Saturday, March 11, 2006

The Governor's Budget Presentation

In a piece titled One Dimensional Thinking, Paul Nelson of NJ Fiscal Folly critiques the governor's recent budget presentation. He concentrates on the weakly stated debt problem, which is huge, but I'd like to point out another hidden feature of the presentation.
The governor claims, on slide 3, that "Deterioration began in the late 1980’s and continued Deterioration began in the late 1980’s and continued under both Democratic and Republican under both Democratic and Republican administrations," but the data don't really support that claim. Look at the slowing growth in appropriations on slide 5, where from FY 1997 through 2004 the annual rate of increase averaged about 7.5% per year. The most significant problem was the McGreevey budget of 2005, which increased appropriations by more than 16%, using an unprecedented number of gimmicks and shams to pretend that it was balanced.
Acting Governor Codey's 2006 budget, in contrast, appropriated about 3% less than 2005. He recognized that spending restraint was required to get the state's financial house in order.
Corzine wants to return to the McGreevey policy of ridiculous growth in spending. As shown in slide 12, projected growth this year is $4.9 Billion, or more than 18%, with the largest chunk dedicated to "State, College, and Teacher Employee Pension & Health Benefits."
This kind of profligate spending cannot stand. Revenues are projected to grow at 3-4% each year without any changes to the current tax structure. State expenditures growth should be limited to what we can afford, and if hard choices must be made, so be it. I have not taken a vacation or bought a new car since moving to New Jersey in 2001 because my personal revenue growth did not allow for such additional expenditures. Shouldn't I expect the same behavior of my government?

Tags: Spending, Taxes, Corzine