Record’s Stile Rightly Eyes New Direction but Misses Murphy’s Active Role, Conflict of Interest
August 19, 2020The NJEA Hits the Trifecta with Murphy’s Budget; the Rest of NJ, Not So Much
August 26, 2020Former NJ budget director Richard Keevey urges Governor Murphy not to issue bonds (borrow money) to plug budget gaps in an op-ed in NJ Spotlight. Keevey argues that the true budget gap is about $4 billion – substantially less then the $9.9 billion that Murphy has been authorized to borrow. Keevey suggests that by cutting Murphy’s FY 2021 budget by 3%, not making the full $4.9 billion pension payment, and increasing tax revenues, Murphy can plug the budget gap.
Keevey makes the sound points that borrowing money is a one-time event that cannot be done again next year and will cost the state an additional $50 million in interest payments for every $1 billion of bonds issued. Such borrowing puts today’s expenses on the back of New Jersey’s future generations – in other words, our kids and grandkids.
SPCNJ is not convinced that raising taxes on NJ’s over-burdened taxpayers makes sense, given that wealth is mobile and can and will leave for lower-tax states. Remember that NJ has one of the worst outmigrations of people, businesses and wealth of any state (see SPCNJ’s report “Beware the Downward Spiral” for a full discussion). But Keevey is surely right that Murphy must look to reduce spending before he borrows more money and kicks the can down the road for our kids and grandkids to deal with.
Alas, SPCNJ fears that Murphy will seek to maintain government spending by borrowing and raising taxes. This would take care of his public sector union political allies at the expense of our future generations.