The NJEA Hits the Trifecta with Murphy’s Budget; the Rest of NJ, Not So Much

Governor Murphy presented a nine-month FY2021 budget yesterday that props up state government spending by issuing bonds and raising taxes.  As analyzed by NJ Spotlight’s Jon Reitmeyer, there is virtually no state government belt-tightening: state spending will “still top $40 billion for a traditional 12-month fiscal year … even as he is projecting steep revenue losses due to the pandemic.”  By issuing bonds and raising taxes, Murphy appears content to push the cost for current spending on to NJ’s future generations.  That means more debt to be paid off and a weaker economy for our kids and grandkids.

Why would Murphy burden future generations with the cost of propping up current spending?  Because it gives his biggest political supporters, the public-sector unions, immunity from COVID’s effects.  We already know that Murphy negotiated a deal with the state employees union, CWA, with no lay-offs – at a time when many private-sector workers have been laid off.  With his proposed budget, Murphy has presented the NJEA – his biggest political supporter – with a trifecta of its main priorities:

1. A record and full pension contribution of $4.9 billion – precisely the same level proposed before COVID hit.  Note that the $4 billion of bonds can be seen as funding this payment, and thus can seen as de facto pension obligation bonds.  Remember that in 1997 NJ issued $2.8 billion of POBs in a disastrous deal (which the NJEA strongly supported) that burdened future generations with over $10 billion in pension costs.  The legislature subsequently banned POBs, but now Murphy has effectively brought them back, using “emergency” borrowing to fund a non-emergency cost.  Of course, the NJEA has praised Murphy for making the full payment.
2. State education aid has been maintained at last year’s level despite the fact that just about nothing else in NJ – except the pension payment – has been maintained at last year’s spending level due to the ravages of COVID.  This supports local school budgets, thereby maintaining salaries and preventing lay-offs for NJEA members. The NJEA of course wants even more money, but recall that Governor Christie was forced to cut state education aid by $800 million in the aftermath of the Great Recession.  Yet, amidst a COVID recession, Governor Murphy’s belt tightening amounts to … ZERO.
3. Millionaire’s tax.  The expansion of the millionaire’s tax has long been an NJEA priority, and Murphy has dutifully continued to push for it, including in his current budget.  Along with other taxes (including a corporate tax), that’s another $1 billion to fund the NJEA’s priorities.  But NJ already has one of the highest tax burdens and largest outmigration problems in the nation. Unfortunately for the rest of the state, that means even more people, businesses and wealth will leave the state.  That means a weaker economy for the future generations who will have to pay off the increased debt.

That’s three-for-three, a nice trifecta for the NJEA.  With our governor appearing in ads paid for by the NJEA (via NJEA-funded, dark money Super PAC New Direction), NJ citizens would be right to question just who the governor is working for.  Murphy’s budget hits the trifecta for the NJEA, with the rest of NJ and our kids and grandkids picking up the tab.  Some deal.