You Can't Have It Both Ways, Governor
Posted June 6, 2008

In his budget address earlier this year, Governor Corzine stated, “We must turn away from the era of spending and borrowing beyond our means … once and for all.” Talking of his intention to implement difficult changes to fix New Jersey’s fiscal fiasco, he said that “out-of-control borrowing must end;” that “we must reduce our crushing debt load;” that “debt service payments crowd out important priorities every year;” and that “[w]e should be cutting debt service.” 

He also outlined his plans to cut $2.7 billion from the state budget and urged several action steps including “put[ting] on the ballot this fall the Lance-Lesniak constitutional amendment to limit state borrowing.” This amendment, Senate Concurrent Resolution No. 39, would also require voter approval before the state borrows money.

Yes, in his budget address on February 26, 2008, Governor Corzine said all these things. But unfortunately, it seems they were just hallow words. Because just last week he was again advocating plans to borrow (yes, borrow) $2.5 billion (yes, billion) – without (yes, without!) voter approval.

As NJBIZ reports, Governor Corzine “is pushing for legislation that would let New Jersey borrow $2.5 billion to fund school construction in low-income communities.” The money would be used to restart 27 unfinished projects and fund 20 new ones.

If you’re wondering why 27 projects are currently unfinished, well, remember the school construction program that was stopped in 2005?  The school construction program for which the state pledged in 1998 to borrow $8.6 billion? The same school construction program that, as Newsday.com reports was “stalled by waste and mismanagement?” Yes, that is what Governor Corzine wants to restart – by borrowing yet additional billions.

Not surprisingly, this borrow-and-spend move by the governor faces opposition from both sides of the aisle. According to Senator Leonard Lance (R-Hunterdon), one of the sponsors of the Lance-Lesniak amendment to limit state borrowing, “Taxpayers should be given the right to decide at the polls whether they trust state officials to spend another $2.5 billion competently and efficiently.” And Senate Budget and Appropriations Committee Chairwoman Barbara Buono (D-Middlesex) noted that the governor’s move “seems violative of the spirit and the intent of the proposed change.”

Additionally, taxpayers should note, as Senator Lance points out, that of the $32 billion in state debt, most of it was not approved by voters. In fact, NJBIZ reports that since 1990, the state has borrowed $27 billion, and of this, only $3 billion was voter approved. And where has this gotten us? In multiple billions of debt!

Even worse, as the Courier Post Online notes, “The bonds would be repaid with state income taxes.” Translated: Get ready for a tax hike! The Post observes:

Since the Corzine administration already is struggling to balance the nearly $33 billion state budget, there does not appear to be a surplus of tax revenue. So, pledging income-tax revenue to pay off economic development bonds suggests the governor plans to adjust the rates upward. If that is not where the governor is headed, he should make that clear to legislators and taxpayers.

Well, he has not made that clear, and even if he were to do so, we question what other source or sources he would have in mind to repay the $2.5 billion.  Another toll hike plan? Cutting state agencies? Closing state parks?

The moral of the story is clear: The governor should immediately rescind his plans to borrow even one more penny as long as our state remains burdened with debt. And beyond this, the legislature should resoundingly approve the measure to place on the ballot a constitutional amendment requiring voter approval for all state borrowing.

After all, it’s our taxes that will be called upon to pay back the debt. We deserve to have a say.

 

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