The pain of New Jersey’s unsustainable finances is being relieved temporarily by the robust U.S. economy. That has helped residents and businesses, and boosted state government revenues.
But the fiscal sickness has worsened and when the inevitable next national downturn comes, the combination of extremely high taxes, nation-leading debt and government employee pension/health promises will bring excruciating pain.
The $48 billion in state debt and $152 billion in politicians’ promises that future officials and residents pay for lavish health and pension benefits already put every New Jersey family of four on the hook for $72,464. That’s the biggest such burden in the nation, a ridiculous amount compared to the less than $3,000 liability for each resident of New York and Pennsylvania.
Yet Gov. Phil Murphy insists on raising taxes, letting the debt grow and making more promises to the government unions that provide money and workers for political campaigns. His first two budgets, even after compromises forced by the Legislature, increased New Jersey government spending by $2.6 billion.
Legislators see the state’s dire fiscal condition and are moving slowly to address it.
Last week they overwhelmingly voted to establish a legislative New Jersey Economic and Fiscal Policy Review Commission.
If the name sounds familiar, that’s because creating such a permanent commission was a recommendation by the N.J. Economic & Fiscal Policy Workgroup — a 2018 panel of former Cabinet officers, professors, economists, accountants and others who examined the soundness of New Jersey government finances. Their Path to Progress report recommended how to make government sustainable and even one day affordable by fixing its spending problem.
The bipartisan 12-member permanent commission would ensure work continues on reducing spending, paying down debt and meeting pension obligations without decimating core state responsibilities such as education, infrastructure and services to seniors and low-income residents. The Senate president and the Assembly speaker would each select two members, while the minority leaders of those bodies would pick one each. Six outside policy experts would likewise be selected by the legislative and minority leaders.
Legislators overwhelmingly approved creating the permanent fiscal commission, voting for it 30-2 in the Senate and 60-7 in the Assembly.
But on Tuesday, Gov. Murphy declined to sign the bill authorizing the commission. That means the Legislature must start over in the new current session.
Whether the governor supports fixing New Jersey’s finances or not, the state can no longer just keep increasing spending, taxing residents and businesses even more and borrowing at high interest rates. That keeps New Jersey’s economy performing worse than the national economy, shrinking the pie that residents share and driving them out of the state.
The Legislature should approve the permanent fiscal commission again and be prepared to override Murphy if he vetoes the bill.
And if the governor insists on digging New Jersey into a deeper hole, legislators should let residents vote on the needed money-saving reforms to government worker pensions and health benefits in November.