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Pension, transportation, school funding shortages push N.J. structural deficit over $7b

Tuesday, February 24, 2015   (0 Comments)
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NJ.com 02/23/15

As recently as his State of the State address last month, in a speech aimed at a national audience, Gov. Chris Christie took credit for wiping out an $11 billion structural deficit after taking office. But under the same rules for calculating that figure, New Jersey faces a $7.35 billion structural deficit heading into the next budget year, projections from the state's nonpartisan Office of Legislative Services obtained by NJ Advance Media show. The estimate represents the gap between the state's revenue and how much it has to pay if it fully funded all state programs, such as public employee pensions and state aid to schools.

Christie's proposed budget, which he'll outline in a message before the Legislature on Tuesday, will include strategies for counteracting the deficit. Because the governor spurns tax increases, typically that means shortchanging the annual pension payment and other programs and postponing property tax rebates. State law requires that the budget must be balanced. The fiscal year begins July 1. "Regardless of what the projections of a budget deficit may be... the governor's budget will have a proposal for reconciling that," said Marc Pfeiffer, assistant director at Rutgers' Bloustein Local Government Research Center.

The OLS defines the structural deficit this way: "If the state were to fund all of its statutory obligations and continue all other state programs at the current or normal service level, while relying on revenues solely from existing sources, what is the sum of budget actions that would be required to produce a balanced budget?" That total, OLS said in a Jan. 14 report, is $7.35 billion. To put that in context, the state's current budget is $32.5 billion. Fully funding the public worker pension system next year contributes $2.27 billion to the deficit, according to OLS. Fully funding homestead rebates adds $1.84 billion; school aid, $1.65 billion; municipal aid, $935 million; Medicaid and charity care, $355 million; Senior Freeze Program, $44 million; and health benefits, $117 million. Replacing one-time revenues and maintaining other programs adds roughly $660 million.


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