim Florio took at least a month of posturing before initiating his tax increases. Corzine has done the same in less than two weeks”