A new day appears to be dawning in the Garden State. In a previous blog entry, I wrote about New Jersey Governor Chris Christie, who is facing an $11 billion deficit, one of the highest tax burdens in the country, and the steady loss of businesses and residents. Now, we have an opportunity to hear directly from the Governor about his plan to turn his state around.
Governor Christie recently sat for an interview with the Wall Street Journal's Editorial Board to discuss the state’s fiscal woes, his plan for New Jersey, and his efforts to implement it. This interview is worth a read. Speaking of New Jersey, Christie says, "We are, I think, the failed experiment in America—the best example of a failed experiment in America—on taxes and bigger government. Over the last eight years, New Jersey increased taxes and fees 115 times." To bring these high taxes under control, Christie has proposed a $29.3 billion budget without tax increases. Additionally, he exercised emergency power immediately after taking office to freeze $2.2 billion in previously authorized spending. Next, Christie wants to get voter approval for a constitutional amendment that would limit property tax increases to 2.5% annually.
Besides taxes and spending, Christie also must tackle a large – and growing – pension problem. The state has at least $90 billion worth of unfunded liabilities in public employee medical and pension plans. Currently, beneficiaries pay nothing for medical care. But the governor recently enacted reforms to require workers to contribute 1.5% of the cost of medical care and to change the retirement benefits for new workers. It’s a small change in the grand scheme of the unfunded pension problem, but it is a start.
New Jersey is important to watch because its fiscal problems are some of the most severe in the nation and the state now has a governor who recognizes the severity. Moreover, Christie knows that more spending and tax increases will only make matters worse. Unfortunately, Christie's plan faces serious opposition from tax and spenders in the Legislature, union bosses, and others who favor the unsustainable status quo. But Christie is taking his hits and pressing ahead. On why it matters, Christie says, "What I hope it will do in the end is first and foremost fix New Jersey, and end this myth that you can't take these people on," he says. "I just hope it shows people who have similar ideas to mine that they can do it. You just have to stand up and grit your teeth and know your poll numbers are going to go down—and mine have—but you gotta grit it out because the alternative is unacceptable." Let's hope Christie lives by these words; New Jersey cannot afford the alternative. We at NTU will keep our eye on New Jersey and you should too.