NJ bond outlook lowered to NEGATIVE

From Marketwatch this morning:

Moody's Investors Service lowered its outlook on the State of New Jersey, reflecting challenges to the state's financial operations and repeated use of nonrecurring revenue to plug budget gaps. The outlook was lowered to negative from stable. The outlook affects about $2.5 billion in outstanding general obligation bonds and $28.5 billion in annual appropriation debt. The revision comes as the state plans to sell $200 million in school-construction bonds in the coming week, rated A1 by Moody's. The state's GO rating is Aa3. Moody's also noted the state has one of the highest debt burdens and, like many states, has depleted its reserves. "It is anticipated that economic recovery in New Jersey will be at a slower pace than the nation as a whole," Moody's said in a release late Monday.

When a State continues to avoid addressing key fiscal issues and instead pursues a policy of tax and spend, this is what happens. The result will be increased interest on borrowing which will eventually create problems all its own. Remember when Corzine said he was cutting the budget and we documented here at njtaxrevolution that he was actually increasing borrowing by 3.9 billion for school construction? Well guess what, the cost of that just went up.

Congratulations Jon! You have one again demonstrated your fiscal prowess.

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GOP: Governor Deficit's (aka Jon Corzine) Budget

PolitickerNJ.com ran an article based on the GOP criticism of Jon Corzine's budget scheduled to be debated this week. The article listed Corzine's ill conceived "time bomb", or bad decisions for today that we will pay for horribly tomorrow:

The Corzine Pension Deficit -- Governor Corzine's budgets have underfunded the pensions off teachers, police officers, and other government employees. The total during his administration, including for fiscal 2010: More than $7.5 billion. This includes $6.5 billion in unpaid state contributions, and incredibly irresponsible legislation this year that allows municipalities to defer more than $1 billion in payments to the funds.

The Corzine Federal Aid Deficit – Governor Corzine has relied on $2.2 billion in one-time federal stimulus aid to create the illusion he is cutting that much in spending. He didn't cut this spending. He merely used federal aid to pay state bills. Next year, that federal money will not be available. The governor hasn't provided an answer on how he will fill this $2.2 billion addition to next year's deficit.

The Corzine 'Temporary' Tax Deficit – The governor is relying on more than $1 billion in tax increases this year that he is labeling "temporary." He is raising the income tax and eliminating the deductibility of property taxes for many middle class residents. Again, the governor hasn't told legislators what he plans, if anything, to eliminate this $1 billion hole next year.

The Corzine Property Tax Rebate Deficit -- More than 1.7 million New Jersey homeowners who got rebates in the past will not get them. The governor says the cancellation of rebates is temporary. He doesn't say where he will find the $1 billion needed to restore them.

The Corzine Unemployment Fund Deficit – Governor Corzine will borrow $1.6 billion from the federal government because of past raids on the unemployment benefit fund. He has no announced plan for how he will pay this loan back.

The Corzine Debt Service Deficit – The governor will skip $450 million of payments on bonds next year. He hasn't said one word on how much extra this will cost taxpayers over the long haul, or where he intends to find the money to pay for the borrowing in the future.

The Corzine Biden Buyoff Deficit – The governor has promised a 7 percent pay increase to state workers, half that will come 12 months from now and the other half in 18 months. This will cost the state $350 million. Again, the Governor has committed to a plan that will cost taxpayers for decades without finding a way to pay for the expense.

The sad thing about the Governor's budget is that while he is getting creative in kicking the can down the road, he once again does not make a single difficult decision. He has not cut people, he has not cut patronage, he has not cut back over generous services that the state can no longer afford and he has not decreased any part of the budget in a meaningful way. This is the same cowardice he has shown during every budget cycle.

President Obama keep harping on the failure of the financial industry which has hurt every segment of our economy. Jon Corzine was one of the people who became rich during that time and we now see that his enrichment was not based on competence. I wonder when we will hear President Obama criticize Corzine and his destructive greed and incompetence?

Crickets chirping....

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State deficit - Corzine says everyone is doing it!

Jon Corzine made a comment meant to suggest that New Jerseys fiscal woes a the same saying "almost every state is in the same situation". Do the facts back him up(from CBPP)?




So, while many states have deficits, they all do not. And while many states are revising their numbers (these were prior to most states evaluating their revenue collection for 2008), it is not all states. As a matter of fact, 29 states have budget deficits. 21 do not. And 7 states have a deficit in excess of 10 percent of their budget, New Jersey being one of them.

So maybe Governor Corzine should say "7 states have completely failed in their fiduciary responsibility to the taxpayers and we are one of them". That would be a lot more accurate.

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Some thoughts from former NJ residents...

My wife and I recently took a long weekend off down south to visit some former lifetime NJ residents. These were folks who were born and raised here in the state and had all of their family here as well. So I was curious whether or not they regretted their decision to leave the state 8 years ago.

One of our friends was very emphatic. No way no how would they ever return to the Garden state. Even with the current economic conditions, business is good enough, they make less than when they lived here but take home more. All in all a good deal and a much better standard of living.

The other friends moved nearby. Again, no one has any desire to move back and have been attracting other family members to come. I had an interesting conversation with one of our friends who took a job as a equipment operator for the state. He told me that he was following the news in NJ that state workers wouldn't give up their raises or accept temporary furloughs to save money and cut the state's budget deficit. I was curious to see his reaction.

He went off that the people who work for the state of NJ are nuts. If his current state asked him to take days off as a way to save his job-he is in 100%. If his current state pared back a raised that was already agreed-he would accept it. He said everyone is in it together in these tough economic times and we should all be happy we have jobs. No one is entitled to anything.

Indeed.

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