State Budget Crisis Task Force Releases its Report

State and local budgets are arguably the toughest challenge that citizens and politicians need to face. After all, unlike the Federal government, the state cannot run a deficit, nor can it print money. So it was with great interest and anticipation that I attended the release of a report from the State Budget Crisis Task Force earlier today.

As the presentation started in a ballroom at the Trenton Marriott, the panelists took to the stage and one thing hit me in the head like a falling anvil. Everyone on the stage was a white male. And with the exception of the moderator, John Mooney of NJ Spotlight, all had gray hair. To me, this was is hardly an approach that instills confidence that the interests of all of the citizens of one of the most diverse states in the nation are accounted for in the report.

Nevertheless, there were some big names on that platform. Representing the umbrella organization, the State Budget Crisis Task Force were Paul Volcker and Richard Ravitch.  Among the VIPs in the audience was former Governor Jim Florio.

Volcker, a New Jersey native, is a former chair of the Federal Reserve. Ravitch, is a former Lieutenant Governor of New York (and ex-husband of education advocate Diane Ravitch).  The Task Force has done similar analyses in several other states. Here in New Jersey, the leader of the group is Richard Keevey of the Rutgers School of Public Affairs and Administration in Newark.


(L to R) Paul Volcker, Richard Ravitch, Richard Keevey


The panelists opened by stating they strive for non-partisanship and would not comment on the merits of specific budgetary items. They told the audience that some budget issues are common across the board with other states, and other issues are unique or particularly troublesome in New Jersey.

The report was prepared prior to Hurricane Sandy, and a hastily-made one-page insert about the hurricane was inserted into the slick 84-page report. It indicated that while there may be some near-term positive impact from the infusion of outside dollars, the overall systemic problems outlined in the report will still be with us.

All of the states they investigated (CA, NJ, TX, IL, VA) are struggling with pension payments, Medicaid costs, and infrastructure. Volcker called out education funding as a particular problem in New Jersey. State Supreme Court decisions were mentioned more than once as a culprit. (More on this later).

Of course, the genesis of the crisis is the Bush Recession and its lingering effects. The panel concluded that New Jersey will not surpass the peak number of jobs (seen in 2007) until 2016. Our pension obligation is close to $85 billion (this is approximately what the entire state budget would be for two years), the tax base is eroding, our rainy day fund is depleted (it had $800 million three years ago), and Federal aid to states is decreasing over time.

But we’re not at the bottom of the list in every category. Pension obligations in Illinois are more severe. Also, even though 70% of our tax dollars are spent at the local level, the task force concluded that the state’s strong oversight of the fiscal affairs of local entities is a plus. And despite the “gimmicks” that Governor Christie and his predecessors have used to balance the budget, similar actions in other states are more egregious. The panel mentioned the well-defined budget process as a best practice among states, so budget chairs Senator Paul Sarlo and Assemblyman Vincent Prieto (and his immediate predecessor Lou Greenwald) deserve a bow, along with the OLS Legislative Budget and Finance Officer, Dr. David Rosen – another public servant much maligned by our governor.

The need to improve the state’s crumbling infrastructure was mentioned more than once. We will need at least $130 billion over the next ten years, and the panelists implored the pols not to divert the money from Hurricane Sandy to fund other essential infrastructure needs.

The panel came up with 11 recommendations – you can read them in detail in the report. Among the highlights were the need for multi-year budgeting and getting the pension and health care costs under control. Tey also recommended that the budget be considered holistically. If the off-budget items were rolled into the sum, our annual budget would be more accurately represented as $48 billion, not $33 billion. Of notable importance, when asked by an audience member, the panel said that the Affordable Care Act will have no deleterious impact on the state’s budget.

So getting back to the lack of diversity on the panel: It was probably not part of their charter to examine the impact of the budget crisis. And I doubt if a group led by three fairly well off white males could do a good job at it anyway. But it would be a good idea if the foundations that sponsored the Task Force could also charter a similar task force, with diverse representation from across the spectrum of New Jersey stakeholders, to develop a similar report outlining the pros and cons of increasing taxes (especially on those most able to afford it), the impact (good as well as bad) of our Supreme Court decisions, and make recommendations to improve the quality of life in the state. That quality of life is not a result of a one-dimensional look at finances and taxes, but is dependent on the priorities that are applied to our limited resources and the unlimited talents and strengths of New Jersey’s people.

Comment (1)

  1. Bill Orr

    which served as the basis for this conference raises critical, difficult issues with which the governor and legislature will have to grapple. Hopefully these people and others concerned about our fiscal challenges will read the report and heed some of its warnings and recommendations.  


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