New Jersey is flush these days, with Gov. Phil Murphy proposing the biggest budget ever, a 9 percent bump, with no increase in taxes or fees. For this split second, happy days are here again in Trenton.
And now, here comes a tidal wave of fresh federal cash. The House is drafting its version of the $1.9 trillion federal relief package, and it includes $6.5 billion for Trenton, with another $3 billion for local governments.
So, the pressing question now is this: Will we invest the money in ways that will do lasting good? Or will be look back in 5 years and wonder where it all went?
Start with a sober look at where we stand: New Jersey is buried in debt and has the nation’s second lowest credit rating. Our state and local taxes are the third highest in the country, per capita, and even that’s not enough. Murphy is on track to increase spending by 25 percent during his first term, a pace that can’t be sustained without big tax hikes in the years ahead, which is bound to discourage job creation.
So think of the coming federal aid as a rope lowered into the dark pit where we find ourselves. It could help us escape if we are smart about it.
The rules on use of the federal money aren’t set yet, but one way or another, it could help handle long-term costs.
We could try to pay down debt. The $3.6 billion Murphy borrowed last summer was structured so that it can’t be paid back in advance, but the state has more than $40 billion in bonded debt, some of it with higher interest rates locked it.
We will need billions more to finance the school construction projects ordered by the state Supreme Court. The state has a list of 24 priority projects in poor districts that will cost at least $2 billion, according to David Sciarra of the Education Law Center.
Repairing our decrepit water infrastructure is another big challenge. Children in many of our cities are gulping water contaminated with lead, leaky pipelines spill 130 million gallons a day, and a rainstorm is enough to overwhelm many of the state’s aged sewer treatment systems, leading to contamination of our waters. Fixing all that would cost $25 billion over 20 years, according to New Jersey Future.
You get the idea. We have the second lowest credit rating for a reason. No one knows how we’re going to pay these bills.
There are some good signs. Murphy just made the first full pension payment in a quarter century and has kept health costs flat. His budget includes $200 million to promote wind energy, and $200 million for new school construction, both capital projects that would normally be covered by more borrowing.
And Senate President Steve Sweeney, long the voice of fiscal sanity in the Democratic Party, is optimistic. “It could be a good outcome,” he says. “A lot of us are talking about how we can do this right.”
Imagine that.
More: Tom Moran columns
Tom Moran may be reached at tmoran@starledger.com. Follow him on Twitter @tomamoran. Find NJ.com Opinion on Facebook.
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February 28, 2021 at 07:17PM
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Here comes a flood of federal money. Will Jersey squander it? | Moran - NJ.com
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