|10-19-17 Education in the News|
NJ Spotlight--Budget Basics: New Jersey’s Fiscal Future, a Path to Improvement
A series that details the fundamentals of New Jersey's budget, as well as its current budget woes
In the previous nine Budget Basics, I discussed major fiscal topics, including revenues and expenditures, debt, retirement costs, property taxes, and surplus and deficits. Principally, the series was fact-based. My intent was to inform. I conclude with summary observations about the state’s fiscal future and a specific process that the new governor needs to take to address our problems.
The fiscal future of New Jersey is bleak. It has struggled to balance its budget for the past two decades. In the early 1990s the state’s credit was AAA by all three rating agencies. In subsequent years, the credit rating was reduced — during the past eight years it was reduced seven times. It is now the lowest in the country, except for Illinois. A recent report by George Mason University echoes the conclusion of the rating agencies and ranks New Jersey last in overall fiscal condition. A report by the PEW Foundation draws similar conclusions.
While New Jersey has never technically ended the fiscal year in a deficit — based on a modified accrual basis of accounting (the accepted criteria for all state and local governments), it has done so with gimmicks and underfunding education aid and the pension systems.
Richard F. Keevey | October 19, 2017