New Jersey Business Weekly: Cuts Alone Can’t Solve the Problem

By Jon Shure
Board of Contributors
6/23/2008

If you quit your job and can’t pay your bills, that’s not a spending problem. It’s an income problem.

If you stop paying your mortgage because you just don’t feel like it and now you’re in danger of losing your house, that’s not a spending problem either; it’s a failure to live up to your obligations.

It’s not hard to figure out the difference between overspending and financial mismanagement—which made this year’s state budget and the rhetoric enveloping it so disappointing.

From Gov. Jon S. Corzine on down, the mantra since the fiscal year 2009 budget was proposed in February has been that New Jersey’s financial crisis comes from an addiction to spending and so the remedy is to cut. It sounds simple, both the problem and the solution. Trouble is, it’s like going to the doctor with a broken arm and being told he’ll yank your appendix. Such misdiagnosis isn’t just dangerous in medicine. It is in state finances, too.

New Jersey’s financial problems are real, make no mistake. But you can’t solve them without understanding them. They come from more than a decade of ill-advised tax cuts, taking money from one program to fund another instead of creating new revenue, failing to fund obligations like retiree pensions and health benefits and then, to top it off (and cover it up), huge borrowing.

That’s why New Jersey has been staring down the barrel of a budget that erodes the state’s quality of life and threatens its future. Of course we should always be on the lookout for wasteful, inefficient spending whether it’s in state government or our own household budget. But that doesn’t mean we should fool ourselves into believing that just cutting the waste will make everything good again.

There are plenty of areas where New Jersey doesn’t spend enough. Our transportation infrastructure, key to maximizing the locational advantage that drives New Jersey’s economy, is falling apart. In part, that’s because we’ve only had the guts to raise the gas tax once in 36 years. College is getting harder for many students to afford, as the state’s support for higher education continues to erode. The state doesn’t have as many government employees as it used to have to enforce environmental laws or read the fine print in municipal budgets to make sure tax dollars are spent as they should be.

And those are just a few examples. The bottom line: New Jersey won’t cut its way to prosperity or shrink its way to growth. It takes investment. If Trenton wants to talk about spending cuts, that’s fine. But it shouldn’t be in simplistic isolation. It needs to be part of a broader conversation. What are the needs and priorities of this state? What will they cost? Who should pay, and how? That’s the discussion we can’t keep avoiding if we care about the future.

Jon Shure is president of New Jersey Public Policy Perspective in Trenton. NJPP is a nonprofit organization that conducts research on state issues. He can be reached at shure@njpp.org

Originally published here: http://www.njbiz.com/weekly_article.asp?aID=57095966.9185545.973375.47937302.5942376.598&aID2=74866