By Brenda Flanagan
New Jersey expected to hit a $160 million jackpot from online gaming. Instead it flatlined at less than $10 million.
Residents earning less money in the struggling economy paid less income tax — just half of what the state projected. That’s why, in part, Standard & Poor’s claims, Gov. Christie’s budget isn’t really balanced: it relies on money that doesn’t materialize. Democrats pounced.
“We’re predicting higher income tax projections than, say, Manhattan,” said Sen. Paul Sarlo. “I don’t believe that’s realistic.”
Neither does Standard & Poor’s. Its prime bond rating is AAA — extremely strong. New Jersey was rated AA-minus — still a very strong evaluation. But S&P downgraded that — to A-plus. As S&P’s John Sugden explains, “There is increased pressure in terms of balancing their budgets and being able to better align their revenues and expenditures.”
S&P says New Jersey’s budget liabilities include a revenue gap it pegs at $786 million; a staggering debt load — $35 billion to $36 billion; and one-shot cash infusions like the $92 million from the Tobacco Settlement Fund.
“It’s costing you more to borrow long-term capital dollars,” Sarlo said. “Road projects, school construction — any long term facility needs.”
In town hall meetings, Gov. Christie says New Jersey’s biggest liability — it can’t afford pension and health benefits.
“You’re gonna have to tell somebody who thought they were getting X that they’re getting X-MINUS — and nobody wants to hear that,” said Christie.
“And it’s the taxpayers who are funding a big portion of the pension obligation here. Think about that. Those people are in the private sector — not gettng anywhere near the benefits they are having to fund for public sector employees,” said Assemblyman Declan O’Scanlon.
“I think we’re gonna be before the deadline. We’ll have a budget to introduce to the legislature and have it pass,” said Sen. Anthony Bucco.
Gov Christie’s take? The S&P downgrade underscores what he he’s been saying all along — time for the legislature to come to terms with reality. But what gets cut out of the budget? The devil’s in the details.