Austere state budget / Marred by borrowing
Published: Wednesday, June 25, 2008
Good news. The state is using a $650 million windfall in tax collections this year to pay off some of its staggering debt.But hold your applause. On Monday, just as state lawmakers voted to pay down $650 million in debt, they agreed to dig the state deeper into the hole by racking up an additional $3.9 billion in borrowing without voter approval.Wait. There's more. The Legislature also agreed Monday to ask voters to approve a constitutional amendment requiring voter approval for all debt incurred by the state. In other words, lawmakers passed a measure asking voters to stop them from doing what they just did. The borrowing bill marred what would otherwise have been the most fiscally responsible - and timely - budgets in recent memory. Gone is the traditional "Christmas tree" spending - legislative pet projects stuffed into the budget at the last moment. Cuts in the budget are real, and those cuts will be painful to hospitals, to municipalities, to colleges and universities and to homeowners and renters, many of whom will see reduced or eliminated rebates this year.
The budget contains no major tax increases or fiscal gimmickry. Certainly, continuing a utility tax set to expire next year could be construed as a small tax increase. And yes, moving money out of the Shore Protection Fund to keep parks open could be seen as a one-shot revenue ploy. But these were relatively minor maneuvers, especially compared to past years. But the unprecedented restraint on budgetary spending - the spending plan is $600 million less than the previous year's budget - was overshadowed by the hypocrisy displayed on the state's debt.To be fair, the state is in a real bind on $2.5 billion of that $3.9 billion debt. The courts are requiring the state to build new schools in Abbott districts. Gov. Jon S. Corzine promised the Supreme Court last winter that he would ask the Legislature to approve $2.5 billion in bonds for Abbott construction. He maintained then that there is no inconsistency between his insistence on voter approval for all debt not backed by a specific revenue stream and his support of bonding $2.5 billion without voter approval. His reasoning: The Abbott school construction is court-mandated.His reasoning, we believe, is flawed. The Supreme Court never said the state couldn't put this borrowing before voters. That would have sent a message to voters that Corzine and the Legislature were serious about giving voters back some control on state borrowing.But even if one buys the argument that this $2.5 billion bond needed to be done without voter approval, the Legislature did what has long been business as usual in Trenton - it ballooned the debt to $3.9 billion by adding another $400,000 for Abbott schools and another $1 billion sweetener for other schools around the state.And state politicians wonder why New Jersey voters are cynical?
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