New Jersey’s finances are a long way from being set on solid ground — and it is unclear whether the state Legislature has the stomach to make the repairs necessary.
Of course, nonsense like this from a former governor who did so much to create the mess from which we are attempting to crawl really do not help.
South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog
E-mail me by clicking here.
Interesting post from Wally Edge on Politics NJ today that reminds us that Democrats are not the only ones who know how to use their office to take care of their own:
The Record‘s story this morning on the federal probe of legislators who received some personal benefit from state budget items suggests that only Democrats are being targeted. According to The Record, there are some similarities between State Senator Joseph Coniglio and Assemblyman Brian Stack, both Democrats who have received subpoenas, and two Republican legislators who have not: State Senator Robert Singer and Assemblyman David Wolfe.
Like Coniglio, Singer works for a hospital — he is with the St. Barnabas Health Care System, which runs two facilities in Ocean County — that has received “Christmas Tree” grants. And Wolfe, like Stack, has a wife who works for a non-profit organization that has received funding from the state; Carol Wolfe’s organization, Homes Now, received $500,000 from the state in 1999 to build a women’s shelter in their hometown, Brick. Carol Wolfe founded the group in 1997, but did not receive a salary until 2001.
While the statute of limitations for most non-capital federal offenses is five years but federal prosecutors can look back further in some cases. In the Jack Abramoff corruption case, they went as far back as 1997 to detail offenses he ultimately pled guilty to.
This brings into focus something that the GOP is unwilling to address, i.e., the party’s own complicity in the “Christmas Tree” program. While sites like Red Generation and Enlighten NJ like to use the flow of subpoenas around the state as an indictment of Democrats, the reality is that Republicans have been willing collaborators.
The difference right now between the Democrats and Republicans has far more to do with power than with anything endemic within the New Jersey Democratic soul.
“I don’t think the Christmas tree was planted in 2004,” said Assemblywoman Valerie Vainieri Huttle, D-Englewood.
Most of the subpoenas served on lawmakers and their aides in recent months seek records starting in 2004. That could be for a number of reasons, including the fact that the probe began with a senator who became chairman of the Budget Committee that year. But it also happens to be the year Democrats took full control of the Legislature. That has some wondering whether Republicans would be getting more of the subpoenas if investigators looked back a bit further.
In the context of the U.S. Attorney’s probe and the apparent politicization of the federal Department of Justice, it is a fair question to ask.
That said, the most important thing that can come out of this mess is reformation of the process, an opening up of the budget to ensure that these last-second grants are given the kind of scrutiny they deserve. At least some of the money in question was for legitimate programming, but all of it now is tainted by the actions of a handful of elected officials.
South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog
E-mail me by clicking here.
This week’s cover story in Business Week offers a primer on the benefits and extensive pitfalls of leasing out public infrastructure — a primer that should give Gov. Jon Corzine and the state Legislature more than pause as they wade into the deep end of the pool on the issue.
In the past year, banks and private investment firms have fallen in love with public infrastructure. They’re smitten by the rich cash flows that roads, bridges, airports, parking garages, and shipping ports generate—and the monopolistic advantages that keep those cash flows as steady as a beating heart. Firms are so enamored, in fact, that they’re beginning to consider infrastructure a brand new asset class in itself.
With state and local leaders scrambling for cash to solve short-term fiscal problems, the conditions are ripe for an unprecedented burst of buying and selling. All told, some $100 billion worth of public property could change hands in the next two years, up from less than $7 billion over the past two years; a lease for the Pennsylvania Turnpike could go for more than $30 billion all by itself. “There’s a lot of value trapped in these assets,” says Mark Florian, head of North American infrastructure banking at Goldman, Sachs & Co (GS ).
There are some advantages to private control of roads, utilities, lotteries, parking garages, water systems, airports, and other properties. To pay for upkeep, private firms can raise rates at the tollbooth without fear of being penalized in the voting booth. Privateers are also freer to experiment with ideas like peak pricing, a market-based approach to relieving traffic jams. And governments are making use of the cash they’re pulling in—balancing budgets, retiring debt, investing in social programs, and on and on.
But are investors getting an even better deal? It’s a question with major policy implications as governments relinquish control of major public assets for years to come. The aggressive toll hikes embedded in deals all but guarantee pain for lower-income citizens—and enormous profits for the buyers. For example, the investors in the $3.8 billion deal for the Indiana Toll Road, struck in 2006, could break even in year 15 of the 75-year lease, on the way to reaping as much as $21 billion in profits, estimates Merrill Lynch & Co. (MER ) What’s more, some public interest groups complain that the revenue from the higher tolls inflicted on all citizens will benefit only a handful of private investors, not the commonweal (see BusinessWeek.com, 4/27/07, “A Golden Gate for Investors”).
There’s also reason to worry about the quality of service on deals that can span 100 years. The newly private toll roads are being managed well now, but owners could sell them to other parties that might not operate them as capably in the future. Already, the experience outside of toll roads has been mixed: The Atlanta city water system, for example, was so poorly managed by private owners that the government reclaimed it.
The issue is far from settled, though it seems foolish of supporters (like Philadelphia mayoral candidate Chaka Fattah this morning on WHYY radio) to crow about the benefits without acknowledging the potential problems.
The thing that strikes me about the discussion is that privatization is being pitched as a creative solution to public financing problem and that so-called liberals like Fattah and Gov. Corzine seem willing to play the game. The problems they are hoping to address — broken budgets and a lack of money for social programs — are very real, of course, but the solution is shortsighted and does not address the root causes of the problem.
In fact, privatizing only exacerbates it because the chief problem is and has been privatization and the demonization of government. We have been engaged in a decades-long downward spiral in which the word taxes and the notion of government as protector of the citizenry has been denigrated. This has led to a starvation of public resources and a group of weak-kneed elected officials at the state level unwilling to raise taxes or talk straight about service levels and who rely on borrowing to pay for what is offered.
Add to this the inability or unwillingness of Congress to fund what is needed (either directly, or through grants to states and local governments) and you have a mess.
“Asset monetarization,” to use Corzine’s term, will remain an attractive approach for governors and legislators around the country until we repair the damage done over the last three decades.
South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog
E-mail me by clicking here.
More bad news about the state’s fiscal stability from today’s Star-Ledger:
Dwindling assets have pushed the fund that bankrolls unemployment benefits for jobless New Jerseyans to the brink of fiscal collapse, but have stayed just shy of the line that would trigger a $400 million-a-year business tax hike, state Labor Commissioner David Socolow told lawmakers yesterday.
“We are very close to the threshold that would have triggered a tax increase,” Socolow told members of Senate Budget and Appropriations Committee. “We are playing it very close to the edge here.”
Over the past five years, the Unemployment Insurance Trust Fund has plunged from $3.1 billion to its current value of $260 million, largely as a result of regular raids to prop up state budgets. Between 1993 and 2006, lawmakers tapped the unemployment fund for more than $4.6 billion.
So, add the state’s unemployment fund to the long list of bank accounts raided by governors and legislators of both parties over the years to balance the budget (pension, temporary disability) without asking for any sacrifices from anyone — whether they be taxpayers, state workers or the many constituencies who receive money from the state.
The fund, according to Socolow, will be OK so long as the state does not fall into recession. It is due to get a bump in contributions shortly, but that will only get the fund to the minimum level needed to ensure its solvency.
“Any kind of economic downturn puts us into the situation of either having a badly timed increase in business taxes or emptying the fund to the point where we would have to borrow from the federal government and pay a surcharge,” he said.
Not an impending catastrophe, just more of the same in a state that seems to prefer living on credit cards to crafting sane fiscal policy.
South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog
E-mail me by clicking here
Let’s do some math.
First, 78 percent of school budgets on the ballot yesterday — including all four in the towns my papers cover — were approved. It was the highest approval figure since 2001.
Then add the results of the Quinnipiac Poll released yesterday:
Sparked by increased approval for his property tax reduction plan, the poll results released today are Corzine’s highest ever, and show “little apparent effect from his auto accident,” according to Quinnipiac.
Here are the numbers:
51 – 36 percent approval among more than 800 registered voters surveyed April 10 – 12, before news of his accident was widely known;
52 – 35 percent approval among almost 500 voters surveyed April 13 – 16, or after the accident;
51 – 36 percent overall approval for the entire survey.Voters approve 71 – 21 percent of the property tax cut Corzine signed recently. The Governor still gets a negative 41 – 44 percent approval for his handling of property taxes, but this is his highest score on this issue, up from 33 – 57 percent February 28.
The numbers, when added together, would seem to indicate that a tax revolt similar to the 1991 purge that gave the Republicans a majority is not in the offing.
But then, the Legislature remains in the red in the poll. But there is another number that probably needs to be added into the mix: the Democrat’s 4-1 financing advantage.
(Rider University Professor David) Rebovich said safe districting and Democratic Party cash advantages will likely prevent any power shift in the coming election.
“Plus, most residents like their individual lawmakers while disapproving of the institution,” Rebovich said.
So much for an angry electorate.
South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog
E-mail me by clicking here
Hank Kalet 