The Star-Ledger today offers a pretty solid overview of the fiscal calamity facing the state, which raises unstated questions about the current budget discussions that neither political party seems willing to answer.
Gov. Jon Corzine, as I’ve written many times, has put together a painful budget that makes some effort to right the state’s fiscal ship. The problem is that he is asking taxpayers to help foot the bill though an increase in the sales tax rate and an expansion in what it can be applied to.
This has led to a revolt by his own party and a disingenuous assault from Republicans who want to paint it as just another tax-and-spend budget.
State Sen. Tom Kean Jr., who is running for U.S. Senate, has hammered on the new spending in the $30.9 billion budget — it is about 10 percent larger than last year — without acknowledging what the new spending is or how he would cut spending without further injuring the state’s fiscal health.
From my perspective, there are two basic things we need to keep in mind:
1. The state has been spending more money than it has generated in recurring revenues for years, so that the governor was facing an estimated $4.5 billion shortfall before he even started (estimates already place next year’s gap at $5.5 billion). The budget proposed by the governor, by no means perfect, attempted to close this gap by splitting the difference — about half will come from new revenues, including $1.1 billion from the sales tax — and half from spending cuts — including money for state colleges. None of this is popular, but almost no one involved seems willing to offer a reasonable alternative that does not push the problem off for another year.
2. The state has been underfunding its pension plan for going on 15 years — it is about $18 billion in the hole right now. The governor is proposing $1.5 billion in pension payments this year, up $1.1 billion from last year and more than the total contributed by the state for the last nine years, according to the Ledger. And yet, his proposal is still $300 million to $400 million less than would be needed just to cover this year’s portion — without taking into account the past amount owed. A major crisis is looming, one that will be far more painful when it hits than the incremental sacrifices being sought by the governor now.
The upshot in both cases is the same: We can pay some now or we can pay a whole lot more later.
The South Brunswick Post, The Cranbury Press
Hank Kalet 
1. The state has been spending more money than it has generated in recurring revenues for yearsSo, that\’s easy. Hard times are here. Cut the spending to the level of theft.Yes, money extracted involuntarily from people is theft. Let\’s get the gubamint out of the theft business. A start would be to cut ALL the services that are not Constitutionally required. Even those, that are required, but should really be dumped or minimized, could be unenforced by the Guv. They are enough lawyers in Trenton to justify whatever the Guv really really wants to do!Why is the gubamint the only thing in the world that can force us to \”buy\” its services and \”pay\” outrageously for it? If I can\’t avoid it, then it\’s a tax. Let\’s have truth in gubamint labels. If a service is SO important that people want it, then let thems that want it pay for it and leave the rest of us out!Gubamint is ineffective and inefficient. Ineffective, in that, it ALWAYS hurts the people it is intended to help and has unintended consequences. Inefficient, in that, it can not do what a market can do because it always has overhead and is never permitted to fail going out of business. No one can name ONE effective and / or efficient gubamint program.2. The state has been underfunding its pension plan Well, IBM, Delta, and a host of other companies have shown the Guv how to lead us out of this problem. Get the State out of the pension business. Now don\’t screw the people. They have a right to depend upon what they were promised. So, lets unwind it. New employees get a defined CONTRIBUTION plan like a 401k. Old employees are \”frozen\” with a Net Present Value of what there pension is worth. If we don\’t have the money in the pension plan to unwind it. Give them a partial payment and an IOU for the difference. The IOUs are basically bonds for the future value. We should be fair but not fools.Some reforms are needed: ** one job per person period; ** no relatives under your supervision, sorry your family have to get real jobs; ** vacation, use it or lose it;** sick pay, you have to be kidding, use it or lose it;** we eliminated pensions; so the era of adding sick and ot pay to your pension base is over.Yup, Guv C wouldn\’t tolerate this Barbara Streisand when he was on Wall Street, so why is Trenton different? Yup, no cajonies! Hey Guv C, hire me for a dollar a year, and in one year, we could have it cleaned up. I\’ve worked for Wall Street bosses who would only need six months. My mother in her prime could have done it in three!