NJ Business Matters: The Blog of the CIANJ

No Christmas Tree, No Christmas Tree

Senator Barbra Buono, Chair of the Senate Budget and Appropriations Committee, has expressed her support for the elimination of so-called Christmas Tree spending in this year's budget. The budget items add millions of dollars to the state budget to fund pet projects of legislators. Following an ethics tussle regarding the grants, they were reduced to a total of $112 million last year.

CIANJ supports Sen. Buono's recommendation as an effort to protect New Jersey's overburdened taxpayers, and it appears she has bi-partisan support,

"I believe we need to restore balance to the burden all of us must share during these extremely painful economic times," [Buono] said.

The budget adopted last June included an estimated $112 million for additions for legislative districts, the lowest total since Democrats regained control of the Statehouse in 2002.

Sen. Leonard Lance (R-Hunterdon), a veteran budget committee member, said he agrees with Buono that there is no room for such spending, commonly known as "Christmas tree" grants, given that Corzine is proposing deep cuts to municipalities, hospitals, nursing homes, colleges and other groups.

This budget, like all, should be about the role of government in our lives. Some Christmas Tree items may be worthwhile causes, but there are many worthwhile causes - why don't taxpayers pay for them all? We see Sen. Buono's recommendation and Sen. Lance's support as a positive step in that conversation.

Early Retirement, Later Costs

Yesterday, State Treasurer David Rousseau told the Assembly Budget Committee that the Governor's plan to entice state workers into early retirement would save NJ taxpayers $136 million this year and $161 million next year - IF it is approved by May 15th. That's unlikely to happen.

While we support the Governor's effort to reduce the government's payroll, New Jersey has been down the road of early retirements before. Multiple times, in fact. The result has always been the same - workers take the incentive and taxpayers pay retirees more money than they would have in retirement. Then, the now-vacated positions are filled in short order, meaning the size of government is not reduced.

Governor Corzine promises this plan will be different, because the Administration will not fill more than 10% of vacated positions. However, the Gov cannot dictate that to future Governors or future legislatures. Taxpayer protection beyond this Governor would be minimal.

Corzine is correct when he says that the alternative, layoffs, is nearly impossible because of current civil service laws. In our opinion, that's a great argument for reforming those civil service laws and not for trying the same failed policy again.

Fortunately, there's still time.

Hangin' Tough

We don't agree with Sen. Sweeney on many issues, but during the budget crisis of 2006, the Senator (who is also a Business Rep. for Iron Workers Local 399) was one of few voices within his party willing to admit that public employee costs were the primary reason for out-of-control spending, and he worked to address it.

Advocates for the Governor's toll road proposal claim that debt service is consuming an unacceptably high share of our budget. A reminder that in the last ten years, employee benefits increased by $4.3 billion, more than three times the rate of spending increases on debt. Sunday's Asbury Park Press outlined the Senators "outrageous" proposal to bring public employees more in line with the private sector, including,

• Reduce paid holidays, not vacation days, from 13 to 10.

• Bar married employees from receiving health benefits from more than one public employer. Couples now can have the state pay for two health plans.

• Make employees with state health benefits pay at least 10 percent of the premium. (When Sweeney proposed the bill, state employees paid nothing other than small co-pays.)

Only 10 paid holidays?! Surely you jest.

Had Sen. Sweeney's proposals become law, then the budget would have saved $1 billion this year. Maybe they're worth looking at again? Especially given half of New Jersey residents prefer "steep budget cuts" to increased taxes or tolls.

Good News, Bad Sub-headline

Governor Corzine is proposing a $260 million bailout of the Unemployment Insurance (UI) fund, following years of diversions over the objection of business and labor.

The UI fund is filled by a tax on workers (totaling about $305 million per year) and employers (totaling about $1.5 billion annually). If the fund has less than 1.4% of the total payroll of all employees in the system, then an automatic $350 million tax hike is imposed on the state's companies. There is no automatic trigger for additional employee contributions.

It is because of this arrangement that CIANJ objects to diversions from the fund. Since 1993, more than $4.7 billion has been diverted from the UI fund to pay for other state budget items. Now that economic times are rough, that rainy day money is not available and the UI fund is forecast to be below its magic number.

The Gov's plan of moving $260 million into the fund is welcome news. If the legislature approves the cash infusion, it means the $350 million tax increase can be avoided, and it seems like the legislature is willing,

"This strategy will protect both our vulnerable unemployed population as they struggle during these difficult economic times, as well as our state's business community," Corzine said in a statement announcing the bailout plan today....

Yesterday Sen. Barbara Buono (D-Middlesex), chairwoman of the Senate Budget and Appropriations Committee, endorsed Corzine's proposal.

"Hopefully the Legislature is ready to replenish the fund to make up for past budget mistakes," she said.

Thanks for clearing that up, Sen. Buono. The Star-Ledger sub-headline calls this a bailout for employers, who will be able to avoid a tax increase. Respectfully, we see this as a bailout of the legislature and their previous inability to show fiscal restraint.

Efficiencies Here, But Real Savings There

As we first noted yesterday here at NJ Business Matters, the legislature's research arm is forecasting state tax receipts to come in below the Governor's original estimate. The difference is a $289 million question that must be answered through either further spending cuts or tax increases. If you're a loyal reader, then you know that CIANJ has outlined a host of possible cuts in areas that government simply cannot continue to afford - such as within the Division of Community Affairs.

This year's budget also features state aid cuts to New Jersey's smallest towns with a way to get the money back if those towns with populations under 10,000 merge or share services. Given the fact 19 of our 120 state legislators are dual office holders, that discussion sometimes becomes terse.

Shared services in small towns would offer some measure of savings, and CIANJ supports efforts to streamline the process and remove legal impediments to mergers that have evolved through state history. However, Assembly Budget Committee Chairman Lou Greenwald strikes exactly the right note when he repeats a message he delivered to our members last May,

He said he's not in favor of cutting the property tax rebate program and instead suggested forcing school districts – which are seeing an increase in state aid in the budget– to become more efficient.

Bingo. New Jersey has 616 school districts - some of which do not even have a school. We spend more per-pupil than any other state, but rank below the national average SAT score, and when you calculate the number of students who pass the HSPA and not the much-discussed alternative test, we rank 24th in graduation rate.

So much of the reason for that is the number of dollars spent that never reach the classroom. Forcing efficiencies there would be a much better use of the budgetary bully pulpit.

Short

The state's economic downturn eventually will be mirrored in state tax receipts. And today the legislature will be told not to count on all the tax collections forecast in the governor's budget message.

The Assembly Buget Committee will hear that tax collections will be $134 million below the Corzine Administration's estimates over the next 15 months. The Office of Legislative Services (OLS), which is the legislature's non-partisan research and legal arm, will be the bearer of bad news.

Bad news that could get worse, that is,

Joseph Seneca, an economics professor at Rutgers University, agrees the state's revenue outlook is more likely to get darker than rosier in coming weeks.

"I think it's an alignment of a number of very potent negatives all pointing to an outlook that can be summarized as one of extreme caution," he said.

Seneca noted that the last time the state suffered a recession in 2001, state income tax collections actually fell two years in a row. That's largely because Wall Street, a major employer of New Jersey residents, was hit hard by the downturn.

The current situation is similar, only potentially worse, Seneca said. Investment banks already are pondering major layoffs due to $250 million in losses from subprime mortgages, he said.

"This recession has the potential to be broader and deeper than the two previous recessions that were shallow and brief," he said.

Time to dust off that list of billions of dollars of potential spending cuts and give it a second look, eh?

State Budget May Shed 3,000 Jobs - Sort Of

Today's New York Times hints at some of the cuts Governor Corzine will propose during his budget address next week. Among those, the shedding of 3,000 state jobs and eliminating the Department of Personnel. That department is primarily responsible for administering all aspects of the civil service system at multiple levels of government.

Eliminating 3,000 jobs in a state that can no longer afford to have government as bloated as it is can happen through a multitude of ways. It appears the Administration is leaning toward early retirement packages rather than layoffs, which brought a lukewarm response from CWA Local 1034 President Carla Katz,

"As an alternative to layoffs, which are unacceptable, an early retirement incentive is good policy and would be welcomed by the union and the members. However, it is critical that there be appropriate backfilling of jobs,” since incentives for early retirement on top of an existing two-year hiring freeze “will mean that essential services to the public will continue to be undermined"

The problem with that strategy is that the state has tried it before - multiple times in the past 20 years. The net result has been increased retirement pay to those opting to depart early followed by an immediate filling of their briefly vacated position. The grand total was something that cost New Jersey's taxpayers more than it saved them.

As Senator Lance aptly put it, the burden of proof that a fifth time would be different will be heavy.

Spending Freeze Hits Resistance

Attached to Governor Corzine's proposal to bond 75 years worth of toll revenues to pay down debt and fund infrastructure is a promise to freeze spending during the current budget cycle. In our press statement opposing the monetization of the toll roads, we also noted that CIANJ supports the spending freeze.

Which is why we were disappointed to read Senate President Codey's statements that a spending freeze may not be possible - or even wise - while asking taxpayers to send more of their money to Trenton. Today's Asbury Park Press notes,

"You cannot plead poverty, raise $40 billion, and then say you've got to cut the budget," Codey said.

"Are you going to cut aid to colleges and raise tuitions?" Codey said. "Are you going to cut aid to hospitals and see more hospitals close and more people laid off from work? Are you going to cut aid to towns and see more in property taxes because the towns didn't get as much as they though they'd get? I think that's a very hard to sell as well. . . . There are no good choices here."

It's always the children and the hospitals.

The reality is New Jersey's budget has doubled in ten years. Its population has not doubled, nor has its people's income. Meanwhile, we are in an economic cycle of slow growth, an expected population decline, and some are forecasting higher unemployment in the immediate future.

Given that, isn't it time we lessened the burden on taxpayers to allow them to keep more of the money they worked for, rather than increasing tolls 800% or making Trenton's expansion permanent?

Doing Less with More

The Sports and Exposition Authority, despite having less responsibility, has gone ahead and increased its staff costs by 20% for next year. Cheers to the Star-Ledger today for throwing the red flag and calling for review.

Remember that the NJSEA, which operates the Meadowlands, is in the midst of an exodus of its sports teams. The Devils have left for their own facility in Newark and taken Seton Hall basketball with them (Go Pirates!), the Nets plan to move to Brooklyn and the Giants and Jets will operate their own stadium once its construction is complete. That leaves the NJSEA with the racetrack, collecting rent from Xanadu and trying to book entertainment.

As the authority's revenue decreases but its administrative expenses increase, it won't be long before agency executives again go hat in hand to Trenton asking for a bailout.

To avoid that, the authority must take another look at its budget proposal and, like all other government agencies, search for savings. At a time when Corzine is urging the state to go $38 billion more in debt to help put it on a firmer fiscal footing, the authority's plan to pile on expenses doesn't make sense.

If government is going to come to taxpayers looking for a $38 billion bailout in the form of tolls eight times higher than they are today, then state agencies should be doing everything within their power to cut expenses. After all, if an agency like NJSEA can spend more with less revenue and then go to Trenton for taxpayer-funded assistance (as they did to the tune of $15 million in 2000), what's to prevent a PBC from doing the same?

Jersey Votes Against Business As Usual

Yesterday New Jerseyans went to the polls and delivered the message to Trenton that the tax-hiking solution to all the state's ails over the past few years are no longer good enough. Voters rejected two bond initiatives - one to spend $450 million to construct stem cell research facilities (with no defined way to pay for their completion) and one to take last year's sales tax increase and dedicate it to property tax relief (thus increasing the likelihood of another sales tax increase in the next few budget cycles).

The stem cell research bond is unfortunately par for the course in NJ public policy. The original plan included less dollars and a facility located in New Brunswick, but political bosses in other parts of the state found that unacceptable. So the final bond act called for more money to construct three facilities. Spreading facilities across the state lessens the ability to attract top talent as they would be scattered - we'd spend more money to get less.

With about 95 percent of the precincts counted as of 12:20 a.m., both initiatives were losing by more than 72,000 votes.

Although the two issues seem unrelated at first blush, opponents turned the debate on their merits into a referendum on the state's financial health.

"People are saying enough is enough with the borrowing, and that we shouldn't be venturing into highly risky business ventures," said Bogota Mayor Steve Lonegan, who campaigned against both proposals.

Congratulations to the 37 PENPAC endorsed candidates who will serve in the New Jersey legislature next year.

District 7

Senator Diane Allen (R)

District 8

Assemblywoman-elect Dawn Marie Addiego (R)

District 12

Assemblywoman and Senate Candidate Jennifer Beck (R)

Assemblyman-elect Declan O’Scanlon, Jr. (R)

Assemblywoman-elect Caroline Casagrande (R)

District 13

Senator Joseph Kyrillos (R)

Assemblyman Sam Thompson (R)

Assemblywoman Amy Handlin (R)

District 16

Senator-elect Christopher “Kip” Bateman (R)

Assemblyman Peter Biondi (R)

Assemblywoman-elect Denise Coyle (R)

District 17

Assemblyman Upendra Chivukula (D)

District 20

Senator Raymond J. Lesniak (D)

District 21

Senator Thomas Kean, Jr. (R)

Assemblyman Eric Munoz (R)

Assemblyman Jon Bramnick (R)

District 23

Senate Minority Leader Leonard Lance (R)

Assemblyman Michael Doherty (R)

Assemblywoman Marcia A. Karrow (R)

District 24

Senatator-elect Steven Oroho (R)

Assemblywoman Alison Littell McHose (R)

Assemblyman-elect Gary R. Chiusano (R)

District 25

Senator Anthony Bucco (R)

Assemblyman Michael Patrick Carroll (R)

Assemblyman Richard Merkt (R)

District 26

Senator-elect Joe Pennacchio (R)

Assembly Minority Leader Alex DeCroce (R)

District 30

Senator Robert W. Singer (R)

Assemblyman Joseph R. Malone III (R)

Assemblyman Ronald S. Dancer (R)

District 36

Senator Paul Sarlo (D)

Assemblyman Gary S. Schaer (D)

District 39

Senator Gerald Cardinale (R)

Assemblyman John E. Rooney (R)

Assemblywoman Charlotte Vandervalk (R)

District 40

Senator-elect Kevin J. O’Toole (R)

Assemblyman David C. Russo (R) 

Taking From Peter to Pay Peter - Part 2

Add New Jersey's public colleges and universities to the list of state entities to be declared as wasteful by yet another government investigation.

CIANJ has been aggressive in pointing out the difficulty of taxpayer-funded lobbyists, especially in the state's higher education system. In such a scenario the state is left with lobbyists who are paid for by the taxpayer lobbying legislators for more taxpayer money for their school. Somewhere in that equation there needs to be protections for the men and women who pay taxes to fund the entire operation.

NJ.com is reporting on a State Commission of Investigation report on the misappropriation of dollars, including the aforementioned merry-go-round. The report found,

Excessive intrusion of politics, including millions of dollars in lobbying expenditures, efforts to solicit state college and university officials for campaign fundraising and influence-peddling in the appointment of institutional governing boards.

Even more unfortunately, when it comes to NJ's colleges saddling future generations with some of America's highest debt, the news only gets worse. The report recommends a reshuffling of priorities and of governing boards at various schools. All 189 pages are available here. 

Cause and Effect

State Senator Tom Kean wrote an op-ed for yesterday's Asbury Park Press outlining the reasons for next year's projected budget shortfall and the necessity of a budget which utilizes spending cuts versus the business-as-usual model of tax increases.

New Jersey's income tax structure is progressive. More than 50% of state income taxes are paid by the top 4% of wage earners. Those high wage earners tend to have large portions of their income in corporate partnerships and investments which are not reported until the end of the year, making budget forecasts on thin margins a tricky busiuness.

New Jersey's high wage earners are also heavily reliant upon Wall Street success compared to other states. Kean aptly writes,

Given the recent downturn in the nation's housing, credit and financial markets, many economic observers expect state revenues will fall significantly short of expectations. The current state budget assumes a nearly 8 percent projected increase in income tax revenues. Those reduced collections, combined with a structural budget gap that Corzine last week projected as high as $3.5 billion, present a serious challenge to the state's fiscal stability.

In both the city and state governments in New York, Mayor Michael Bloomberg and Gov. Eliot Spitzer have acknowledged the slowdown in the economy and are beginning to reduce government spending in anticipation of a reduction in income tax revenue collections.

The Governor's office is preparing for such changes with next year's budget cycle. Sunday's Record tells of a high-level meeting at which Department heads were told to find $3 billion in cost savings. Of the state's $33 billion budget, certain gubernatorial priorities and 'mandatory' spending is considered off-limits - - about $18 billion worth. That means the remaining $15 billion requires a 20% cut. While it would still leave major areas for savings untapped, a $3 billion reduction should at least prevent digging even deeper into taxpayers' pockets. Maybe those 72,000 departures we blogged about last week are making an impact. 

Taking from Peter to Pay Peter

A hat tip to Herb Jackson in yesterday's Record and to the paper's editorial board for bringing to the light the practice of public colleges hiring lobbyists to help increase funding to those schools. Jackson's article points out one of the most glaring problems with taxpayer-funded lobbyists seeking taxpayer dollars for taxpayer-funded institutions - - the lack of a review process to protect the taxpayer,

James A. Savage, a University of Virginia professor of politics and author of the book "Funding Science in America," could not comment on whether those grants were appropriate or not.

And that's his problem with them.

"With earmarking, there's no review process, no accountability, and the taxpayer has no way of knowing if the money is going to the best place," he said.

He said that Congress in the 1960s set up a system where teams of experts, mostly at the National Institutes of Health and the National Science Foundation, would identify proposals with the most potential to advance scientific discovery. These proposals would then receive federal funding.

It soon became clear that the lion's share of these grants was going only to a few top-tier universities, so Congress in the 1980s began to direct money to institutions that aspired to be in the top tier, Savage said. And the university earmark was born.

"The research universities thought they could keep this to themselves, but that ignores politics. Members of Congress respond to constituents, and they also respond to junior colleges," Savage said.

Last year, for example, Congress directed $1 million from the NASA budget for equipment at Burlington County Community College.

Universities originally wanted a peer-review process like the ones at NIH and NSF to protect against political meddling into research, Savage said.

"But what's happened is universities and colleges for their own self-serving interests have gone to members of Congress to get these pork-barrel projects," he said. "About 10 percent of all federal money for research is now pork barreled. The growth of earmarking has outstripped the growth in normal academic research."

The editorial board at the Record notes that aside from the $1.6 million spent by public colleges on lobbying, public agencies spent another $1.4 million. Both the investment by the intuitions and the returns are paid for by taxpayers. Somewhere in that equation, their interests need better protection.

Another $800 Million in School Construction Money Borrowed

New Jersey's Economic Development Authority has approved the borrowing of another $800 million in school construction money, adding to the $8 + billion already borrowed and the $33.7 billion New Jersey already owes.

The NJ Schools Development Authority is the successor of the state's School Construction Corporation. That's the same School Construction Corporation which managed to complete barely a third of its assigned projects, leaving buildings unfinished as a lack of oversight cost the state's taxpayers billions of dollars.

Today's Star-Ledger reports,

The $800 million loan, endorsed unanimously by the New Jersey Economic Development Authority at its regular meeting in Trenton, will cover the school program's expenses for about eight months, officials projected.

When the 30-year bonds are is sued early next month, the school program will have used up all but $1.7 billion of the $8.6 billion that lawmakers authorized it to borrow. Officials of the New Jersey Schools Development Authority, the panel in charge of the school building program, earlier this year identified 27 ongoing school projects that they say will consume the balance of the funds allocated to the program.

The authority has asked lawmakers to authorize another $3.25 billion in borrowing to enable construction to continue on other projects that have been suspended for lack of funds.

Both you regular blog readers will remember that last week, the state approved $1.25 billion in borrowing for highway construction and maintenance.

State Borrows Another $1.25 Billion

From NJ.com:

Even as Gov. Jon Corzine works on a secret plan to pay down New Jersey's long-term debt, the bill continued to grow this morning, as a state transportation panel approved borrowing up to $1.25 billion to pay for highway and mass transit projects for another year.

The new loan, to replenish the state's Transportation Trust Fund, is the second of five annual installments of debt Corzine and lawmakers authorized when they restructured the trust fund last year.

Issuing Debt to Pay for Relief Which Was Funded By A Tax Increase

New Jersey is considering taking out a short-term loan to cover $2 billion in costs as the state awaits expected "revenues" (aka taxpayer money) to come into Trenton. Today's Record reports the loan coincides with the $2.5 billion property tax rebate plan. Senator Lance aptly notes the program is not sustainable following this year,

The fact that the state is borrowing money upfront to cover the costs of the property tax rebates is further evidence that the program is not sustainable, said Senate Minority Leader Leonard Lance.

"I think it's an indication of a much more serious matter next year, when we will not be able to pay for the program because we don't have enough revenue," said Lance, a Hunterdon County Republican.

This year's rebates will be paid for with revenues from last year's 1-cent sales tax hike.

However, a new source of funding has yet to be determined for next year, if the rebates are to be repeated.

Next year the state expects to start off the budget season with a $2.5 billion structural deficit.

We've added a lot of readers since the days of the special session on property tax reform, so here are some of our thoughts on the program:

• Businesses pay the nation's highest property taxes twice - once by virtue of paying about one-third of the state's overall property tax package and then again through higher wages needed to attract and retain talent seeking a high quality of life. Despite paying one-third of property taxes collected, it is seldom noted businesses are ineligible for the program.
• Any degree of property tax relief is appreciated, but short-term relief is no substitute for the long-term reform measures needed.

Of course, all this heightens the need for a new school funding formula and to reduce spending. Before plans such as asset monetization can be considered, spending patterns must be altered. If you're going to sell off the family car to pay off your credit card, you'd better cut up the card. That has yet to happen.

Bills In The Drawer

Piggybacking on today's first blog post is another story from the Record which further details New Jersey's mounting debt crisis. Adrienne Lu's article focuses on the pensions and benefits owed state workers and how escalating healthcare costs are burdening taxpayers in ways most do not imagine.

The private sector has moved from a defined benefits system to one of defined contributions. That allows companies to budget properly as they know future costs. The New Jersey government has not changed, leaving taxpayers on the hook for benefits owed with little control over costs. It is a nationwide problem exacerbated by other fiscal issues in the Garden State.

Earlier this year, the Governor successfully negotiated a plan to have new retirees contribute 1.5% of their pensions toward their own health benefits, only to have the state government unable to develop the necessary mechanism by the agreed upon deadline. That plan was nixed and now those same retirees can skip the payments if they participate in a "wellness program" (something the teachers union agreed to earlier this year), but as The Record notes,

It turns out that "wellness program" doesn't even exist yet.

The swapping of a health care contribution for a yet-to-be-created wellness program is the latest example of just how difficult it will be for the state to keep both health care and pension costs for government workers in check on behalf of taxpayers, who pay the highest property taxes in the nation.

Mark Perkiss, a spokesman for the Treasury Department, said the state is waiting to receive proposals from vendors before deciding what the wellness program will entail.

"The problem is the state is in a financial crisis," said Sen. Stephen Sweeney, D-Gloucester, who is also a labor union official. "We don't have the money to pay our bills. It's only going to get worse."

If we fail to change the status quo, then the problem will get much worse. In the interim, the legislature and administration have a slew of proposals developed during the special session on property tax reform that remain idle on their desks. Implementing more of those would be a start, as would a freeze on new benefits - including those with yet unknown costs such as paid family leave.

Must Read: How NJ Got $30 Billion in the Hole

The CIANJ dedicates a large share of its energy at ways to chip away at New Jersey's massive debt - and how to not make it worse. Today's Record features an article with the same title as our blog post which details the many ways in which New Jersey amassed such a large debt. It takes a lot of creativity to dig yourself a $30 billion hole. The financing mechanisms, budget gimmickry and court orders may be complicated but the underlying answer to the $30 billion question is simple: we spent too much. Philosophical points aside, the New Jersey government spent more money than it was collecting and the problems were intentionally left to future legislatures and administrations.

John McAlpin's excellent article as to where the money went and how is available here.

And remember, there are already plans and ballot questions scheduled to issue more debt.

The MSM Urges Caution on School Spending - Now You Know Things Have Gotten Bad

It's rare, but every so often we here at NJ Business Matters agree with the mainstream media. Today, the MSM was on target when the Star-Ledger urged caution in allocating funds for the New Jersey School Development Authority. You probably remember and may have cursed its predecessor, the School Construction Corporation, which built schools in such a way that they cost 45% more than those funded by local school boards. The $8.6 billion built more than thirty schools, with an original goal of more than 100 above that total.

Before the NJSDA receives its requested $3.25 billion, the Ledger reminds us,

Dewey Street is one of those sites. The once-solid neighborhood was disassembled to build University High, a school that the SCC did not have money to construct. The agency's action left a ghost town of homes -- ideal havens for vagrants and drug dealers. So the state demolished most of the empty houses.

That's good, but what re mains five months later is big piles of rubble and old mattresses. The street is littered with carpets, old furniture, lumber and bags of trash. The NJSDA says other people are throwing trash on the site. The city bears some responsibility for allowing trash to accumulate, but if people are dumping, it may be be cause the authority has turned Dewey Street into what cer tainly looks like a dump.

The agency did not put deadlines into its contracts as a way to require the completion of phases of a project within de fined periods of time. That failure to build in accountability is what caused many of the SCC's problems in the past.

If the Dewey Street demolition was supposed to be an example of how the new school construction agency functions, why should anyone be encouraged?...

But no new projects are planned simply because there is no more money. The authority wants the Legislature to approve another $3.25 billion. And where would lawmakers get the money? From the Economic Development Authority, which has bank rolled the other school construction. And where does the EDA, a supposedly independent agency, get the funds? It goes to the state treasurer.

All of this comes as the governor is talking about the urgent need to reduce the state's debt. His plan to monetize the state's assets -- such as the Turnpike and Parkway -- is intended to provide money to lower that debt. That's all that's known for sure about Corzine's proposal.

Remember that NJ has a cost of living and doing business already ranked in the top 5. In fact, that cost is the chief obstruction to a more prosperous, livable New Jersey. The Ledger is right to urge caution.

That's Billion...With a "B"

Today's New York Times once again outlines how New Jersey, through administrations and legislatures for more than a decade, managed to accumulate a $58 billion shortfall in public retiree care. The complete story is available here, but the Cliff's Notes version can be quickly explained in three paragraphs,

In 1994, New Jersey decided to stop setting aside money in a fund to pay for health care for its retired public workers. The savings paved the way for a big tax cut.

Meanwhile, hundreds of thousands of public workers were being told that as long as they worked 25 years, the system would provide virtually free health care for them when they retired, often when they were as young as 55....

When New Jersey stopped funding its retiree health plan 13 years ago, it also stopped trying to keep track of the cost. That created the illusion that the long-term obligation was zero, not billions of dollars, and made it easy for the state to enhance its already rich benefits.

Regular blog readers already know that future retirees were expected to pay a small percentage of their pension toward health benefits, which would have produced some savings and marked a significant deviation from past unaffordable practices. However, the state was unable to develop a program by the contractual deadline, meaning some could opt out by participating in a wellness program.

The article also highlights the fact the NJEA negotiates with New Jersey's more than 600 individual school districts (thus giving them 600 opportunities to increase benefits).

Meanwhile, retired teachers have dodged the bullet entirely. Their union, the New Jersey Education Association, negotiates contracts with school districts and not with the state, and the state has not asked them to chip in for their premiums....

Another problem is that for years, New Jersey has allowed towns, school boards and other local governments to set pay and benefits. School districts, which contribute to health care only for active workers, can help their own budgets by negotiating small pay increases and reassuring their employees that the state will retain ample retirement packages. The state then has to come up with the money.

You get the idea, and regular blog readers know the CIANJ is pushing for all options to be available. Reworking our disjointed school funding formula, bringing public employee benefits more in line with the private sector and yes, asset monetization, must all be considered if our over-taxed businesses and residents are going to be able to remain in the state. 60% of residents have reported they cannot keep pace with cost of living increases - the most unacceptable number of all.

Another Day, Another Ranking, Further Proof of Opportunities Lost

CNBC has completed the release of its "America's Top States for Business" and there are striking (though not surprising) similarities to last week's Forbes ranking. CNBC pegs NJ as the 15th best state for business. Blog commentary on the Forbes rank here and CIANJ press release full of pithy quotes from CIANJ President John Galandak here.

Some New Jersey specific rankings include,

#1 in Quality of Life
#5 Ranking in Access to Capital
#2 Rated in Technology and Innovation
#45 in cost of doing business
#48 in cost of living

Once again we see the tremendous advantages New Jersey has both in its natural resources and geographical location and those brought about by the hard working men and women who have established a high quality of life. Yet, once again, we see that those who built all that are increasingly unable to afford to remain in the state. Just doesn't seem right.

Here are some common traits among the top five states, 5. North Carolina, 4. Georgia, 3. Utah, 2. Texas, and 1. Virginia:

• All five are right to work states
• All scored high in the workforce category (NJ placed 40th)
• In education, all recognize that spending more money does not necessarily equate to better results
• All featured a cost of doing business or a cost of living within the top 15

The national graph is available here with New Jersey specific ranks here. When legislators and candidates make their way to parades and talk to you about their outlook for the future of New Jersey, be sure to ask them about rankings such as this and the most recent Monmouth University survey.

Red Jersey

The Star-Ledger is reporting that the Economic Development Authority has agreed to have New Jersey take on an additional $150 million in debt to fund special needs housing.

The new loan will be repaid by motor vehicle fines paid by scofflaw drivers over the next 31 years.

It is the final installment of a $200 million plan lawmakers approved in 2005 to borrow against future motor vehicle fine revenues to develop apartments, condominiums and houses for individuals with special needs....

Besides raising $150 million in new funds, the state plans to issue another $425 million in bonds to refinance portions of an earlier set of motor vehicle revenue bonds that were issued to balance the state budget three years ago.

More Relief for NJ's Public Employee Unions

In the waning hours of this year's budget session, government inability allowed the state's public employee unions to win back something they negotiated away this winter - the right to free health insurance for retirees.

Today's Star-Ledger explains,

Union officials got the chance to revise the co-payment provision after the Corzine administration said the state would not be able to meet the contract's Jan. 1, 2008, deadline for setting up a new set of health insurance plans for workers and retirees.

Under the original plan, retirees would pay 1.5% of their pensions into their own health plans, something more in line with private sector practices. Now, those meeting the threshold of years served can skip the payments if they participate in a "wellness program".

Unsustainable benefits negotiated by legislatures and administrations of the past have made health insurance one of the fastest growing budget items, accounting for $1 billion this year and it is expected to double within five. During the "special" session on property tax reform, the Joint Legislative Committee on Public Benefits Reform's first health benefits recommendations were to make current employees AND future retirees pay some portion of their health benefits.

The sooner the recommendation becomes practice, the sooner taxpayers can see an easing of upward pressure on their taxes.