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Re: NJ Budget Weighed Down by Old Debt -?You have to stop borrowing, no matter how worthy the cause is.?
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This Credit Card Culture goes back to at least McGreavey. Just can't stop girls from shopping.

Posted on: 2009/4/12 15:31
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NJ Budget Weighed Down by Old Debt -“You have to stop borrowing, no matter how worthy the cause is.”
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A Budget Weighed Down by Old Debt

New York Times
By DUNSTAN A. McNICHOL
Published: April 10, 2009

SINCE taking office in 2006, Gov. Jon S. Corzine has repeatedly warned of the dangers of New Jersey?s ?credit card culture,? as one administration after another has borrowed to pay the bills.

During the past 15 years, the state?s debt has increased fourfold, to $33 billion from $8.1 billion. In the fiscal year beginning July 1, with the governor and lawmakers trying to balance the budget at a time when tax revenues are dropping, the payment due on New Jersey?s debt ? $2.9 billion ? accounts for about a tenth of the governor?s proposed spending plan.

Even though Mr. Corzine?s proposed budget of $29.8 billion is smaller than the current fiscal year?s budget of $33 billion, the debt payment will increase by $300 million. As a result, New Jersey taxpayers will spend more next year to repay old loans than they will on initiatives like property tax rebates and aid to cities combined.

?We?re in a dilemma, and it?s eating up our whole way of life,? said Assemblyman Joseph R. Malone III of Burlington County, the ranking Republican on the Assembly Budget Committee. ?It?s either you stop or you go into bankruptcy. I don?t know how you can continue like this.?

Annual payments on outstanding loans have nearly doubled since 2003, State Treasury Department records show, even though New Jersey?s overall budget has grown by 26 percent in that time.

R. David Rousseau, the state treasurer, said that many of New Jersey?s current fiscal problems are the result of previous administrations shortchanging the pension system, borrowing heavily and diverting resources from funds like the unemployment account even when the state economy was in good shape.

?We got hit by an economic tsunami that engulfed us,? Mr. Rousseau said. ?Our problem in New Jersey is we used the things in good economic times, which limits your options even more when you?re in bad times.?

The debt includes long-term loans for everything from highway and school construction to pension payments and the acquisition of open space. More than $4 billion of borrowed money was used to shore up state budgets between 2003 and 2005, meaning taxpayers will be making payments for another 26 years on loans that financed government services six years ago.

In two appearances last week before legislative budget committees, Mr. Rousseau acknowledged that debt payments would mean sacrifices in other areas of the budget.

?We can?t turn back the clock, but we can wonder aloud: How much easier would it be to retain critical services to vulnerable residents, education and public safety if we did not have that bill to pay in this budget?? Mr. Rousseau said in prepared remarks to lawmakers.

Mr. Corzine has long tried to warn lawmakers that constant borrowing would eventually cut into services.

?Not only does this reliance place an ever-growing burden on state residents and businesses,? the governor said in the preamble of his 2007 state budget proposal, ?but debt payments essentially crowd out appropriations needed for education, health care, property tax relief and other key programs.?

Two years ago, the governor proposed steep highway toll increases to raise billions of dollars to be used toward paying down the state?s debt, but that plan collapsed in the face of widespread opposition.

The potential for loan payments to ?crowd out? other budget priorities, as Mr. Corzine put it, came into sharp focus this year, with a historic plunge in revenues from state income tax returns resulting in his trimming state spending by about 10 percent.

With debt service payments essentially unassailable, the governor turned elsewhere for savings.

He has proposed cutting property tax rebates by $539 million. He declined to deposit $500 million into the state?s Unemployment Insurance Trust Fund ? setting the stage for a $370 million business tax increase in July. And he is seeking $400 million in savings from public employee furloughs, wage freezes or layoffs.

But many of Mr. Corzine?s cost-cutting strategies will add to future state budget expenses.

For instance, he has proposed cutting payments to the state pension funds so sharply that an actuarial firm that reviewed the largest of the pension accounts questioned earlier this month whether the retirement system could survive.

?We do have concern about the fund being able to meet its long-term obligation,? Scott F. Porter, an actuary with the firm, Milliman, told trustees of the New Jersey Teachers? Pension and Annuity Fund when he presented his annual update on the financial condition of the fund.

Similarly, the Unemployment Insurance Trust Fund, which covers the cost of weekly benefit checks to New Jersey?s growing ranks of the unemployed, has been overdrawn since March, and is on track to have a deficit of $1.6 billion by July 2010.

Mr. Corzine?s proposed budget assumes the state will borrow another $2 billion for school construction and transportation improvements, adding millions to future years? debt service costs.

Assemblyman Malone agreed that the high debt payments leave state officials with few good options, but he suggested one:

?You cannot give everything to everyone all at the same time, and it has to stop,? he said. ?You have to stop borrowing, no matter how worthy the cause is.?

Posted on: 2009/4/12 12:40
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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ianmac47 wrote:

The states should be lobbying congress for federal money. But short of that then they should play accounting games or issue debt, which is admittedly more difficult in New Jersey, but still possible. There are not fewer students just because there is a recession. There are not fewer bags of trash that need collecting. There are not fewer mass transit riders-- in fact, mass transit ridership trends up in a recession. Not only is laying off state workers adding to the ranks of the unemployed, but its also creating economic inefficiencies and short changing future investment.


Seriously? Are you advocating that politicians play accounting tricks with taxpayer money? Because their current level of corruption isn't enough in JC? Ask Hoboken how well that has worked out.

Also, as I stated previously, you generally can't use debt or federal money for operating costs, only capital and strategic projects. If you have less money coming in, your choices are either to trim the budget or operate more efficiently. Unions, strict work rules and general managerial incompetence in the state bureaucracy make it nearly impossible to operate more efficiently, so the state has to cut payroll. Many bad and not so bad companies are doing the same thing. Everybody shares the pain.

Posted on: 2009/4/8 22:26
I'd go over 12 percent for that
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state work
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Since the state started going democrat 30 years ago, it has been trying to catch up to New York with services that only serve the special interests while hard working taxpayers get screwed. It's time to get rid of the unions and other special interests. If you produce no wealth, you should not be getting paid better than those that do. If you work for the gov't and want to retire at 50, the taxpayer should not have to pay for it. If you want "free" healthcare and other freebies that liberals always exclaim to be their "right", maybe you have to start paying for it yourself instead of freeloading off of others, because baby, it's never free.

Every heavily democratic state in this country is in hock up to it's eyeballs because of an approach that says their constituents should get everything for free and that later generations can pay for it. We either end it now or get used to rationing and mediocrity.

Posted on: 2009/4/8 14:52
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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T-Bird wrote:
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ianmac47 wrote:
Government isn't a business. Government should be spending more, not less. Later when times are good, then government should pay off the debts incurred when the economy was in a recession. If government workers are let go, then not only do services suffer, infrastructure suffers, but the those consumers who have government jobs will spend less.


But that only works at the federal level, where you can debt finance budget deficits. States can't do that. If you expand government, you have to either raise taxes (which everyone pretty much agrees isn't wise in a recession) or play accounting games to either accelerate revenue streams or steal operating dollars from other funds.


The states should be lobbying congress for federal money. But short of that then they should play accounting games or issue debt, which is admittedly more difficult in New Jersey, but still possible. There are not fewer students just because there is a recession. There are not fewer bags of trash that need collecting. There are not fewer mass transit riders-- in fact, mass transit ridership trends up in a recession. Not only is laying off state workers adding to the ranks of the unemployed, but its also creating economic inefficiencies and short changing future investment.

Posted on: 2009/4/8 13:16
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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State workers protest furloughs at NJCU

by The Associated Press/The Jersey Journal
Tuesday April 07, 2009, 11:26 PM

Resized Image
New Jersey City University Chief Engineer Jose Abalo and CWA Contract Administrator Dorene William protest outside NJCU against proposed 12-day furloughs, layoffs and a wage freeze in Gov. Jon Corzine's new budget.

State workers are protesting Gov. Jon S. Corzine's plan to order furloughs and wage freezes for the second time in a week.

Communications Workers of America District 1 protested today at scores of locations across the state, including marcing on Kennedy Boulevard in front of New Jersey City University and in front of the Statehouse.

The budget Corzine proposed contains $500 million in savings from wage givebacks and furloughs for public workers.

The unions have sued to stop the furloughs.

Corzine wants the workers to take two unpaid days off this spring and 12 off next year. Emergency workers likely will be exempt.

Posted on: 2009/4/8 12:27
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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I'm loathe to recommend that anyone be laid off, but surely there are ways to reduce payroll and benefit costs such as through furloughs, sick day limitations, contributory health care, and pension modifications.

Posted on: 2009/4/8 1:15
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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Thanks T-Bird, I was slow to respond.

ianmac, I agree with you in principal, but despite Keynes' best efforts, you have to get value for the money you're paying the people in government, otherwise you're wasting it same as anyone else. Bloated bureaucracies should shrink during hard times. If the govn't wants to build bridges and roads to try and stimulate the economy, I can understand the argument (though I don't agree with it). Ultimately, those types of projects can be paid for with bonds, etc. The operating budgets need to shrink, however.

Posted on: 2009/4/7 21:58
I'd go over 12 percent for that
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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ianmac47 wrote:
Government isn't a business. Government should be spending more, not less. Later when times are good, then government should pay off the debts incurred when the economy was in a recession. If government workers are let go, then not only do services suffer, infrastructure suffers, but the those consumers who have government jobs will spend less.


But that only works at the federal level, where you can debt finance budget deficits. States can't do that. If you expand government, you have to either raise taxes (which everyone pretty much agrees isn't wise in a recession) or play accounting games to either accelerate revenue streams or steal operating dollars from other funds.

Posted on: 2009/4/7 20:18
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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niceguyeddie wrote:
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ianmac47 wrote:
Yeah, great idea in a recession: get the government to add to the number of unemployed.


Actually, you have to add to unemployment to get out of a recession. Employment is a lag indicator, which means these jobs should have been trimmed a while ago. Businesses have to grow to get us out of a recession. To do that, with less consumer spending, they need to trim workforce so they have money to grow with. It sucks, but that's the way the cycle works. There are plenty of 3rd world nations (and 1st and second world, for that matter) that try to use government jobs as an unemployment office, and all it does is bankrupt everybody.


Government isn't a business. Government should be spending more, not less. Later when times are good, then government should pay off the debts incurred when the economy was in a recession. If government workers are let go, then not only do services suffer, infrastructure suffers, but the those consumers who have government jobs will spend less.

Posted on: 2009/4/7 19:34
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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Anyone who lives in Jersey City and doesn't see that City, County and State jobs are used as a form of welfare is BLIND.

Posted on: 2009/4/7 19:23
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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ianmac47 wrote:
Yeah, great idea in a recession: get the government to add to the number of unemployed.


Actually, you have to add to unemployment to get out of a recession. Employment is a lag indicator, which means these jobs should have been trimmed a while ago. Businesses have to grow to get us out of a recession. To do that, with less consumer spending, they need to trim workforce so they have money to grow with. It sucks, but that's the way the cycle works. There are plenty of 3rd world nations (and 1st and second world, for that matter) that try to use government jobs as an unemployment office, and all it does is bankrupt everybody.

Posted on: 2009/4/7 19:14
I'd go over 12 percent for that
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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What's the alternative, Ianmac? Raise taxes to make up for the shortfall so you can maintain services at expansionary levels? Does that make sense in the current environment?

Posted on: 2009/4/7 18:51
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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Yeah, great idea in a recession: get the government to add to the number of unemployed.

Posted on: 2009/4/7 18:45
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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Wait until Chris Christie becomes Governor. Then the state worker unions and cities will have a lot to cry over.

Will the Democrats jettison Corzine like they did Torricelli ?

Posted on: 2009/4/7 18:15
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Re: NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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TOO BAD!!!! Nearly EVERY small, medium and large coproration in America and abroad is cutting back - time for gov't to do the same and stop shafting the taxpayer. The taxpayer shouldn't suppoort unions on their backs! If they have a furlough at least they'll still have a job - just ask the millions that have been laid off in the past year.

Federal, state, local and county gov'ts have grown too big and are inefficient - time to take the medicine like everyone else!

Posted on: 2009/4/7 15:33
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NJCU union protests Corzine's budget cut -"He wants to balance budget on the backs of state workers"
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NJCU workers to protest Corzine budget today

Tuesday, April 07, 2009
Jersey Journal
RON ZEITLINGER

At least 100 New Jersey City University workers will take part in a demonstration today on Kennedy Boulevard to protest Gov. Jon Corzine's proposed budget cuts, a union official said yesterday.

The workers, members of the Communication Workers of America Local 1031, are angry "that the governor wants to balance the state budget on the backs of state workers," said Nancy Gomez, the NJCU branch president of Local 1031.
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Corzine is proposing a 12-day furlough and wage freezes, saying that if unions do not agree to the concessions, there will be layoffs.

Gomez said union workers at state colleges across New Jersey will be demonstrating during their lunch hours today. Teachers and staff at the Department of Children and Family Regional School in Secaucus will also be holding a rally today at 12:30 p.m.

Union officials there say 18 special needs schools across the state will close under Corzine's proposed budget and the students will be placed in schools in their home districts.

Posted on: 2009/4/7 12:29
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