Here is last week’s Dispatches (still playing catch up) on “asset monetization.”
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Tag: governor
Fiscal follies
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.
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Governor injured
This is pretty scary — and not just for Gov. Jon Corzine. Anyone who has driven a major highway in New Jersey knows the danger we are in nearly every second we are on the roads.
The picture above is from The New York Times. Look closely and you can see the governor’s SUV perched on a guardrail, hanging over. Other shots in other papers show that the damage was pretty bad.
I can only go back to my own accident a year and a half ago at the intersection of Deans Rhode Hall Road and Cranbury Road. We collided with a pickup truck at the intersection and banked off it into a telephone pole. Luckily, no one was hurt, but I remember the whole thing unfolding in slow-motion and the airbag deploying. My wife was driving and she said I was sort of chanting “no, no.” It was a horrible experience.
I can only imagine what went thorugh the governor’s mind and the mind of the other passengers and I wish him well in his recovery.
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Make it public
This probably won’t quiet the small squall surrounding the governor, but he is asking “a panel of ethics advisers to review his conduct during recent negotiations over a new contract for state workers and his financial ties to union leader Carla Katz.”
I can understand his reticence about going public with some of the information here, but at the same time he is a public official, the chief executive of the state and his behavior needs to be above board. This is especially true in the wake of the McGreevey scandals and all of the other ethical problems facing the state.
His past relationship with Carla Katz is always going to be an issue. The two of them can make it less so only by allowing us into some areas they might prefer to keep private. That’s not comfortable and may not be fair, but he’s the one who chose to run for governor.
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A big mess
The governor is calling for changes in the accounting used to track the state’s pension funds, but that may not be enough at this point to avert catastrophe. The changes, which would seem pretty simple (I’m not an accountant so maybe I’m wrong) and would bring the state in line with regular practices, should help give us a more complete picture of the problems we face.
And the problems are huge.
Douglas Love, an investment expert who monitors the retirement accounts as a member of the State Investment Council, said at a council meeting last month his independent analysis of the state’s pension debt puts the shortfall even higher — at $56 billion.
The problems date back to a revaluation of the pensions by Gov. Christie Whitman — and were exacerbated by Gov. Jim McGreevey’s own pension gimmicks.
Initially, the numbers held — but then came the “collapse of the stock market,” which “drained $22 billion from the funds.”
Lawmakers compounded the problem by using accounting gimmicks to skip required annual payments into the funds and to cover billions of dollars in additional costs from increased retirement benefits they granted to public employees.
“The fact is we have a huge hole,” Corzine said. “It has been created by failure to deal with this issue, frankly, for the better part of a decade.”
While Republicans are shouting for reforms on this, they were part of the problem in the first place and injecting politics at this time is only guaranteed to ensure that nothing will actually get done.
Essentially, this is a bipartisan problem that requires a bipartisan solution.
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Hank Kalet 