Monday, December 14, 2009

Legislating Fiscal Irresponsibility

I've railed against Governor Jon Corzine's incessant attempts to engage in the fiscally irresponsible action of deferring pension obligation payments so as to avoid the tough decision of cutting spending elsewhere or dealing with the massively underfunded pensions around the state.

Now, Corzine is hoping to allow the state and municipalities to get away with still more fiscal irresponsibility and incoming Governor Chris Christie is backing the measure.
Towns, cities and counties could put off paying half their required contribution into the pension system this year, under a bill introduced in both houses of the Legislature over the past week.

The proposal would essentially extend by one year a controversial measure pitched and signed into law by Governor Corzine earlier this year to stave off property tax increases during the economic downturn. It allowed local governments to delay up to a half billion dollars in payments.

The bill is sponsored by Sen. Sandra Cunningham, D-Hudson, a member of Governor-elect Chris Christie’s transition team who is advising him on issues that affect municipalities. Local governments that take the short-term cost saving offer would have to make up the cost of deferment later. Actuaries would determine the unfunded liability in the pension systems, and towns and cities would replenish the funds with equal payments over 15 years beginning in 2013.

The New Jersey State League of Municipalities, the lobbying arm for the state’s 566 towns and cities, backed the measure Monday.

“It’s designed to help municipalities to manage the cost of their budgets in these difficult times,” said league director Bill Dressel. “Most towns have already lost the fifth payment of [municipal] aid, towns are looking at unprecedented foreclosures, a proliferation of successful property tax appeals, mandates.”
No, it isn't letting them manage their costs; it's allowing them to ignore and shift costs so that they can avoid making the tough decisions. It's a cop-out.

New Jersey currently faces a $1 billion shortfall, and the sad fact is that this plan will continue to saddle these same municipalities with a larger debt down the road; it simply passes the buck and shifts the decisionmaking on to others.

No comments: