Gov. Murphy is out with his FY2022 budget. Four facts stand out:
- Murphy is increasing spending to $44.8 billion, a 10% increase over last year.
- Murphy is devoting over 14% of this budget – $6.4 billion – to shore up NJ’s worst-in-the-nation public pension system. While making the full payment may seem like the right thing to do, in this case it is not. Here’s why: the largest pension fund is the teachers’ pension fund (TPAF), which was 27% funded entering into the pandemic. It is broken and needs to be reformed. One, or even a few, full pension payments will not save it. Putting $6.4 billion into unreformed pension funds is throwing good money after bad, which hurts all NJ. With his re-election campaign in 2021, Murphy is taking care of his political pals at the NJEA, which desperately wants to tell its members that after years of neglect the NJEA is finally focusing on their pensions. You can be sure the NJEA will take care of Murphy in this fall’s election. (Murphy also increased eduction aid by $578 million, which also sits very well with the NJEA).
- Murphy borrowed $4.3 billion in high-coupon, non-callable debt to help finance all this. So Murphy is spending now (during an election year) and making future New Jerseyans pay for it. Recall that NJ is already America’s most-indebted state. Some deal.
Sadly, Murphy’s budget is more of the same for NJ: more government spending to take care of powerful special interests funded by more borrowing. The NJEA and Murphy win. NJ loses.