New Jersey Taxpayer Education Tour – Part 1

Governor Jon Corzine has been conducting town hall meetings across the state to educate New Jersey residents about the state’s financial crisis and his $38 billion asset monetization plan. He uses graphs and charts in his Power Point presentation to explain his side of the story and to convince people that the creation of a Public Benefit Corporation and hefty toll road increases are the answers to New Jersey’s financial problems.

It’s now time for someone to begin an education tour of New Jersey’s 21 counties with the real story. (Republican leaders in Trenton should consider taking on this project.). As concerned taxpayers, we’ll help, starting with our first in a series of facts and charts.

Source for data: New Jersey Department of the Treasury – Office of Management and Budget

New Jersey’s state budget has more than doubled over the past ten years, increasing by $16.9 billion. However, state operations consumes a smaller portion of the budget with each passing year - 30.8 percent in 1998, 21.3 percent in 2002 and only 19.7 percent by 2008.

Investment in capital construction is slightly higher in 2008 at 3.8 percent than 1998’s 3.1 percent, although down from the 5.1 percent share of the budget for 2002.

Contrary to popular belief, the state's debt service has been taking a declining share of the budget with 3 percent in 1998, 2.2 percent in 2002 and 1.3 percent in 2008.

State aid has been level at about 39 percent during the ten-year period, while grants in aid have grown from 23.3% of the budget in 1998, to 31.9 for 2002 and to 35.9 percent by 2008.

State debt is greater than any taxpayer would like to see, but it’s the expanding share of grants in aid that’s putting the squeeze on New Jersey’s ability to invest in vital infrastructure with current revenue streams.

Grants in aid have grown to consume 12.6 percent more of a pie that’s doubled in size in just 10 years. Conversely, the portion now consumed by state operations is 11.1 percent less than in 1998.

State Operations consists of services provided and programs operated directly by State government. The largest component in this spending category is for salary and benefits of State employees.

Debt Service payments represent the interest and principal on capital projects funded through the sale of general obligation bonds.

Capital Construction represents “pay-as-you-go” allocations for construction and other infrastructure items.

State Aid consists of payments to or on behalf of counties, municipalities, and school districts. This aid transfers the expenditures of local governments to state taxpayers. The largest component in this spending category is School aid. In addition, his category includes the Consolidated Municipal Property Tax Relief program; the Municipal Block Grant program, and other forms of municipal aid. It also includes funding for county colleges, local public assistance and county psychiatric hospital costs.

Grants-in-Aid are appropriations for programs and services provided to residents on behalf of the State by a third party provider or grants made directly to individuals based on assorted program eligibility criteria. The Medicaid program, Homestead Property Tax Rebates, payments for State inmates housed in county jails, public transportation aid, the Tuition Assistance Grant Program and funding for State Colleges and Universities fall into this spending category.

New Jersey State Budget By Category

FY 1998-FY2008