NEW JERSEY'S WARNING
February 28, 2008
In his annual budget address to the Legislature, New Jersey Governor Jon Corzine outlined the state's dire fiscal crisis, warning that several budget cuts would have to be made to find a way to bring in more money, says the New York Times.
Unfortunately, New Jersey is not alone:
- More than 20 states, including New York, are facing budget shortfalls next year, due at least in part to the economic downturn, according to an analysis released this week by the Center on Budget and Policy Priorities.
- The report said a few states -- most notably, Arizona and California -- face even bigger deficits than New Jersey.
But New Jersey's problems are magnified by a long history of irresponsible borrowing and spending. In a self-destructive gimmick, the state seriously underfunded its pension plan and used the money to pay for current spending programs. As a result, the state's annual debt service now exceeds what it invests in higher education.
The Garden State's woes should serve as a warning to other states, whose lawmakers might be inclined to use budget gimmickry to deal with shortfalls in revenue and get through immediate fiscal troubles, says the Times. As New Jerseyans are learning the hard way, that is likely to lead to much bigger trouble in the years ahead.
Source: Editorial, "New Jersey's Warning," New York Times, February 28, 2008.
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