Tag: governor

Borrowing to pay down the debt


This is a lot to take in. The governor is proposing borrowing enough money to cover paying down a large portion of the state’s debt, but also to replenish the state’s Transportation Trust fund and maintain the state’s toll roads for years to come.

Gov. Jon Corzine is billing his toll road proposal as a way to bail out a state awash in debt, a state with a political class that has relied on a host of gimmicks and accounting tricks to spend like drunken sailors while pushing off the consequences for another time.

That time is now. Debt payments are consuming a greater portion of the state’s budget every year. In addition, the state’s pension and healthcare funds are woefully underfunded. Together, these obligations are crowding out other priorities — including real property tax and educational funding reform.

Yes, the Legislature did provide some nominal tax relief this past fall. And yes, it approved on Monday a new school funding formula that calls for a $500 million boost in overall state spending on schools.

The reality, however, is that both of these accomplishments were nothing more than nibbling — a much larger infusion of state cash into local school is needed both to ensure equality of educational opportunity and to reduce the amount spent locally in property taxes. And this does not take into account the cash needed to build the affordable housing units needed both to provide housing and to desegregate this horribly segregated state.

Will the toll-road plan address these issues? Perhaps. The governor certainly seems to think so.

In a speech that may be the most important of his political career, Corzine described his plan as “comprehensive and sober,” adding that is bound to be “controversial.” He ticked off its four elements, some of which Republicans have been demanding for years.

“One: Freeze spending now,” Corzine said. “Two: Limit future spending to revenue growth. Three: Capture the enterprise value of our tollways to pay down debt and make capital investments. Four: Limit borrowing by requiring voter authorization.”

“If there is a better plan, I am open to its consideration,” he said. “Put it on the table.”

According to The New York Times, the governor wants to boost highway tolls over the next 15 years (by 50 percent in 2010, 2014, 2018 and 2022), while borrowing between $30 billion and $38 billion “to help the state pay off half of its debt and pay for transportation improvements.” The plan also calls for the state to “establish two new agencies, one to operate and maintain the roads, and the other to provide some oversight.”

It is an ambitious plan, that’s not in question; there is no way to address years of political timidity without being bold and ambitious.

What is questionable is whether this plan is the right plan to address the state’s woes. That’s a question I can’t answer at the moment.

My initial sense, however, is that this is just another in a long line of gimmicks foisted on taxpayers — though there is a twist: Taxpayers will not be the ones on the hook for the plan; drivers, the majority of whom the governor says come from out of state, will be. That, in the end, is his chief selling point.

At least the governor is being honest. Unlike his predecessors, who revalued the state’s pension plan so that they could avoid making payments into the fund (I’m talking to you, Christie Whitman and Jim McGreevey), Gov. Corzine is being honest about this plan and the pain, about its risky nature and about the pain it will cause for drivers.

I’m skeptical, but will keep an open mind. It’s now up to the governor, in his upcoming statewide dog-and-pony show, to convince voters and state legislators that his plan offers far more good than ill.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick

E-mail me by clicking here.

Email me at grassroots at comcast dot net.

A vote to delay?

As of now, it appears that the governor’s school-funding plan is not going to pass in the state Senate. This is not a bad thing — and not because the plan is flawed. It is because the plan is being rushed, because officials from school districts like South Brunswick, which appear to gain new funding, are concerned what will happen down the line. And because the concerns of urban educators need to be addressed — will this plan result in reduced funding?

Should the plan go down, I am hoping the governor will put it back on the table and the state Legislature slows the process down and answer the questions.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick

E-mail me by clicking here.

Email me at grassroots at comcast dot net.

Sinking ships

I wrote yesterday about the governor’s announcement that he plans to move forward with his monetization plan, even if it means driving smack into the brick wall of public opinion.

“I’m willing to lose my job if that’s necessary to set our fiscal house in order.”

But, as The Asbury Park Press (an editorial page that I often disagree with) points out, the plan really is nothing more than another gimmick,

borrowing today what will have to be paid back tomorrow through taxes or tolls. It’s another quick fix that will bring an influx of cash that will be quickly frittered away, saddling either the commuters of New Jersey or the next generation of taxpayers with an even heavier financial burden.

The governor is right about the state’s finances and, as he has said over and over, the fiscal condition in the state makes it difficult to do the kinds of things that will make the lives of the people living here better. But gimmicks are the wrong way to address the issue.

The Press says the governor should try a different tack:

Corzine may have faith in his ideas to wring billions of dollars out of the state’s toll roads to cut the state’s borrowing debt in half and provide permanent funding for transportation projects. We don’t. Neither do many of the state’s residents, especially the commuters who would unfairly shoulder the burden of Corzine’s plan with the dramatic increase in tolls.

Corzine should instead insist that the Legislature get to work doing what most households have been forced to do in the face of skyrocketing property taxes over the past several years: Cut spending. He should make the state do what New Jersey families have done as a horde of new taxes and fees has driven their cost of living steadily higher: Eliminate waste and cut out “extras.”

This would be a good start, but it will not be enough. The state needs to completely reform its way of doing business — including streamlining government at all levels and reducing the number of towns and school districts.

New Jersey residents, as well, will have to reconsider what they believe is important. To right the fiscal ship while also cutting property taxes, New Jersey residents will have to sacrifice some things. I can’t say what — that will have to be up to those affected. That’s why we need to convene a constitutional convention that brings nonpolitical representatives together to hash these questions out.

The politicians have had their opportunities and failed miserably. It’s time to give someone else a try.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick

E-mail me by clicking here.

Email me at grassroots at comcast dot net.

Election, Part II

There are those — myself included — who see the defeat of the first two ballot questions as a slap against using budget gimmicks and pushing the state farther into debt. We editorialized against the first three questions for a simple reason: The state is without a plan to address its debt problem or its structural deficit and shouldn’t borrow more money until it crafts one.

I stand by that idea. I hope our elected leaders will listen, address the issue and then come back with the stem cell plan when money is not so tight.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick

E-mail me by clicking here.

Email me at grassroots at comcast dot net.