“The problem we have with the economy here: Businesses don’t like high taxes,” said Sweeney, the sponsor of a bill that made New Jersey’s corporate-business tax the nation’s second highest, behind Iowa’s. That legislation, along with measures to close tax loopholes, will lead to an estimated $800 million in revenue to support the $37.4 billion budget for the fiscal year that started July 1. In all, Murphy’s first budget included more than $1.5 billion in new or higher taxes.
Still, that revenue is going largely to pension and health payments, rather than higher education, fixes for beleaguered New Jersey Transit or property-tax relief. That’s the legacy of years of skipped or reduced pension payments by Democratic and Republican governors, plus $2.8 billion in borrowing in 1997 to pay for election-year tax cuts -- a maneuver that by 2027 will have cost the state $10.8 billion, Sweeney said.
The pension system, without changes, is on track to consume 27 percent of state spending by 2027, according to a December 2017 analysis by a Christie-appointed commission. Had New Jersey stuck to its actuarial funding plan, the required payment would have been just one-third of this year’s record $3.2 billion.
“There is money -- it’s just all in one place,” said Sweeney, referring to the pension burden’s crowding out other priorities. “There would have been $2.1 billion this year to spend in the areas where we needed to spend.”
This article was provided by Bloomberg News.