Sunlight could not have said it better. Supporting the NJEA’s early endorsement of Gov. Murphy, NJEA Vice President-elect Steve Beatty said: “There is no governor in the nation who has worked as closely and collaboratively with public employee unions than Gov. Murphy.” (June NJEA Review, p. 16).
Just so. The record $46.3 billion budget Murphy just signed proves that Beatty’s statement was well justified. Right in time for Murphy’s re-election campaign.
As John Reitmeyer reports in today’s NJ Spotlight, this year’s budget represents a gusher of money for the NJEA’s priorities. Government spending is up 15% over last year, and up more than 50% over the last decade. Where did all this spending go?
- A record $6.9 billion public pension payment, which was an NJEA priority. While this money will improve the funding levels slightly, the unreformed public pension system is still in crisis, and spending 15% of the budget every year on an unreformed pension system is not sustainable for the state.
- $18 billion in state school aid, obviously another NJEA priority, up 29% (or $4 billion) since Murphy took office.
- About $600 million for tax rebates but with no change in tax rates, which accords with the NJEA’s priority of having maximum government revenues. (Other states like Ohio are using their budget surpluses to reduce tax rates).
Where did the money come from?
- Higher taxes. Murphy raised taxes on the wealthy (twice) and corporations. State income tax revenues were up $3 billion over last year, with sales tax and corporate tax revenues up $1.5 billion and $2 billion, respectively, during Murphy’s tenure. That’s $6.5 billion of increased tax revenues. Great for the public unions feeding at the government trough but terrible for NJ long-term economic health.
- More debt. State debt is up to $48 billion (including last year’s emergency $4 billion borrowing), which is up 23% over the past decade. And as of June 30, 2020, NJ still had over $128 billion of unfunded public pension liabilities, which is debt, and which is why Murphy’s record pension payments will not make a big difference unless and until these pensions are reformed. Murphy did set aside $2.5 billion to pay down debt, but remember he borrowed $4 billion to be able to do that.
- Draining the state’s rainy day fund (although Murphy did increase budget reserves).
The NJEA is always and everywhere for more government spending, especially on school aid and public pensions, and for ever higher taxes to provide the necessary revenues. And if tax revenues are not sufficient to provide the desired level of government spending, then more debt to fill the gaps.
Murphy’s latest budget gives Murphy’s NJEA pals exactly what they wanted. In return, during this election year, Beatty’s warm words – and the NJEA’s early endorsement – are exactly what Murphy wants to hear.
New Jersey under Gov. Murphy: government by and for the public unions.