Photo Credit: Jeff Zelevansky, Getty Images News, Thinkstock
Christie Acts To Close Budget Shortfall Without Raising Taxes Or Sacrificing Priorities That Matter Most
On May 21, 2014
Governor Christie puts is putting in place solutions to deal with New Jersey’s budget shortfall for the current fiscal year of approximately $1 billion.
To meet his constitutional responsibility to balance the budget this year and the next, the governor is taking the following actions:
Managing down government spending and producing reduced supplemental spending and lapses of unspent balances totaling $160 million in the current year and approximately $128 million in savings for fiscal year 2015.
Making a pension payment of $696 million this year and $681 million next year, a payment level that pays today’s bills by covering the costs accrued on the administration’s watch by active employees. This payment level will not increase the accrued unfunded liability for active employees in the pension system, but does not pay down the unfunded liability accrued by the irresponsibility of previous governors and legislatures.
Due to April’s disappointing revenue results for fiscal year 2014 and corresponding adjustments for fiscal year 2015, the following changes are being made to revenue projections:
The Administration is projecting approximately $31.5 billion in total revenue for fiscal year 2014, a reduction of 3.2 percent from February.
We are now projecting $32.7 billion in total revenue for fiscal year 2015, a 5 percent reduction from February.
Overall this represents a revenue reduction of $2.75 billion across the two fiscal years that the Governor is detailing solutions for today.
Even with these reductions, Governor Christie has contributed more to the pension system than any other governor in New Jersey history. The story behind the numbers represents the problem, however. Roughly 80 percent of the payments this Administration and this Legislature have budgeted in recent years have been directly tied to decisions and events of the past going back a decade and half at least – underperforming of the pension fund, benefit enhancements with no way to pay for them, underfunding the state and local payments or skipping them altogether.
States across the nation are facing the same revenue and entitlement cost challenges as New Jersey:
States inside and outside our region are dealing with significant revenue shortfalls based on missed projections for April revenues and the impact of the fiscal cliff, including Connecticut, Vermont and New York.
More than 40 states have taken steps in recent years to try and rein in mounting public employee pension costs.
Across the country the total unfunded benefits liability has grown from $3.1 To $4 Trillion Since 2009.