O’Scanlon: There’s no silver bullet to resolve New Jersey’s budget issues

By Assemblyman Declan O’Scanlon

declan-oscanlon-budgetPoliticians like to talk about budgetary issues and challenges in pieces -ignoring the big-picture, and inconvenient,  collateral effects of their proposed solutions. Even the public, and well-meaning editorial boards, fall prey to this segmentation mentality hoping there is an answer that doesn’t eviscerate their particular sacred cow.  Throw in the fact that there is a general belief in a magic bullet that will fix our budget problems and you have a dangerous mix of ignorance and irrational expectation.  It is time to clear that up.  Governor Christie is right when he says our budget problems are serious. The solutions are going to be painful.

First, let’s understand that the causes of the problem are rooted in the actions, over the last 20 years, of legislators and governors – Republicans and Democrats – who were either well-meaning, but ultimately ill-informed, or those who consciously opted for political expediency knowing their actions would ultimately bankrupt the state.  The former motivation is sad, the latter reprehensible.

Making certain assumptions about things we can and can’t fund, our structural deficit is around $6.75 billion – inclusive of $1.6 billion in transportation investment per year but exclusive of things we’d love to do like cut property taxes.

So how do we plug the $6.75 billion hole – what is the magic bullet?  There is none. My fellow conservatives who simply say “cut 20% across the board and you’re done!” are fooling themselves.  Almost 1/3rd of our budget –  around $10 billion – is essentially locked in by federal rules or constitutional mandates or obligations.  We can’t default on our debt for instance and we have to pay social security etc.  So right there you go from a 20% cut across the board to a 30% cut on the remainder.  But that’s not practical for a big chunk of the remainder as well.

If we cap school aid at $12,000 per student we could save around $700 million. That likely would mean closing some school districts and sending those students elsewhere.  I can hear the hue and cry now.  But we have to focus on areas where it could be argued we are spending too much.  Schools that cost us more than $20k a kid per year – and still provide a lousy education – swallow hundreds of $millions.  If we make fundamental change there we can save big $ – and serve those kids better!

Another area where we spend much more money than other states – and is a big percentage of our budget – is pensions and health benefits. I know – I hear the pronouncements “we have to keep our promises.”  But in reality almost every dollar we spend has been “promised” to some important cause or constituency. Pension obligations should be around 7% of a state budget.  Our obligation is 15% of ours (would have risen to approximately 25% before the 2011 reforms).  We spend almost $8 billion in pension and health benefits.  Let’s say we all can figure out a way to trim those by 10% – that’s $800 million in savings.

So…we have come up with $1.5 billion in savings. We will still need to come up with another $5.25 billion but we only have around $13 billion from which to cut.  That’s a 40% cut to operations that are already running on fumes.  You going to cut home health aides who are already overworked, haven’t had a raise in years and make $12 bucks an hour?  How about massive cuts to higher education (NJ already falls well below national average) or aid to municipalities – which would drive up property taxes?

My friends on the other side of the aisle argue that we should raise taxes to plug the gap, and regularly rule out additional cuts to school funding and pensions and benefits.  Problem there is that we are already one of the highest taxed states in the nation.  And we aren’t talking about small tax increases on small segments of the population.  The so-called “millionaires tax” in its most optimistic form would only raise around $800 million – and would risk driving away some of our largest taxpayers – leaving the rest of us remaining to pick up the future obligations.  If one is going to make an argument against the cuts I mention above he must be honest and admit that he is instead opting for massive tax increases on everyone – not just the “rich.”  Want to plug a $6.75 billion hole with income taxes – it would take a 50% increase – on every taxpayer!

So you see folks, there is no magic bullet.  This ain’t going to be at all easy.  But we have no choice.  Only after we understand and accept the overarching problem can we move forward with a dynamic, balanced mix of solutions.

Declan O’Scanlon (R-13) is the Assembly Republican Budget Officer

Posted: December 22nd, 2014 | Author: | Filed under: New Jersey, New Jersey State Budget, Opinion | Tags: , , , , , | 4 Comments »

4 Comments on “O’Scanlon: There’s no silver bullet to resolve New Jersey’s budget issues”

  1. Thomas Scarano said at 3:45 pm on December 22nd, 2014:

    Maybe hire the Governor of Wisconsin, Scott Walker, to close the gap.

  2. Bob English said at 6:05 pm on December 22nd, 2014:

    Part of the problem is that NJ is almost dead last versus the other 49 states in terms of economic growth. We can’t entirely cut (spending) our way out of this or tax our way out of it. Since the price of gas is so low, I would be good with raising the gas tax a bit (price/gallon would still be roughly a $1/gallon lower than it has been) and dedicating those funds to the road construction/maintenance. Besides actually dealing with one problem that has gotten kicked down the road for future taxpayers, it would also provide some decent paying badly needed jobs…..which in turn helps the rest of the economy when those people spend their earnings.

  3. trouble in marlboro said at 8:46 am on December 23rd, 2014:

    maybe we can team up with the mayor from marlboro, and build some more cell towers, and use that money to plug the holes.. no wait you are already doing that and the only people making out are your company and johnny lawyer and engineering friends. how about attacking the real problem, unions. new jersey pays 1.4 million a mile for road repair, and south carolina spends about 300,000 a mile. teachers start at 50,000 a year and get a raise each and every year, along with the police. but no one has the balls to fight these unions. because in the end every politician is only worried about his or her re election, and of course making money from their position, aka selling cell towers, or getting your wifes firm millions of dollars of business with the state, even though the person said that they would cut all ties to their wifes firm. so the wheel keeps going around and round. ask yourself why jon hornik would spend 100,000 dollars to become mayor of a town and get a salary of 6,000 dollars? because he can spend 1 million tax dollars a year with his lawyer buddies, and in turn they can feed his law firm in freehold. so the republicans and democrats do the same thing and blame the other guy.. its just a big joke. their are no more statesman. both sides are out to fill their buddies pockets. and i and the rest of the tax payers foot the bill, and have to listen to you cry that its been over twenty years in the making, B.S. it happens each and every day, you included. we need statesman like geo washington, jefferson, etc. god help n.j. and america 18 trillion in debt and counting.

  4. Simple math said at 9:31 am on December 23rd, 2014:

    – you just don’t have enough people working,to pay for the thousands and thousands who line up every day,at every welfare and social security office,in this state. We MUST find better ways to get more people paying taxes into the system,than taking from it! ( then perhaps the next stop- gap fix of raiding something yet again won’t be necessary!) The constant expansion and perpetuation of every social program under the sun, is why the roads aren’t getting fixed, and the metal overpasses are rusting away! Unless and until these legislators STOP promising our money to huge groups of people, for votes and power, we will continue to be dead last, in everything that matters! Disgusting, and they all should be ashamed of themselves, but are too arrogant to be so!..