In response to Governor Corzine’s announcement that he will identify only $800 million in budget savings to address a $1.7 billion loss of revenue and to pay for about $400 million in new spending, Senator Steve Oroho called on the Governor to listen to his own sound advice set forth in an Executive Order he signed in June. Executive Order 103, signed by Governor Corzine after the current budget was enacted, noted that it is incredibly poor public policy for the State to spend more than its recurring revenue.
“Governor Corzine obviously had a very successful career on Wall Street, but his approach to the State’s budget problem is based on phony math, ” said Oroho. Finding $800 million in budget savings to address a $1.7 billion revenue drop and to pay for $400 million in new spending is obviously inadequate and means the Governor has another $1.3 billion to go if he wants a budget that is in balance.”
Republicans have consistently and repeatedly urged the Governor to embrace substantial budget savings and he has refused. Attached is a Top 10 set of recommendations that Governor Corzine dismissed in May as make-believe math.
A Sampling of Constructive Budget Savings that Republicans and Others Have Offered to Corzine that He Continues to Ignore:
1. Special Municipal Aid – $107,305,000
Over the past six years, a handful of municipalities received state aid from a program whose funding increased from $38 million to more than $145 million. At the same time aid for other municipalities has basically been held flat. The Special Municipal Aid Program has been the subject of harsh criticism in a recent State Auditor’s Report which noted: (1) aid has been awarded without any application process; (2) no objective criteria exists to guide awards; (3) financial recovery plans for recipients have not been prepared as required by law; (4) hearings have not been held to determine if towns should be subject to a fiscal review board as required by law; and (5) grants recommended by staff are subject to “managerial override” (political manipulation). It is clear that the original purpose of the program is no longer adhered to and it has become nothing more than a “fund” for politically-connected municipalities.
Certain municipalities receive annual and increased funding from the program even though the program was originally intended to provide temporary assistance to help municipalities through short-term fiscal problems. For example, Union City received a four-fold increase in funding this year, despite having spent public funds in the past to support questionable expenses. Despite being a distressed city and receiving millions of dollars of distressed cities aid, Union City has been able to pay for several municipal swimming pools and cover a $500,000 jury award paid to a detective who was demoted for political reasons.
There remains a need for funding to address true emergencies in distressed areas, but the amount available six years ago remains the appropriate level for funding the program.
2. Pension and Health Benefits Reforms – $85,000,000
The Legislature has attempted to make fair and equitable reforms to state worker pension and benefit policies. Governor Corzine has thwarted many of these changes, only allowing for relatively modest changes. Further changes should be pursued.
The current pension formula that determines payouts is based on a three-year average of an employee’s highest pay. In the past this has made it easier to “boost” pensions beyond what has been earned. Republicans propose a pension formula based on a five-year average.
State employees receive three extra holidays that the federal government does not recognize. The number of state holidays for State employees should be reduced to match those given by the federal government. This will lower overtime costs and make State services more accessible to taxpayers.
The Benefit Review Task Force issued a report in late 2005 proposing changes in employee and retiree benefits and documenting the savings attributable to each change. One change, which has since been partially implemented, was to increase the employee and retiree contributions to health insurance to 10% of the cost of a base plan. That proposal alone was documented as saving State taxpayers $206 million. The Corzine Administration ultimately embraced a different approach, requiring employees to contribute 1.5% of salary towards the cost of their health plans, which required State employees to contribute far less than could have been saved under the Task Force recommendation.
Possible other reforms include: allowing vested employees to opt into a 401(k) style retirement program which may be attractive to employees and taxpayers; increasing the threshold of hours worked to become eligible for health benefits to prevent certain politically connected employees, who do as little as attend one or two meetings per month, from getting health insurance.
The proposal here is to embrace work on a bipartisan basis and adopt a combination of the above proposals to reduce benefit contributions by at least $85 million. The combination of substantial additional reforms and a modest reduction in the FY 2009 contributions does far more to bring the pension system into balance in a manner that is fair to rank and file workers and taxpayers alike.
3. Eliminate Political Appointees – $68,481,000
The Governor touted an early retirement program to reduce the State employee count. Early retirement programs have failed time and time again in the past and have actually resulted in the State simply increasing its unfunded liabilities in the pension systems. The most recent early retirement program failed to get rid of political appointees, and like past efforts, never met its stated goals and resulted in increased pension costs.
Republicans have a better way to shrink the payroll – eliminate patronage and managerial positions.
Despite claims to the contrary by Governor Corzine, there remains substantial patronage and top heavy administration in State Government. Some of the people in these positions were hired by Governor Corzine himself. For example, a former County Clerk was hired as the Deputy Executive Director of the Board of Cosmetology and Hairstyling. A former Executive Director of the Arizona Democrat Party was hired as a public relations staffer at the Department of Environmental Protection. A campaign worker whose job included taping opponents at various functions was hired as an aid to the Governor. Those are only three of hundreds of examples of positions that could be eliminated with little or no disruption of public services.
Additionally, if the Administration eliminated 2/3 of the employees in the following titles, they would save $68, 481,000 in salary and benefits: State Supervising Photographer, Government Representative, Confidential Aide, Aide to the Governor, Senior Executive Service, Legislative Liaison, Confidential Secretary, Confidential Assistant and Administrative Assistant. It is not claimed that all of the employees in these positions should be fired. In fact, some of these people perform valuable functions, but political appointees are clearly employed in these titles – most of which are outside civil service laws and competitive hiring requirements.
Firing political employees who are not protected by civil service is a far easier, more sensible, and more efficient way to reduce the workforce without promising unwarranted benefits through an early retirement program.
4. County Prosecutor Funding Initiative Pilot Program – $8,000,000
This program provides a subsidy to four counties (Camden, Essex, Hudson, and Mercer) based on nothing but pure partisan concerns. It is nothing more than an unfair and unbalanced slush fund disguised as a policy concern.
5. Elimination of the Department of Public Advocate – $6,670,000
Eliminating this department, which didn’t even exist until recently, and transferring its essential functions to other departments will save the state considerable funding without jeopardizing essential State services. Spending for the programs operated out of this department have increased from the $13.164 million expended during FY 2005 to the $19.20 million recommended for FY 2008. In addition to substantial administrative savings achievable by eliminating this department, there are carry forward accounts available for some of the functions that should be transferred to other departments.
6. Elimination of Compensation to Members of Commissions and Boards – $4,000,000
Hundreds of politically connected people who sit on various state boards and commissions and attend infrequent meetings, receive full-time pension credit, as if they are full time employees. Individuals on these commissions are eligible for a full year of pension credit, provided they were hired prior to recent pension reforms. They should be removed from the pension systems that are intended for rank and file career employees.
This option would eliminate pension and benefits for more than 250 members of various commissions and boards who receive just enough compensation to be eligible for credit in the State pension system. Examples include the Local Finance Board, Real Estate Commission, Public Employee Relations Commission, the various licensing boards in the Department of Law and Public Safety and local boards such as the County Tax Boards. Total budget savings, would include up to $4 million in salary savings and health benefits costs.
7. Board of Public Utilities – $4,000,000
$4 million received by the BPU should be returned to the General Fund to offset indirect costs incurred by the State, including defense of a whistle blower lawsuit and criminal investigations and audits. This can be achieved by cutting confidential employees at BPU, whose number has increased by 40 over the past several years. In addition, BPU leases expensive office space in Newark. A portion of the premises could be subleased and BPU could move to cheaper office space elsewhere.
8. State Cars, Cell Phones, Tuition and Other Perks – $4,000,000
The budget assumed that the state will hold title to 15, 544 vehicles. This is an increase of 144 since January 2007. The budget also assumes that 2 additional mechanics will be on the payroll to service the additional vehicles. Treasury, the Department responsible for the State Central Motor Pool, should evaluate who is driving these vehicles and if they merit vehicle assignment. Eliminating a small portion of the fleet as well as placing a moratorium on purchasing additional vehicles (not including the replacement of state police vehicles) will save the cost of new vehicles and cut fuel costs and reduce claims against the Vehicle Claims Liability Fund.
Additionally, a review of tuition reimbursements showed that the State was paying for educational costs completely unrelated to the jobs of recipients. For example, a dozen employees of the Department of Banking and Insurance showed that they were taking geology classes paid for by the State taxpayers and a Department of Transportation employee took a class called Myths, Mummies, and Magic.
Finally, the State has had a proliferation of cell phones and Blackberries, especially to upper management, that are not essential to job functions.
9. Governor’s Contingency Fund – $600,000
The Governor’s Contingency Fund began more than 100 years ago for the purpose of allowing the Governor to make funds available to address true emergencies. It was politicized by former Governors McGreevey and Codey. Spending should be eliminated and true emergencies should be funded by the Legislature.
10. New Jersey Law Revision Commission – $400,000
The New Jersey Law Revision Commission was established in 1985 to promote and encourage the clarification and simplification of the laws of New Jersey. This function can adequately be performed by existing staff in the Office of Legislative Services.
…and a bonus #11
11. Sports and Exposition Authority (NJSEA) – $350,000
NJSEA retreated from George Zoffinger’s cost cutting initiatives and hired numerous nonessential employees and gave bonuses to executives. At the same time, the state subsidy of the NJSEA is increasing.
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April 26, 2011
