New Jersey has had a long history of fiscal irresponsibility and excessive spending, on both a state and municipal level. The worsetning economy and increasing debt of the federal and other state governments, however, has brought more pressure to reduce deficits, and New Jersey has come out ahead of the game here. Thanks to the efforts of Republican Governor Chris Christie, and surprising support from the Democrat-controlled legislature, New Jersey is coasting to fiscal responsibility and viability. RiShawn Biddle at the American Spectator takes a look at what is going on in New Jersey.
On Monday, the Democrat-dominated state senate approved measures capping the payments civil servants could receive from cashing in sick days to $15,000 (from the more generous one day’s worth of pay for every two unused sick days) and banish part-time workers from qualifying for public pensions. The final bill will likely be approved by the state’s lower house and signed into law within the next month. Two weeks earlier, the new governor, Chris Christie (a Republican), took steps to deal with the state’s $58 billion deficit for retiree healthcare liabilities (as of 2007) by ending free healthcare for teachers (and other bureaucrats). They will be required to contribute 1.5 percent of their salaries to fund medical coverage.
Unions – especially teachers’ unions — are mounting a strong opposition to these cuts. But with even the democrats on board, union opposition may fall short. The obviousness of the need for spending cuts goes a long way.
The current recession — now in its fourth year — has awakened New Jersey residents and politicians to the reality that the status quo is far too costly to maintain. The possibility of an $8 billion budget deficit in the 2010-2011 fiscal year is forcing state officials to consider drastic measures. Nor can they no longer ignore the long-term woes ahead. Besides the $34 billion deficit in its public employee and teacher pensions — among the largest in the nation — there is some $101 billion in long-term debt held by the state and municipalities that went to previous spending sprees and previous budget-balancing tricks. Then there are the long-term economic costs of hefty tax hikes, which have made New Jersey’s property taxes the highest in the nation. The average rate of 1.74-percent of assessed value paid by Garden State homeowners is higher than the 1.14 percent paid by colleagues in New York; the total in-state tax burden of 11.8 percent of income paid by New Jersey residents is the highest in the nation, according to the Tax Foundation.
As more and more states struggle with debt and increased spending, taxes are sure to go up, and state economies will falter even more. Hopefully more states will follow New Jersey’s example and actually work to cut spending and lower taxes. Such a boon to the economy will surely prove a boon to the national economy as well.
Now if only we can get the US Legislature to see what is going on here …