Murphy’s Bail-Me-Out Math

[Valin]

City Journal

The New Jersey governor threatens huge layoffs if Washington doesn’t solve his budget woes.

Steven Malanga

June 3, 2020

As Washington debated a bill last week to provide states with new coronavirus aid, New Jersey governor Phil Murphy announced that, unless Congress comes up with more money to help him close a projected $10 billion budget deficit, he might have to fire as many as half of the state’s 400,000 government workers. “I don’t think there’s any amount of cuts or any amount of taxes that begins to fill the hole,” Murphy said. Though many other governors issued similar—if not such extreme—warnings to Congress about impending cuts, Murphy’s declaration was perhaps the starkest example of how politicians are blaming the coronavirus exclusively for their budget woes.

The problem, however, is that Murphy, a liberal Democrat elected with the backing of the state’s most powerful public-sector unions, has spent the last two and a half years in office declining to enact reforms that would rein in the budget, including getting control of enormous employee pension and health-care costs. He’s let the bills pile up even though—long before the virus appeared—fiscal watchdogs warned him that New Jersey faced significant future shortfalls. Even so, the budget hole that the governor says he can’t possibly fill without Washington’s help is in fact smaller than the $11 billion gap that the state confronted in fiscal 2010. Murphy’s threat illustrates why providing states with huge, unrestricted aid to help their budgets rewards bad fiscal practices and undermines local reform efforts.

In February, before the virus hit the U.S., Murphy proposed a $40.9 billion budget, anchored by a plan to raise taxes on those earning more than $1 million a year to 10.75 percent. That would have made New Jersey’s income-tax rate the nation’s third-highest. The governor’s budget included more money to pay the state’s increasingly hefty employee-benefits bills and to make community college tuition-free. Tom Moran of the Star-Ledger, the state’s largest paper, called the proposals “a liberal battle cry” that offered “no plan to significantly cut spending, or to lower the burden of property taxes.”

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