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OUR TOP STORY

Sounding the Right Tone: Balancing the Budget While Paying for Vital Programs

by: John Galandak President, CIANJ

Galandak_SM_2It’s budget season again in New Jersey and Spring Training for Major League Baseball, a time of hope and anticipation if you are the Governor of New Jersey or a New York Mets fan—and Governor Chris Christie is both.

“My favorite baseball team is the New York Mets,” said Governor Christie when he talked with children at the Samsel Upper Elementary School in Parlin, New Jersey, last year. Most of the kids were Yankees fans.

Fans of the budget process in Trenton are equally hard to find, as competing state lawmakers have to develop a spending plan for the next fiscal year, which begins on July 1, 2014. This process began when Governor Christie delivered his budget address on Feb. 25, 2014, in which he outlined his fiscal plans for the state.

The budget proposal includes spending of $34.4 billion and the projected revenue to pay for this spending, an increase of 3.5 percent that also allows for a surplus of $313 million. It is, as usual, a blueprint for how to bring the governor’s agenda to life.

The underlying goal of this budget is to restore fiscal responsibility to New Jersey, a theme which brought Governor Christie to office in the first place. Runaway spending and borrowing combined with unfunded health benefits and pension liabilities have overwhelmed any good math that would allow for the required balanced budget. Nevertheless, Governor Christie has moved the state in the right direction with private sector jobs growth and pension and benefits reforms.

Make no mistake, the economy, while on the mend, is not booming by anyone’s estimation and no one is forecasting a dramatic increase in revenue to the state’s treasury. When this is coupled with the intent to follow through on a commitment to make the largest contribution ever by the state to its pension plan, there was little room to propose any additional tax cuts.

So while another round of tax cuts would have been a welcome addition to those enacted over the last four years, it was important to keep the promise made during the first round of reform to New Jersey’s pension system, by making the state’s scheduled contribution part of this year’s spending plan.

The governor made it clear that additional reforms to the pension system will be necessary to restore its health and ensure its long-term stability. There are several reasons that reforms are necessary. Paramount among them is the need to atone for the fiscal sins of past administrations and legislatures, which went hog wild with irresponsible spending and promises made to state workers that were impossible to keep.

Now many state workers feel betrayed. While that’s understandable, that doesn’t make the status quo any more sustainable. While the primary cause of the pension system’s problems are due to politicians from both parties making poor decisions, there is another critical factor that is driving the need for reform: people are expected to enjoy longer lives in retirement than when the pension system was designed, and that must be acknowledged in any realistic, long-term solution.

Without addressing this crisis, New Jersey could become the next Detroit; bankrupted by its unfunded pension and health benefits. It has become a losing situation for all. Further reforms in state health benefits and pensions are necessary to create a system that can keep the promises that are made to workers today, tomorrow and in the future.

Hall of FameIf we shy away from doing what is required to bring solvency to the state budget and to the retirement funds that retirees are depending on, we only delay the reckoning that awaits another round of inaction.

A Bruce Springsteen fan, Governor Christie is the “boss” when it comes to presenting a state budget to the legislature. But getting it passed requires sounding the right tone in concert with the rest of the “band”— members of the New Jersey State Legislature—to responsibly balance the budget, while paying for necessary programs.

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