Chris Christie, New Jersey’s freshly minted GOP governor, made national news on February 11 in an address to the state Legislature regarding his proposal to balance the Fiscal Year 2010 budget, which is, as he pointed out, “in shambles.” Gov. Christie pushed for $2 billion in spending cuts just for the remaining four-and-a-half months of FY 2010.
Why isn’t he following in the footsteps of previous New Jersey governors in both parties who raised taxes and/or tinkered with fiscal timetables when faced with large budget deficits? “The old ways of doing business have not served the people well,” explained the governor.
Mr. Christie was surely right about that. The Garden State now stands before a fiscal abyss not primarily because of the recent national recession, but because New Jersey’s heavily unionized public sector has for many years been sucking resources and vitality out of the state’s beleaguered private-sector employees and businesses.
For example, during the five years from 2003 to 2008, even as the national economy boomed, New Jersey’s private-sector employment grew by a total of just 1.5%, roughly a quarter of the national average. Meanwhile, state and local government jobs in New Jersey (more than two-thirds of them under union monopoly-bargaining control) soared by 5.9%, nearly four times New Jersey’s private-sector job growth.
And it’s not just the wages, salaries and benefits of active unionized government employees that are growing far more rapidly than those of private-sector employees. A large and rapidly growing share of public-employee compensation costs for New Jersey’s taxpaying individuals and firms come from outsized public pension and retirement-health benefits.
Union negotiators with monopoly-bargaining privileges, as well as Big Labor lobbyists and the politicians who do their bidding, have over the years established policies in New Jersey that encourage a wide array of healthy public employees to retire while they are still in their early fifties with pension and health benefits worth $100,000 or more a year.
No wonder New Jersey’s property taxes in 2009 were an average of nearly $7300, the highest in the nation and more than 70% higher than they had been just a decade earlier. No wonder New Jersey’s business tax climate was the worst in the nation both this year and last year, according to the nonpartisan Tax Foundation. No wonder, in 2009, Chief Executive ranked New Jersey a dismal 48th out of the 50 states for doing business, based on a survey of 543 CEOs.
Unless New Jersey’s elected officials can resolve to curtail sharply the growth in the cost to taxpayers of unionized government employees’ and retirees’ compensation, the state faces a very bleak economic future and possibly even bankruptcy.
The budget reforms announced and recommended by Mr. Christie in his February 11 address to the Legislature, including a freeze on expenditures of over $550 million in unspent funds for the rest of FY2010 and raising public-employee contributions to pension and other benefit funds, together constitute a modest step in the right direction, but no more than that.
And at this writing it is still unclear whether the Big Labor-dominated New Jersey Legislature will adopt even the tentative public spending reforms that are now on the table.
In a February 28 editorial, Newark’s Star-Ledger, New Jersey’s largest local newspaper, glumly but realistically predicted: Union officials “will treat this as a life-and-death fight. They will spend millions on radio and TV ads and bumper stickers. They will mobilize lobbyists. They will activate their fleets [of union militants].”
By all appearances, government union bosses in New Jersey do not care whether or not the state goes under.
Their intransigence makes it more obvious than ever before that all realistic, long-term solutions for New Jersey’s government-spending crisis must involve rolling back public-sector union officials’ special privileges, including, first and foremost, the monopoly privilege to speak for all front-line employees, including those who choose not to join the union and want nothing to do with it, regarding workplace issues.
Despite his evident good intentions, Chris Christie has yet to demonstrate he is prepared to fight to narrow and, ultimately, eliminate government union chiefs’ monopoly-bargaining powers. But unless he does take on that fight, his efforts to bring New Jersey back from the brink are almost certainly doomed to fail.