Unwrap some Shriver's taffy and crank up the that radio playing "Born to Run," it's time to celebrate, Jersey-style! Yesterday, New Jersey's Governor Christopher Christie signed into law a budget that, according to the New York Times, is the smallest budget enacted in five years, making it the first budget to really tackle the state's out-of-control spending. The $29.4 billion budget that the Governor signed is remarkable in that it balances the state's books and closes an $11 billion shortfall without broad-based tax increases, which is welcome considering that New Jersey already has the second highest tax burden in the nation.
What makes this budget so impressive is that it is a welcome break from past budget negotiations. In previous years, governors – of both parties – made it a habit of giving a lot in terms of spending increases and tax hikes, but getting little in return in the form of budget and tax reforms from the State Legislature. But Christie has broken that tradition with a sledgehammer. He publicly took on the Legislature and the powerful public employees unions, who rely on state spending for votes and power. Christie insisted on his budget cuts and refused to yield, even when the legislature offered him various carrots and sticks. Only a few days prior, the State Legislature tried – but failed – to override the Governor's veto of an income tax hike. Christie refused to yield because he knew, as New Jersey taxpayers and we know, that spending and taxes in the state have reached unsustainable levels. By standing his ground, Christie achieved exactly what he set out to do. Not only is the budget $3 billion smaller that last year's budget, it is more than $5 billion less than the 2007-2008 budget, which set the current record on state spending. Let's hope that he continues to stand his ground as he attempts to cap New Jersey's outrageously high property tax rates in the weeks ahead.
Now, there are some who argue that the budget is problematic. There is no question that the budget is not perfect. The budget relies on some fees on state services and tax increases targeting medical providers, which will only increase the burden. But then again, what budget is perfect? Some have actually complained that the budget cuts, especially in state aid to local governments, amount to tax hikes by requiring property tax, but those who make this argument have ignored several important considerations, such as court-ordered spending mandates, the Governor's proposed property tax cap, and the fact that local governments are not operating at maximum efficiency. For more on this, I highly recommend an op-ed by my friend and colleague Joshua Culling. Let's not forget that we are talking about New Jersey, which is politically, economically, and socially unique among the states of the union. For this governor, especially this first-year governor with no previous elective office experience, to achieve what he has done, is simply monumental, and a welcome shot in the arm for those of us who care about economic policy and who believe that New Jersey needs to shake up its status quo. Let's hope Christie continues on this path, standing firm against those who would increase spending and raise taxes on New Jersey. But for now, this is a time to celebrate. Please pass the box of taffy and turn that music up!