AC Press: Next Year's NJ Budget Deficit Isn't 'Fake'

Press of Atlantic City
Editorial
July 27, 2010

The bad news from Trenton just keeps flowing, with no cap in sight: Now, the Office of Legislative Services says next year's budget deficit may be almost as big as the most recent one - possibly $10.5 billion, although that figure could change considerably depending on revenues.

The report has given Democrats ammunition: "While there's more work to do, the governor should stop taking victory laps," said Democratic Assemblyman Joseph Cryan of Union County, pointing to Gov. Chris Christie's contention that he closed an $11 billion budget gap.

Meanwhile, Christie called the OLS estimate "completely fake." He said the report assumes the state funds all of the costs it is required to fund and that programs now in the budget will still be in next year's budget.

True, it does. But the OLS figures are hardly "fake."

The state budget has had a structural deficit for years, exacerbated now by the recession, as well as mounting pension costs and other factors. Those pension costs - $3.5 billion next year - represent the single largest portion of OLS's projected deficit next year. Deferring $3.1 billion of pension payments this year was also the single largest way Christie closed that $11 billion budget gap.

How long can this go on? Every year those costs are deferred, the more costs mount the following year. Christie didn't start this snowballing debt - and the severity of this year's crisis may have left few choices. Still, it's got to stop.

OLS also projects a $2.3 billion gap in school aid next year, $2.1 billion in property-tax rebates and $330 million in municipal aid. Those figures represent the difference between what the state is legally supposed to provide and what it is expected to have available in revenue.

So towns, schools and property taxpayers could face the same kinds of losses next year that they did this year.

The OLS report underscores the need for the Legislature pass strong measures that will help rein in pensions and benefits and give towns the tools they need to trim their budgets. The measures are being heard in committees over the summer, with possible action in the fall. The last summer session on property taxes, in 2006, resulted in an extensive list of relatively strong proposals being watered down and whittled away to nearly nothing. That can't happen again.

Meanwhile, Christie is right that the OLS figure are projections that can change radically, and that they do assume the state funds current programs, as well as fully fund the pension payments and property-tax relief programs it is legally supposed to fund.

But those figures are not "completely fake." And neither is state's continuing fiscal crisis.