March 26, 2008
How to Solve New Jersey's Budget Crisis
Richard Keevey
Director, Policy Research Institute on Religion (PRIOR),
Woodrow Wilson School, Princeton University
Minutes of the 25th Meeting of the 66th Year
At the Friend Center, President Giordmaine called to order the 25th meeting of our 66th year. George Hansen led the invocation. Scott McVay read the minutes of last weeks talk by Ted Daeschler. President Giordmaine introduced new member Ed Weiss, Lynn Livingston introduced her guest Jane DeLung and Lucien Yokana introduced his guest Brad Mills. Bob Varrin announced that Neta Bahcall will be our guest speaker on April 9th and Linda Meisel will be our speaker on April 23rd. New developments on the website are available in writing.
Dick Hanson introduced our guest speaker Richard Keevey, Director, Policy Research Institute on the region (PRIOR) Woodrow Wilson School, Princeton University. His principal job is to run the institute. He was with Arthur Anderson, director of the office of management and budget for New Jersey, chief financial officer of HUD, etc.
Richard had a hand out that was very informative and he referred to several pages in the course of his talk. In his excellent extemporaneous speech, he began with a quick oversight of how the budget works. The legislature has to act on the budget every year by June 30th. The actual preparation begins more than a year earlier. All aspects of budget planning are considered, the revenue side, (income tax, sales tax, corporate tax, and all other) the expenditure side, (state aid, grants, debt service, and direct state service) state debt, unfunded liabilities, and historical trends for '08 and '09.
The largest problem in New Jersey is that there just is not enough revenue to support all the anticipated expenditures. Where can we cut programs that are good, but not critical, and how can we increase revenues? The Governor presents his budget to the legislature in February to March and from march through June the legislature reviews the budget, holds hearings etc. Critiquing the governor’s revenue estimates is the most important because they are often overstated.
By June 30th the legislature submits their budget (with any and all changes) to the governor. New Jersey is one of the few states where the governor has line item veto – he can change any and all line items, but cannot add any back into the budget. The governor also has to certify the revenue. In this regard the governor of New Jersey has the most power in the nation.
This year the governor has done several very extraordinary things:
Where does our money go?
Major issues facing the state include:
In the Q & A session, Mr. Keevey indicated that in his opinion, monetization of state assets and an increase in income taxes for the highest incomes are the most likely to happen.
This very interesting and informative talk ended at 11:30 AM.
Respectively submitted
John Lasley
Dick Hanson introduced our guest speaker Richard Keevey, Director, Policy Research Institute on the region (PRIOR) Woodrow Wilson School, Princeton University. His principal job is to run the institute. He was with Arthur Anderson, director of the office of management and budget for New Jersey, chief financial officer of HUD, etc.
Richard had a hand out that was very informative and he referred to several pages in the course of his talk. In his excellent extemporaneous speech, he began with a quick oversight of how the budget works. The legislature has to act on the budget every year by June 30th. The actual preparation begins more than a year earlier. All aspects of budget planning are considered, the revenue side, (income tax, sales tax, corporate tax, and all other) the expenditure side, (state aid, grants, debt service, and direct state service) state debt, unfunded liabilities, and historical trends for '08 and '09.
The largest problem in New Jersey is that there just is not enough revenue to support all the anticipated expenditures. Where can we cut programs that are good, but not critical, and how can we increase revenues? The Governor presents his budget to the legislature in February to March and from march through June the legislature reviews the budget, holds hearings etc. Critiquing the governor’s revenue estimates is the most important because they are often overstated.
By June 30th the legislature submits their budget (with any and all changes) to the governor. New Jersey is one of the few states where the governor has line item veto – he can change any and all line items, but cannot add any back into the budget. The governor also has to certify the revenue. In this regard the governor of New Jersey has the most power in the nation.
This year the governor has done several very extraordinary things:
- Recommended monetization of key roads in NJ for infrastructure improvement and reduction of state debt.
- Said he will recommend a budget that is less than last year
- Will not submit any more deficit budgets
- All debt requests will be submitted to the voters
Where does our money go?
- state aid
- grants (medicaid, home stead rebate, higher education)
- dept service/capital
- direct state service (day to day running expenses)
Major issues facing the state include:
- state is not a low tax state.
- Excessive reliance on the property tax
- public trust in government is at an all-time low
- current spending needs to be cut
- the budget needs to be presented and approved in TRUE balance
- asset monetization needs to be discussed as part of the budget solution
- pension and health care costs need to be restructured for new employees
- property tax reform initiatives must be accomplished
In the Q & A session, Mr. Keevey indicated that in his opinion, monetization of state assets and an increase in income taxes for the highest incomes are the most likely to happen.
This very interesting and informative talk ended at 11:30 AM.
Respectively submitted
John Lasley