Friday, July 01, 2011

New Jersey Has a Budget; Christie Vetoed Unconstitutional Spending Added By Legislature

There will be no budget shutdown in New Jersey as is the situation developing in Minnesota. Gov. Chris Christie signed the budget presented to him by the Democratic-controlled Legislature, but not without slashing spending by $900 million. The new $29.7 billion budget is $100 million more than the budget he originally presented to the Legislature, but the Democrats will spin mightily to complain that Christie slashed spending and made harsh cuts.

The problem for Democrats is that they propped up their spending with nothing more than wishful thinking. The state was already being forced to use a borrowing plan to tide the state over until it can present a bond measure in a couple of weeks because it lacked revenues on hand to do so. Democrats added hundreds of millions more in spending than they could ever hope to expect from their millionaires tax that they further added. Christie vetoed the millionaires tax and the spending. Besides, the millionaires tax had to be law before the budget was enacted in order to claim that the revenues were available and present - and it wasn't:
Little mattered until Thursday — Democrats could pass what bills they wished on Wednesday, but if they did not survive the Christie cut, the bills were almost certainly dead. The budget as sent to Christie was doomed. The only question was whether it would be cut in a way that would allow the state to not shut down or force legislators into a marathon session over the holiday weekend.

Christie's one gift to Democrats was that he chose the former. There will be no missed barbecues this July 4. The Democrats' budget was unconstitutional; it was not balanced as required by law. It may have included some dandy stuff, but there were insufficient funds. To borrow an oft-quoted phrase: Democrats were writing checks the state could not cash.

The first problem was that the budget only could be balanced if there were a millionaire's tax. And there wasn't. And there wasn't going to be one. But even if Christie had supported such a tax, it needed to be law before the Democrats' budget went to the governor.

It is not an easy time for legislators or the governor. They are all political creatures with agendas. Democratic legislators sold out to non-elected Democratic power brokers and agreed to transform public employees' lives, changing formulas for pensions and workers' contributions toward health care benefits. In the wake of that big sellout, there was a new kind of fire sale in which everything that could be salvaged from those ashes was put up for a vote.

I have not absorbed all the Christie cuts. Most of the increased school funding toward the so-called non-Abbott school districts has been cut. So has the Earned Income Tax Credit increase. And the millionaire's tax was axed like a tree in the Koch brothers' forest. None of this is particularly surprising. Nor will it be surprising to see Democrats try to override some of these vetoes next week.

To date, Christie has been brilliant at holding together the Republican caucus. I doubt few, if any, will defect. And the bottom line is that the budget has to be balanced by law. There is only so much revenue. The debate should be about priorities, and it has never been about that. Democrats added on without taking other things out. The only way to win with Christie is to force him to transfer one item for another. Instead, he was able to say the budget increased spending beyond certified revenues. It did.
Democrats in the Legislature have screwed the state for so long that their song and dance about how budget increases being cuts are getting stale (well, it's a common song and dance - especially in New York). A budget that spends more on education than the prior year is considered a cut because the spending is less than what the Democrats demanded even though there's no revenues to back up the plan.

New Jersey's Constitution requires a balanced budget, and that means that spending must require sufficient revenues. When those revenues aren't expected or can't be reasonably expected to materialize, something has to give. The Democrats' spending spree had to be cut.

The new budget will also provide $468 million in pension obligation payments, which is something that the state had not done in recent years and is part of the deal to overhaul the pension system in the state. There's also a slightly expanded homestead property tax rebate/credit. In all, the state is spending $30 million more than last year on education spending, including $450 million as required by the State Supreme Court following its misguided decision about those districts not getting a thorough and efficient education.

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