N.J. needs $2B loan to pay its bills

Like a cash-strapped shopaholic reaching for a credit card before payday, New Jersey is planning to borrow $2 billion to cover expenses over the next few months – including those record-high property tax rebates. But given the state's financial situation, some wonder if it's a wise move. The state already owes an estimated $29.7 billion to creditors. Debt service alone is costing taxpayers upward of $2.5 billion a year. And employee pension funds are at least $25 billion behind where they should be to cover projected future costs.

Overall, money is so tight that Governor Corzine is looking at selling or leasing state assets, such as toll roads and the lottery, to raise revenues. Like many states at the beginning of a fiscal year, New Jersey is short on cash to pay its bills. But New Jersey has a $2.2 billion expense coming up this year that is unusual: property tax rebate checks.

By the numbers

Total debt: $29.7 billion

Annual debt costs: $2.5 billion

Expected short-term loan: $2 billion

Cost of tax rebates: $2.2 billion

The checks – which average $1,200 for most homeowners – are timed to be in mailboxes this fall before the upcoming legislative elections. Last year a much smaller loan cost taxpayers $43.2 million in interest and fees. The fact that the state is borrowing money upfront to cover the costs of the property tax rebates is further evidence that the program is not sustainable, said Senate Minority Leader Leonard Lance.

"I think it's an indication of a much more serious matter next year, when we will not be able to pay for the program because we don't have enough revenue," said Lance, a Hunterdon County Republican. This year's rebates will be paid for with revenues from last year's 1-cent sales tax hike. However, a new source of funding has yet to be determined for next year, if the rebates are to be repeated. Next year the state expects to start off the budget season with a $2.5 billion structural deficit.

Early next month, the state plans to issue tax and revenue anticipation notes, which essentially serve as short-term loans, providing cash to the state until projected revenues flow in. New Jersey first issued such notes in 1991, when the property tax rebate program cost $710 million. Since then, the program has nearly tripled, reaching record heights. Tom Vincz, a spokesman for the state treasurer, described the short-term loan as a "routine issuance to meet cash flow needs for the fiscal year." "The revenue is necessary to meet expenses that come in advance of when revenues come in," Vincz explained.

The state typically receives big infusions of tax revenues around the holidays, in spring and later in the fiscal year. How much it will cost in interest and fees to borrow the money is yet to be determined. Last year, the state borrowed $1.75 billion. Interest came to $43 million, and the state paid $200,000 in fees, Vincz said. Mark Tenenhaus, a senior analyst at Moody's, which provides credit ratings, research and financial information to capital markets, said almost every state relies on such notes to smooth out the cash flow. "It's an accepted form of business with all entities, be they governmental or corporate," Tenenhaus said. "It's prudent governmental policy."

Routine or not, some question the idea of borrowing money rather than cutting spending at a time when the state is, for all practical purposes, looking between the sofa cushions for spare change. "It seems like a contagious disease down there, let's borrow money," said Sen. Anthony R. Bucco, R-Morris. "I am a businessperson," Bucco said. "When my business is not collecting the money ... and I have to pay my suppliers, I have to go to the bank and say give me some money, and pay it back with interest. We don't like to do that because it's not a good practice for business – it means you're going downhill, not staying level or growing." The solution, Bucco said, is simple. "They should stop spending money and get control of the budgets and control of the expenses," he said. "That's what we've been telling them for several years now, and they continually spend."

>>But given the state's financial situation, some wonder if it's a wise move.<<

Maybe they need to change some laws so that HJ is so appealing to the illegals.

http://www.city-journal.org/html/eon2007-08-29sm.html

>>Both studies found that immigrants used government services at a greater rate than native-born residents did. The New Jersey study found, for instance, that the typical immigrant family received about $4,044 annually in government services, about 11 percent higher than the average native-born family. At the same time, immigrant households paid about 8 percent less in taxes. The net result was that “the average native household generated an annual fiscal surplus of $232” to government, while “the typical foreign household was a net burden of $1,484.” The gap was even wider in California, where immigrant households produced a net deficit of $3,463 each, because so much of that state’s recent immigration had been in the form of low-wage, low-skill workers.

Though the study did not distinguish between legal and illegal immigrants, it did break down foreign-born households by the regions of the world from which they had come. In both states, the study found the steepest deficit in Latin American households, which in New Jersey consumed 26 percent more in government expenditures than the average native-born family, but paid 38 percent less in taxes. By contrast, immigrant households in New Jersey that hailed from Europe or Canada actually consumed, on average, less in government services than the typical native-born family, and paid nearly as much in taxes. <<

The problems with New Jersey stem from one RINO governess followed by a succession of tax and spend liberal Dems, the State Supreme Court, and Civil Service abuses.

The State owes over $58 billion in retirement benefits to state and local employees.

Back when Chrissie the Birdbrain (thank you Ann Coulter) was governess of New Jersey and plotting her rise to the White House, she cut state taxes 10% for three years in a row. UNFORTUNATELY, this was not equaled by a concomitant reduction in state expenditures.

She ALSO reduced or eliminated contributions by local jurisdictions and employees to the State retirement program since the investments and state economy was doing so well at the time.

Subsequent administrations followed suit.

Additionally, the State had instituted a process called “buy-outs” whereby state or local employees were encouraged to retire early in return for extra retirement credits. This was done through a series of bills by both political parties, cost the state a lot of money, and I believe was contrived to create new openings at higher paying positions for new political hacks.

For some time, the primary culprits in the retirement/benefit scam in New Jersey have been the “Untouchables” - the police unions, and the Teachers unions. The Cops are the worst swine swilling at the public trough in New Jersey. Although one can make a valid argument for the twenty and out retirement program for cops who work in such fetid ratholes like Newark and Camden, the fact of the matter is most Jersey cops work in safe rural and suburban neighborhoods where the greatest stress they experience is being awoken in their patrol car by their radar gun as a speeder goes by. The bulk of these individuals can start their careers as young as their late teens or early twenties with no requirement for even a college degree. They then work for twenty years and retire at about 60% of their last years TOTAL PAY, INCLUSIVE of the Overtime they suck up in as large a volume as possible in their last year of service to kick up their pension to the highest level possible. At that point they are probably in their early forties and promptly find employment with the state or local government in ANOTHER pension system and start working on a second retirement pay-out while enjoying that fat 60% retirement check from the taxpayers. Considering the average New Jersey Cop probably earns a base of OVER $60,000 per year or more by the time of retirement, this is substantial.

The Teachers in Jersey START OUT at well over $30,000 per year for a nine month job, right out of college with NO experience. THEY can retire at 55. THEY pay NOTHING towards their GENEROUS medical coverage while employed, and have similar generous retirement packages as the police.

And then we have the regular civil servants. Most state and local civil servants make rather low pay, their retirement packages are nowhere near as generous as the Boys in Blue or the Teachers, and the main reason they are a problem is because of their large numbers. More of that later. HOWEVER, in their ranks, are included VERY MANY political hacks. These are ex-mayors, councilmen, Senators, Representatives, you name it. With most of these people, the salaries they received for elected office were rather low - considering the fact that most elected positions in Jersey hardly qualify as even part-time jobs, its not surprising. BUT the retirement program in Jersey is such that the amount of money a civil servant receives upon retirement is predicated on the basis of their highest three years of service times the number of year of service divided by a factor - I believe its 55. Consequently, these political hacks get themselves “hired” or “appointed” to positions, at VERY lucrative pay, very often in advisory bodies like the state parole board (salary over $120,000 per year) for enough years to boost their retiement which is (or was) based on their full number of years in the pension system.

The New Jersey State Supreme Court is perhaps the most liberal in the nation. It has been responsible for issuing a number of expensive mandates which leave the taxpayers footing the bill.

The current Liar in the New Jersey Statehouse - Jon Corzine - ANOTHER White House wannabe, promised NOT to raise taxes in his campaign (coming from a Democrat this was PARTICULARLY funny).

After being elected, NOT ONLY did he RAISE taxes, he ALSO created NEW ones. At the same time he is whining and crying about the need for “monetization” - the sale of public property which belongs to the taxpayers of New Jersey and not him, to pay state bills, he is CREATING MORE EXPENSES!!

WITHIN THE LAST FEW WEEKS this man has empaneled two new Commissions (Jersey politicos LOVE “Commissions”). One is to investigate and reduce the production of GREENHOUSE GASES ( see “global warming and Algore) by private parties and business in a state which is loosing business and the taxes it generates ALREADY due to excessive taxes and controls by state government. Another is to study the issue of being more “inclusionary” with respect to “immigrants” (read “illegal invaders”).

NEEDLESS TO SAY, BOTH “Commissions” will generate more mandates, require more new state and local employees and demand MORE revenues.

Last and certainly NOT the least are the New Jerseyians themselves.

For the most part, real New Jerseyians have long been outnumbered by refugees from the Five Boroughs of New York City and its immediate environs, fleeing astronomical taxes and high crime - all generated by the Democratic bums they kept electing to office THERE. They come to New Jersey and history repeats itself. They vote in the same kind of villains they put in office in their former places of abode and DEMAND more and more social services from the State and local government - ALL of which requires more personnel and - you got it - MORE TAXES.

SO, if you live in the great state of New Jersey and don’t like where it is going - look in the mirror, or in the case of most New Jersesyians on this forum, look at your neighbors. THAT is the REAL problem.

(I didn;t mention the scams, the no-show jobs, Sharpe James, Senator Bryant, or the 500+ municipalities and even more school districts as it would confuse people who have the great luck to have never lived in Jersey even more).

Things are GREAT in Sopranoland - not for the Mafia - but for the Boys in Blue, the attorneys, the elected state officials and the teachers.

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