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The next New Jersey?

Published 03/19/2010 12:00 AM
Updated 03/19/2010 12:45 AM

Connecticut lawmakers and the lame-duck governor only need look at what is happening in New Jersey to see what might soon happen here.

Rather than making the tough choices last year to truly balance the budget, the Democratic majority in Hartford instead depended on one-time revenues, including federal stimulus money, borrowing and unrealistic revenue projections to "balance" the two-year budget that runs through fiscal year 2011. Gov. M. Jodi Rell let it become law without her signature.

The budget crisis will return next year when stimulus funds run dry, further securitization - borrowing against future revenues to meet current expenses - becomes impossible and there is no longer a sizeable Rainy Day Fund to plunder.

Some bad choices led to this end - the lack of long-term planning and little effort to assess the effectiveness of state programs to determine which work well. Connecticut has long used accounting practices that would never be acceptable in the private sector and allow the fudging of figures. A reluctance to adopt a progressive income tax system and mismanagement of the spending cap, leading to losses in federal aid, contributed to the situation.

Better fiscal management would not have eliminated the state budget problems resulting from the deep recession, but Connecticut would have been better able to handle them.

In New Jersey, the new Republican governor, Christopher J. Christie, inherited a state in similar - and probably more dire - fiscal straits. His response this week was to take a blunt axe to state spending - a

7 percent reduction in public school aid, a half-billion dollars less for towns and cities, proposing to kick thousands off welfare, while increasing co-payments for the disabled and elderly in the state prescription drug program.

He vows not to raise personal taxes.

Gov. Christie still has to deal with a Democratic legislature, but his plan for New Jersey serves as a warning of how ugly things can get when a state ignores fiscal problems for too long.

Town News

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