| MAY 29, 2014

The governor’s reliance on wishful thinking when it comes to the budget finally comes up against reality.

Being governor is all about having options, settling on a course of action, marshaling legislative and public support, and then implementing it smoothly and effectively.

From time to time, though, issues arise for which none of the available options is particularly appealing or without considerable risk. The choice is narrowed to selecting the one that is the least distasteful.

This is where Gov. Chris Christie is at the moment.

The state budget is more than $800 million in the red; he faces a legislative revolt and two court challenges to his plan to dramatically reduce contributions to the public pension system; the state’s credit rating has been cut six times, and the outlook for 2015 is equally gloomy.

Moreover, he’s deferred the homestead rebate program until next year, the equivalent of a $375 million property tax increase on the seniors and disabled eligible for the credit. The rebate program has been skipped in three of the five years Christie’s held office.

The shortfalls are the product of successive budgets built upon wishful thinking rather than hard fact. The administration based its proposed spending on revenue growth of between five percent and seven percent, despite repeated warnings that the state’s economy — while recovering — remained too weak to sustain such optimistic forecasts.

As the gaps between income and spending developed toward the conclusion of each fiscal year, they were bridged by fund transfers, shifting money from dedicated programs, or delaying expenditures until the following fiscal year.

The effect of these last-minute manipulations was to create a rolling structural deficit from one year to the next, putting off an eventual day of reckoning when the shortfall reached a level too great to be overcome by bookkeeping sleight of hand.

The Legislature is hardly an entirely innocent bystander in this drama. Despite hearing the same warnings Christie heard — including from its own budget research office — the Legislature accepted the governor’s glowing revenue estimates and the spending that went along with them.

The Democrats recent indignation over the governor’s inclusion of some $32 million in tax and fee increases was short of genuine as well, since both they and the media were told of the plan in a treasurer’s budget briefing in February.

The sheer size of the impending deficit left Christie with no option but to reduce by $2.27 billion the state’s contribution to the public pension system this year and next. His opposition to any sort of broad-based tax increase and his promise to veto one should the Legislature approve it left the pension payment as the only source of readily available funds sufficient to cover the shortfall.

The reaction of the Democratic legislative leadership was predictable — outrage, accusations that the governor was in violation of the law, and warnings that the state’s credit rating would be downgraded yet again.

Senate President Steve Sweeney who earlier this year threatened to refuse to act on the budget and shut down state government if the pension payment was not made in full didn’t repeat it, but said instead he would pursue reinstatement of a surcharge on incomes above $500,000 – the so-called millionaire’s tax — something Christie has vetoed twice.

It’s not likely that Sweeney will follow through on a government shutdown. Democrats are leery of being blamed for denying essential state services to taxpayers to prove their point that shoring up the pension plan for public employees is more important.

In the ensuing public relations war, Christie would seize the high ground, insisting his plan addressed the budget shortfall and protected against a tax increase while Democrats, on the other hand, were willing to punish taxpayers in the interest of appeasing its public employee union base. He would argue, with validity, that the shutdown was initiated by the Democrats in a brazen move to gain political advantage.

The more likely Democratic strategy would be enacting the tax surcharge on wealthy earners, include the revenue in the pending budget, restore the cut in the pension payment, and send it to Christie’s desk.

As anticipated, the governor would veto the surcharge legislation, use his line-item veto to strike the revenue from the budget, and proceed with the reduced pension payment.

Democrats are short of the required votes to override a veto, but will settle for a “lose the battle, win the war” outcome, one which they believe will support their argument that the governor is more sensitive to the desires of the wealthy than the middle class.

They’ll point out that a modest increase in the tax rate for upper-income earners has consistently enjoyed overwhelming public support and that Christie, by his steadfast opposition, has turned his back on the majority of taxpayers while clinging to the discredited notion that the wealthy will flee the state in great numbers if faced with a tax increase.

Christie’s resolute opposition to any tax increase, including raising the gasoline tax to replenish the soon-to be-bankrupt Transportation Trust Fund, guarantees that in the end he’ll prevail. His line-item veto and the Democrats’ inability to override it ensures he’ll succeed.

The New Jersey Education Association and the Communications Workers of America have challenged Christie’s pension reduction in court, alleging that his action violates a 2010 law that locked the state into a specific payment timetable. How and how long the litigation will take to play out is anyone’s guess.

Of the options at his disposal, Christie chose the one he felt posed the lowest political risk. For instance, should he decide to seek the Republican presidential nomination in 2016, he can do so as someone who refused to raise taxes while reining in the burgeoning cost of public employee benefits — conservative credentials all.

His candidacy would still confront questions about his fiscal stewardship, the lagging pace of job creation and economic growth, and the state’s creditworthiness being near the bottom in national standings. Like all his predecessors, Christie enjoys a wide array of options to address problems. Nowhere in the oath of office, though, does it mention they’ll all be good ones.

Carl Golden is a senior contributing analyst with the William J. Hughes Center for Public Policy at the Richard Stockton College of New Jersey.


Money and politics lead to scandal


Recently, the United States Supreme Court, in a 5-4 ruling in McCutcheon v. Federal Election Commission, effectively overruled limits on aggregate campaign contributions. Before the ruling, individuals were restricted to giving no more than $123,000 to candidates and party committees per election cycle.

The decision by the court allows even more money in a political system awash in dollars and influence peddling.

For some perspective, the 2012 median household income in the United States was $51,371; and, in New Jersey it was $69,667. These figures are from the U.S. Census Bureau American Community Survey.

Not only does this ruling demonstrate how out of sync Washington is with the rest of the country, it also points to the degree to which Washington is not in tune with regular Americans.

Clearly, an individual making about $50,000 in the United States, or even $70,000 in New Jersey, is in no position to contribute $123,000 or more during the course of an election cycle. Citizens in this income area are lucky if they can afford to make a $5 or $10 contribution to a favored candidate for office

This ruling rewards the interest groups and individuals who already dominate Washington, advocating agendas that push apart the American electorate and tempting candidates and elected officials.

United State Sen. John McCain, Republican from Arizona, has already predicted, “There will be major scandals in campaign finance contributions that will cause reform.

“There will be scandal,” McCain repeated. “There’s too much money washing around.”

Money scandals in national politics and in New Jersey politics serve as warning signs of too much money concentrated in too few hands. The film “American Hustle” is a fictional account of the Abscam scandal of the 1970s. More than 30 political figures were included in the bribery investigation. Eventually six members of the U.S. House of Representatives, a U.S. senator, a New Jersey state senator and the mayor of Camden were convicted of crimes.

In 2007, the then-U.S. Attorney Chris Christie warned mayors and other local officials at the New Jersey League of Municipalities convention in Atlantic City: “If over the next couple of days someone approaches you with an envelope of cash looking to seek a favor from you, unless it is your mommy, turn and run for the ocean.  It’s probably us.”

Despite the warning, two years later the U.S. Attorney’s Office conducted a sting involving bribes that ensnared local elected officials, real estate developers, a former punk rocker, an illegal body parts broker, five Orthodox rabbis and a retired exotic dancer.

Ted Sherman and Josh Margolin co-authored “The Jersey Sting,” which chronicled the true story of a three-year corruption investigation that ended up so comical and sensational that it found its way into late-night talk show monologues.

But it is not really funny because, as McCain said, “there will be scandal.”

Daniel J. Douglas is the director of the William J. Hughes Center for Public Policy at The Richard Stockton College of New Jersey.


Stockton’s Hughes Center for Public Policy Launches Online Forum, ‘Policy Hues’

Stockton’s Hughes Center for Public Policy Launches Online Forum, ‘Policy Hues’

For Immediate Release; with photo of Figart

Tuesday, May 27, 2014

Contact:    Maryjane Briant

                        News and Media Relations Director

                        Galloway Township, NJ 08205


                        (609) 652-4593

Deb 1









Galloway, NJ – Concerned citizens have another forum in which to engage on today’s public policy issues with the start of “Policy Hues,” a new blog (http://blogs.stockton.edu/policyhues) hosted by the William J. Hughes Center for Public Policy at The Richard Stockton College of New Jersey.

Policy Hues will feature blog posts from Dr. Deborah M. Figart, professor of Education and Economics in the School of Education and a Contributing Policy Analyst for the Hughes Center. Figart is also director of the Stockton Center for Economic & Financial Literacy, which serves as the southern regional office of the New Jersey Coalition for Financial Education (www.njcfe.org).

Dr. Figart received a Ph.D. in Economics from The American University in 1986 and a B.A. in Economics, summa cum laude, from Wheaton College (Mass.) in 1981.

Dr. Figart is an internationally known scholar in the field of labor and employment issues. She has written on the subjects of equal pay, working time, emotional labor at work, minimum and living wages, job evaluation and career ladders.

With her academic background rooted in her knowledge of economics, Dr. Figart will provide commentary on other public policy issues including those affecting the workforce, financial literacy and economic development.

She is the author or editor of 18 books or monographs, including: Women and the Economy: A Reader (M.E. Sharpe, 2003); Living Standards and Social Well-Being (Routledge, 2011); and Handbook of Research on Gender and Economic Life (Elgar, 2013). Some of her current research is on financial exclusion in the U.S. and the student loan debt crisis.

Dr. Figart currently serves on the Board of Trustees of Novadebt, a non-profit credit counseling corporation. She recently completed terms as a member of Atlantic County Advisory Commission for women and coeditor of the Review of Social Economy, a peer-reviewed journal in economics.

“We are pleased to have the distinctive voice of Dr. Figart in providing commentary on contemporary policy issues,” said Daniel J. Douglas, director of the Hughes Center.

“We encourage members of the public to read and comment on the blog posts,” said Douglas.

In addition to Dr. Figart’s blog posts, Policy Hues will also include columns from Carl Golden, press secretary for former New Jersey Governors Tom Kean and Christie Whitman. Golden is a senior contributing analyst with the Hughes Center.

The new blog expands the Hughes Center’s web and social media presence that includes a website (www.stockton.edu/hughescenter), Twitter handle (@hughescenter or (www.twitter.com/hughescenter), and Facebook (www.facebook.com/Hughes.Center.Stockton.College).

About the Hughes Center

The William J. Hughes Center for Public Policy (www.stockton.edu/hughescenter) at The Richard Stockton College of New Jersey serves as a catalyst for research, analysis and innovative policy solutions on the economic, social and cultural issues facing New Jersey, and is also the home of the Stockton Polling Institute. The Center is named for William J. Hughes, whose distinguished career includes service in the U.S. House of Representatives, Ambassador to Panama and as a Distinguished Visiting Professor at Stockton College. The Hughes Center can be followed on Twitter @hughescenter and found on Facebook at http://www.facebook.com/Hughes.Center.Stockton.College.


Opinion: Gov. Christie’s Made Champagne Promises on a Beer Budget

Opinion: Gov. Christie’s Made Champagne Promises on a Beer Budget

Carl Golden | May 6, 2014

Recipe for a fiscal crisis — optimistic revenue projections, midcourse corrections, and a Legislature all-too-willing to sign on

carl golden

Stripped of the sloganeering — “Turn Trenton upside down . . .” “the Jersey comeback . . .” “the new normal . . . ” — the brutally bleak reality is that the state’s fiscal condition is the worst it’s been in decades.

In a scene reminiscent of the investment broker staring in disbelief at the stock ticker in October 1929, the Christie Administration confronts the following:

  • A shortfall of $807 million in the current budget that must be bridged in less than two months.
  • The fifth downgrade of the state’s credit-worthiness by rating agencies since 2010.
  • A Transportation Trust Fund with no money left.
  • The need for $620 million to continue the state’s capital construction transportation program in 2016.
  • An underfunding of the statutorily mandated aid to education formula by $1 billion, leading to property tax increases or cutbacks in personnel and programs at the local level.
  • Unemployment stubbornly lodged at over seven percent.
  • A job creation rate that has recovered little more than half of those lost five years ago.
  • A scheduled payment of $2.2 billion into the state’s public employee pension fund.
  • A home foreclosure level now the highest in the nation.

Not surprisingly, accusations are flying thick and fast over who bears the responsibility for the sorry state of fiscal affairs, but a good deal of the blame must fall on Gov. Chris Christie who, as a candidate in 2009, pledged that “change is on the way,” an implicit promise that the old ways of tax and spend would end and be replaced by prudent policies to restore sound financial footing.

It’s been the rating agencies, entities with no political axe to grind, that have consistently identified the underlying reason for the state’s ills — wildly optimistic predictions of anticipated revenues year after year, despite repeated warning signs that the economy remained so fragile the estimates would not be realized.

Those same agencies agreed also to the continuing use of one-time budget maneuverings — fund transfers, postponing scheduled spending from one fiscal year into the next, a reliance on borrowing — all served to undermine long-term stability and erode confidence in the state’s credit standing.

It is indisputable that the administration’s revenue projections have fallen considerably short year after year, requiring midcourse corrections to maintain a balanced budget.

Whether the estimates reflected wishful thinking or were based on a political decision to do whatever it took to get through the year and avoid tax or fee increases is up for argument.

David Rosen, budget director for the Office of Legislative Services, has for each of the past four years, warned that the administration’s revenue estimates were too generous and submitted his own figures which, in the end, proved more accurate.

Rosen was publicly castigated by the governor who accused him of partisanship and lacking the intellectual heft to be taken seriously. Rosen can take solace in the knowledge his projections turned out much closer to reality than the administration’s.

With its optimistic estimates, the administration constructed annual budgets that, in reality, contained structural deficits which it then addressed at the end of the fiscal year by rolling them over into the coming year, virtually guaranteeing an annual crisis to be solved by last-minute manipulations.

The Legislature shares some of the blame as well, for accepting the administration’s projections despite Rosen’s warnings they wouldn’t materialize. It could have scaled back the estimates, crafted a budget to comport with the more conservative numbers, and sent the budget to the governor’s desk.

While the exclusive authority to certify revenue estimates rests with the governor, it would have been politically difficult for him to reject the lower projections in favor of his more optimistic outlook and seek approval for the spending increases it would permit.

With less than 60 days remaining in the fiscal year and with 90 percent of the current budget appropriations already spent, Christie has few options to fill the $800 million gap.

Widespread speculation has it that the governor will settle on a reduction or a delay in meeting the $1.6 billion obligation due the pension fund. It is the largest single pot of money remaining and, despite the potential for a major political uproar in the Legislature, it appears Christie has little choice but to move toward skipping a part of the payment or putting it off into the next fiscal year.

It’s highly unlikely that cuts in those few areas in which the money hasn’t already been spent will be sufficient to cover the $800 million shortfall, pushing the Administration closer to the pension solution.

Equally disturbing is the certainty that the budget difficulties — most prominently devising a method to replenish the Transportation Trust Fund — will continue into next year and the year after. Christie has given no indication his unyielding opposition to a tax increase of any sort and for whatever purpose has softened, even though a pay-as-you-go program for capital construction doesn’t appear possible or probable.

There is also the matter of increased payments into the pension fund, as well as the pressure to comply fully with the state’s aid to education formula.

There is no question that the administration’s wide-of-the-mark revenue estimates played a major role in creating the current crisis, as the credit rating agencies contend.

When the state could afford Budweiser, Christie budgeted for Dom Perignon ’55, a menu substitution the Legislature couldn’t resist, either.
It’s time for both to retreat from the taste.

Carl Golden is a senior contributing analyst with the William J. Hughes Center for Public Policy at the Richard Stockton College of New Jersey.