Like Corzine's credibility, my PC is currently flatlined.
I hope to resume posting next week.
Like Corzine's credibility, my PC is currently flatlined.
I hope to resume posting next week.
(1) Low scoring = boring
It wasn't enough to raise taxes yet again.
Gov Corzine and the Assembly Democrats have apparently reached a budget deal. Here's all you need to know.
Has anybody else noticed that every time Corzine shows up to address the legislature he brings along an imperial bodyguard of state troopers?
How is it possible that Gov Corzine is unable to find any significant headcount reductions in a state workforce of 84,400 employees (see pages 3 and 55), including at least 43,500 "non-essentials"?
NJ Assembly Democrats plan to push an alternative budget to Gov Corzine's "tax and spend" turkey.
The NJ Assembly Republicans have prepared a list of more than $2.2 billion in possible spending cuts for next year's budget.
Gov Corzine is threatening to shut down state government unless the legislature goes along with his proposed budget, particularly an increase in the NJ sales tax from 6% to 7%.
New Jersey Policy Perspective, the liberal policy group, has just issued another interesting paper, "Making The State Sales Tax Pull Its Weight".
I've just discovered two excellent sources of information on NJ government employees.
David Rebovich had a pretty good column yesterday, "Democrats' Budget Crisis Has Deep Roots".
New Jersey Policy Perspective, a liberal policy group, has just issued an interesting paper, "One to a Customer: The Democratic Downsides of Dual Office Holding".
I've recently discovered a small group called the Union County Watchdog Association, that also has a blog, The County Watchers. As you might surmise, their primary focus is Union County: political activity, financial issues, freeholder shenanigans, etc.
I've just run across an interesting article, "America's Second Civil War: The Public Employment Complex vs Taxpayers", from the Yankee Institute in Connecticut.
I find it difficult to take too seriously today's Codey-Roberts proposal for the NJ legislature to spend the summer working on property tax reform. There's no way to cut the Gordian knot unless Abbott district spending is significantly reduced. Any other version of property tax "reform" is simply an exercise in shifting the tax burden from one group to another. Any verbiage about revising school funding formulas is simply hot air unless non-Abbott districts get a larger share of taxpayer-funded school aid.
The Heritage Foundation has published a disturbing paper with the lengthy title "Amnesty and Continued Low-Skill Immigration Will Substantially Raise Welfare Costs and Poverty".
One of my favorite topics is NJ's liability for post-retirement health care benefits for public employees (sometimes designated PRM, for post-retirement medical). This liability is a form of debt, a future obligation to be paid by NJ taxpayers. Unlike pension obligations, there are no assets set aside and invested to pay for these future expenses.
Although NJ desperately needs to reform fiscal management and state government, we have no future without economic growth. You only have to take a look at a high cost, declining, Rust Belt state like Michigan to see one possible future if NJ can't stimulate growth and diversify the economy.
State Treasurer Bradley Abelow and the NJ OLS today released revised revenue projections for FY 2006 and FY 2007. The two sets of numbers have not been totally reconciled, but these types of revisions are normal for any large, complex budget.
The most important revelation is that Abelow now expects FY 2007 revenues to be $441 million lower than previously forecast. The primary reason for this shortfall is a lower growth rate in gross income taxes (GIT), which are substantially affected by a small number of taxpayers with less predictable incomes (eg, capital gains). The revenue shortfall also results from lower corporate business taxes (CBT) than previously forecast.
Abelow's FY 2007 figures still include the sales tax increase, and apparently still include the controversial hospital bed tax ($215 million for the state).
As I've noted previously, NJ ranks 50th (ie, worst) in a state-by-state comparison of Federal taxes paid versus Federal spending received. For every $1 in Federal taxes paid, NJ receives $0.55 in Federal spending. This is partly due to NJ's ineffective Congressmen.
One of the many reasons NJ financial management is so poor is because NJ financial disclosure is so poor. Like the managers of a badly run company, NJ politicians and bureaucrats like to avoid any form of reporting that might be used to hold them accountable.
There was a story in yesterday's news that NJ's total state debt has now increased to $33 billion, up 11.5% from last year. However, we get this information from Moody's Investors Service, not the NJ State Treasurer. In all likelihood, the Treasury Department provided the data to Moody's, but not to any NJ taxpayers.
The Public Finance Division of the Treasury Department has a web site which contains two reports related to state debt. However, the reports are incomplete and way out of date. There are no schedules in the Corzine budget proposal with more current information.
I have two recommendations.
First, the State Treasurer should be required to maintain current information on total NJ state debt on the Public Finance web site. The format of the schedule labeled "State of New Jersey Debt Analysis" is particularly useful. The web site should also include current bond ratings for benchmark state bonds from all major ratings agencies. Any links to rating agency reports would be valuable too.
Second, there should be a requirement that all budget proposals and approved budgets include detailed information and summaries of total NJ state debt (including debt service requirements for the next 3-5 years). The best figures would be outstanding debt as of the December 31 immediately preceding the next budget year (eg, 12/31/05 data for the FY 2006-07 budget year). This kind of information is standard in any large private sector budget.
Current information on total NJ state debt is easily available. There's no reason that Moody's should receive this data but not NJ taxpayers.
Yesterday, State Treasurer Bradley Abelow indicated that a new estimate shows that the state's public employee pension system has a deficit of $18 billion. Altough I think this figure is still too low, it's certainly more realistic than the prior estimate of $12 billion, which was a total fiction based on wildly optimistic assumptions, such as inflated investment returns.
The state's pension system consolidates the pension obligations of both state government and local governments. Based on the last available details (as of 6/30/04), the local government component of the total pension deficit is roughly 30%, or $5.4 billion.
The two main pieces of the local government pension deficit are police and firemen (PFRS; 80%) and other employees (PERS; 20%). Teachers are considered a state obligation, not a local one.
As the NJ League of Municipalities has pointed out, "the cost to local government for one PFRS member is approximately three times more than the cost of a local government PERS member". Local government pension liabilities for police and firemen are driven by higher salaries, generous pension benefits (ie, income replacement ratios), and early retirement options.
The cost of local government pension liabilities is ultimately paid by local property taxes. Thus, while it's currently convenient (and mostly appropriate) to focus on the state's overall financial problems, and the shortcomings of Gov Corzine's proposed budget, taxpayers should also remember that there are major liabilities and cost drivers a lot closer to home.
In a prior post below, I noted that Gov Corzine's budget to add 50,000 children to the NJ FamilyCare program seriously underestimated the costs. The Office of Legislative Services (OLS) now agrees with me.
The latest creature to emerge from Dr Corzine's laboratory is the NJ Commission on Government Efficiency and Reform. As the Gov describes its mission, "I look forward to reviewing the commission’s proposals to re-engineer state government and maximize the quality of services New Jersey citizens are receiving."
Ken Adams has a good post about how Gov Corzine's alleged state government headcount reductions are in fact just another budget gimmick. As Ken points out, Corzine claims a reduction of 1000+ staff positions, but total headcount will actually increase by more than 1300.
Today I discovered a pretty good web site that tracks federal campaign contributions data for US congressmen (and candidates). The site provides useful summaries rather than raw data, and includes interesting information on Sen Lautenberg, Sen Menendez, and all NJ representatives.
I periodically skim Gov Corzine's press releases, and recently came across this one, "Corzine Announces Panel on Human Services Reform".
David Rebovich has a new post that's worth a visit. In general, I think he's too easy on the Democrats' responsibility for our current mess, and too optimistic about Corzine, but judge for yourself.
The NJ Assembly Republicans have put together a list of some of the many ways NJ taxes are wasted. Check it out.
The Center For Public Integrity, a journalism organization based in Washington, DC, has just released state rankings for financial disclosure by state legislators. New Jersey received a grade of C, but ranked 10th out of 47 states that require legislators to provide such disclosure.
As described in the CPI press release, "a 43-question survey measured public access to information essential to monitoring whether legislators stand to gain financially from actions they take in office. It graded states on how much they disclose about legislators' employment, personal business activities, clients, investments, real property holdings and leadership positions in organizations. It also studied disclosure statements' accessibility, disclosure law enforcement and rules defining who must file disclosure forms and how often. Survey answers were assigned a numerical value adding up to a possible 100 points; high scores acknowledged high levels of disclosure, public access and accountability."
New Jersey scored 76 points out of 100. The highest ranked state, Washington, scored 93.5 points. According to CPI, NJ did fairly well in some categories, but lost 20 points for insufficient details in the legislators' filings.
If anything, the CPI rating seems generous. If you go to the actual NJ legislator filings, you'll see that the financial data and other details provided are pretty sparse. For example, look at the filings by Wayne Bryant or Sharpe James. Furthermore, the information is not very current.
Nevertheless, the CPI rating is useful. Like the state tax rankings by The Tax Foundation, the CPI financial disclosure rankings provide an outside assessment of a NJ weakness that's hard to discredit or ignore.
Two NJ Democratic legislators will try to determine whether some version of the new Massachusetts "universal health insurance plan" could work in New Jersey.
It's no great secret that the NJ budget is stuffed with all kinds of special interest grants, such as $100,000 for the Inner City Coordinating Council of the Gay and Lesbian Construction Organizers' BLT Educational Alliance (just kidding).
Reported in today's Record:
The largest recipients of Abbott district school aid include Newark, Jersey City, Paterson, Elizabeth, Camden, Trenton, East Orange, Passaic, Union City, and Irvington.
I recently came across some relevant information.
Total employment in NJ is nearly 3.9 million (2005). Public sector employment accounts for almost 638,000 jobs, or 16% of the total.
68.2% of public sector employees are covered by union contracts (64.1% are actually union members). NJ has the second highest "percent covered" ranking in the US, after NY (72.0%). The national average for public sector employees is 40.5%.
Paul Mulshine has a good column today about Corzine's Abbott court filing, which I discussed below.
Mulshine provides a key quotation from a WSJ opinion piece by David Schoenbrod, a NY law professor:
"When courts claim that they have power to make legislatures spend more to vindicate a constitutional right to basic education, they tamper with a basic tenet of our democracy -- no taxation without representation.........Voters are entitled to hold political officials accountable for the taxes they levy, the money they spend, and the education they produce."