The NJ Budget Guessing Game

No one knows how bad the budget deficit is? How is this even possible? And even if the estimates range from "rosy" $3.5 billion to $6 billion, here's the simple way to deal with the mess - base your current budget on the worst case scenario, not hope for a rosier outlook.

If New Jersey is ever going to find a way out of its terminal tax and spend malaise, dealing with the situation head-on is the only way.

The budget process is a total mess, but if the budget really is only as bad as $3.5 billion, then the cuts made will actually have a positive ripple effect and further improve the state's fiscal situation going forward. New Jersey cannot base its budget on hope and prayer that tax revenues will come in above estimates.

And enough with the fiscal gimmicks. New Jersey has suffered for all their usage. John Cichowski, the Bergen Record's Road Warrior, notes that the refinancing does nothing to solve the long term structural problems associated with the Transportation Trust Fund, and that same rationale can be applied to all the other funds that were raided year after year to balance the budget. I made a similar argument here. Dynamo Buzz also made a similar argument.

For starters, Trenton must implement fundamental change - if a fund was designed for a specific purpose - like the transportation fund or the pension fund, they cannot be raided under any circumstances in order to balance the budget in any other areas. Not only does this force the legislature to make difficult choices about budget prioirties, but it maintains the solvency of the various funds.

Treating deficits as political footballs that can be tossed forward enough time so that it becomes someone else's problems is no way to do business. You only reduce the economic viability of the state going forward. It may be painful to deal with a huge budget deficit now, but it is far less painful to deal with it now than when the state is in recession and all the one-shots and gimmicks have been used up (including selling off state assets like the GSP and Turnpike).