By Chief Political Correspondent Michael Aron
Former New York Lt. Gov. Richard Ravitch and his friend Paul Volcker, the one-time Federal Reserve chairman, put together the State Budget Crisis Task Force. Their group has studied the fiscal problems of six large states, and today in Trenton, presented their report on New Jersey.
The exercise has been worthwhile, Volcker says. “It confirmed our view that California has a big problem, New York has a big problem, the most crushing problem may actually be Illinois, but New Jersey’s got a big problem too,” he said.
Before a room of Trenton players and policy wonks, former New Jersey state budget director Richard Keevey walked the audience through highlights of the report.
“New Jersey faces mounting infrastructure needs,” Keevey siad. “Our report demonstrates and documents, based upon reports within the government, about $133 billion over the next ten years, not counting Sandy.”
Among the report’s recommendations:
- strengthen the state’s Rainy Day Fund
- include federal dollars when presenting the state budget (which takes it from a $33 billion document to $48 billion)
- develop a strategy to fund critical infrastructure needs, and
- engage in multi-year budgeting.
“We need to do multi-year planning and budgeting,” said Keevey. “We put out a budget that only looks at one year, it doesn’t go five or six into the future. You make a decision in year 1 you should know what it means in year 5 and 6. Hardly any state in the country does it. We think it’s important to do.”
Volcker, who was born in Cape May and raised in Teaneck, says the most important recommendation is to fund the pension system.
“You’ve got a pension problem,” warned Volker. “That’s been attacked in the last budget or two in these promises of funding over a seven-year period. I don’t think that’s the end of what you’ll hear about pension problems. Just in sheer magnitude of dollars, that’s the biggest problem.”
Ravitch organized the task force to understand the extent of the fiscal problems facing states in the wake of the global financial crisis. He said, “I think that states have a lot to learn from each other. And I think it’s critically important that the problem that states face be injected into the public discussions in Washington about the federal deficit at the moment.”
NJ Spotlight founding editor John Mooney moderated the session.
The report stays away from specific policy recommendations in order to transcend political differences. Many of its ideas have been around 30 years, but their urgency is as great as ever.
Audience members told us the words here today may have been moderate in tone but the message was sharp. And the public may be more receptive to a serious discussion of state finances than it has been in the past 30 years.