New Jersey is facing a four-year budget crisis, with the cost of pensions, retiree health care benefits and debt service projected to rise at least $4.6 billion over Gov. Chris Christie’s last four budgets, a NJ Spotlight analysis shows. The four-year jump would be equal to 14 percent of the current $32.6 billion budget, and would represent a significant challenge for any governor or Legislature.
But New Jersey’s fiscal crisis is deepened by four years of overborrowing that has bankrupted the Transportation Trust Fund a year early, a reliance on fiscal gimmicks and a cannibalization of the state surplus that led to Standard & Poor’s credit downgrade, and a governor so eager to cut taxes that he jumped at the idea of eliminating the $325 million realty transfer tax at the same time that he is proclaiming that New Jersey is like Detroit headed down the road to bankruptcy.
Furthermore, while New Jersey could conceivably cover its soaring pension, retiree health benefit and debt-service costs over the next four budgets, that depends on Wall Street’s bull market continuing at least another three years to keep tax revenue flowing in from thewealthy 1 percent who pay 40 percent of the state’s income tax. It was a “recession of the rich,” not the increase in middle-class unemployment, that sent state revenues plummeting from 2008 to 2010.
Despite the deepening state fiscal crisis, the Fiscal Year 2015 budget that Christie proposed two months ago is likely to be enacted with few changes. For the third year in a row, Christie Treasurer Andrew Sidamon-Eristoff’s revenue projections are higher than those of the nonpartisan Office of Legislative Services’ budget director, David Rosen.