Wednesday, August 27, 2014
Inquirer Daily News

Even tougher New Jersey budget issues loom in 2015

TRENTON New Jersey lawmakers are weighing another tight budget proposal from Gov. Christie, but even tougher decisions could await them next year - around the time Christie could be leaving office if he runs for president.

The Republican's administration told lawmakers this week that funds to fix roads and preserve open space will both run dry next year, and there's no plan yet to replenish either of them.

That could add another dimension - and the possibility of tax increases - to a budget process that will start out with another big jump in the state's pension fund payment for retired public workers.

David Rousseau, a former state treasurer under Democratic Gov. Jon S. Corzine and now an analyst at the liberal think tank New Jersey Policy Perspective, said the way Christie deals with the budget could be a sign of his political ambitions. It's possible to have a one-year solution that avoids raising taxes. If Christie does that, Rousseau speculated, it could signal he is running for president.

If Christie offers a long-term plan, Rousseau said, it would more likely be a sign he is staying in New Jersey and does not have to worry about fiscal decisions on his record in another campaign.

"You're going to need new revenue," Rousseau said.

It is also possible that Christie could launch a presidential campaign and resign as governor before the next budget season arrives, leaving these conundrums to Lt. Gov. Kim Guadagno.

Lawmakers are weighing Christie's $34.4 billion budget plan for the fiscal year that starts July 1. But so far, the legislative hearings have been more of a lamentation of New Jersey's precarious fiscal condition than a debate about how tax money should be spent.

Christie himself has been complaining about the rising cost of contributions to the pension funds for public workers, something the state often skimped on or skipped until a deal he reached with lawmakers in his first term. He is committed to paying $2.25 billion in the coming fiscal year, a jump of about $600 million over the current year. And the bill will rise by about the same amount through the fiscal 2018 budget.

The situation worsened Monday when the administration announced that April tax revenues were lower than expected and that there is an anticipated budget gap of $800 million to fill in the next two months. Christie said that the news came as a surprise, that he has asked lawmakers for help, and that he will have a plan in May.

Also Monday, Environmental Protection Commissioner Bob Martin told lawmakers the state has about $100 million to continue the popular open space program for another year. About $400 million in bonds approved by voters in 2009 has been accounted for, and no long-term solution has been agreed upon.

In the case of road funding, the administration plans for the next budget year - as it has in three of the last four years - to borrow for all current projects, and the revenue from gasoline taxes, federal grants, and other sources will be used to pay debts for past work. Transportation Commissioner James Simpson told lawmakers this week that the fund still has enough bonding capacity to continue borrowing to do more projects costing a total of $1.6 billion in the coming year, the fourth year of a planned five-year capital upgrade schedule.

While borrowing to pay for all road work is unpopular and costly, the situation is expected to get worse.

"When we get through this year, we can bond a maximum of $628 million," Simpson said. "We need another billion."

The dwindling funding for road projects is no surprise.

State Treasurer Andrew Sidamon-Eristoff told lawmakers previously that he would present a plan early in 2015 for how to replenish the Transportation Trust Fund.

Several members of the Democratic-controlled Legislature favor raising the gas tax, which at 14.5 cents per gallon is the third lowest in the United States. Christie has opposed tax increases.

Christie has not ruled out a run for president in 2016. But investigations into a political retribution scandal involving former loyalists of his who ordered lanes closed near the George Washington Bridge have stalled his trajectory. Christie has denied any involvement in the September 2013 closures.

Associated Press
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