Once again under Gov. Murphy, when it comes to the budget, politics supersedes fiscal responsibility. Murphy and his pals in the legislature sure know how to take care of their friends in an election year.
Adding to a continuous string of record budgets, Murphy signed a $54.3 billion FY2024 budget. That’s up over 7% from last year and over 56% since Murphy took office. As shown in the graph below, in six years under Murphy, state spending increased by $19.6 billion over Gov. Christie’s last budget of $34.7 billion.
But without the revenue windfalls, this spending is unsustainable. Murphy benefited from $9 billion in state and local federal COVID aid, $4 billion in expensive (and ultimately unnecessary) debt, and billions in surging tax revenues from the post-COVID economic and market rebound. But the COVID money will run out, the debt will eventually have to be paid back, and tax revenues are already falling billions short of their previous levels. As we reported last week, given the trajectory of Murphy’s spending, the Sweeney Center projects that there will be a $12 – 18 billion budget shortfall over the next several years, which would likely strain Murphy’s much-touted $8 billion Rainy Day Fund. Seen in this light, increasing spending looks unsustainable, but that didn’t stop Murphy from signing the budget.
Of equal concern is that Murphy is spending all this money without doing the hard work of fixing long-term problems that need to be fixed. The case in point is making another $7 billion payment into a structurally unsound and unreformed pension system. As Sunlight has repeatedly detailed, despite Murphy’s pumping $25 billion into the pension system from FY2021-24, the state’s largest pension plan, the teachers’ plan (TPAF), is a mere 35% funded. The Urban Institute recently placed TPAF in its “Deep Red” category and projected it would become insolvent in 20 years. Yet Murphy continues to do the bidding of his biggest political supporter, the NJEA, and throw good money after bad.
Columnist Carl Golden captured the rank political essence of the FY2024 budget, asking if it is “part of an overall campaign strategy to build a fiscal firewall to prevent losing six Senate seats and seven Assembly seats” in this fall’s legislative elections.
Just so. Murphy plays to his special interest benefactors (e.g., the NJEA) and the legislature to its various voting constituencies. Again, Golden: it’s an “abuse of the system.”