Voters would need to OK state borrowing
After maxing out their credit card to one of the heaviest debt loads in the nation, state lawmakers may soon need voters’ permission before they can borrow again.
A constitutional amendment that would require voters to greenlight future state borrowing is gaining steam in Trenton, reflecting public frustration over a perceived addiction to spending and the state’s fiscal crisis.
The idea was embraced in January by Gov. Jon Corzine, who made it part of his broad financial restructuring plan. While that plan’s centerpiece — drastically cutting debt through dramatic toll hikes — collapsed, the borrowing amendment quietly advanced in the Legislature and has a decent chance to make the November ballot, lawmakers say.
“I think our debt is so overwhelming that people are realizing it’s a threat to the state,” said Sen. Leonard Lance (R-Hunterdon), who pushed the amendment for years. “I’m pleased, although we’re not home yet.”
New Jersey is struggling with more than $32 billion in state debt, the third-highest in the country. All but $3 billion was issued without voter backing.
Through the years, lawmakers and governors borrowed without voter approval for schools, highways, open space — even balancing the state budget, a practice now banned by the state Supreme Court. In the budget year that begins next month, taxpayers will shell out $2.7 billion to pay off these debts.
The state constitution already says voters must approve borrowing, but lawmakers routinely have dodged the requirement by authorizing quasi-state agencies to issue billions in debt, and promising to repay it through the state budget.
That strategy would be prohibited under the amendment, which cleared an Assembly committee last week and is scheduled for a public hearing before a Senate committee tomorrow. It has the support of Assembly Speaker Joseph Roberts (D-Camden), but Senate President Richard Codey (D-Essex) hasn’t made up his mind.
Codey said he needs to take “a long, hard look” to make sure it’s “not tying a future governor’s and Legislature’s hands” should a need for emergency borrowing arise.
“There are times when you’d need to do it and do it right away and not necessarily wait for an election,” he said.
Critics of the amendment say it would sap power from legislators elected to make intricate decisions, and turn complex borrowing schemes into yes-or-no issues vulnerable to voters’ snap judgments.
“Simple bumper-sticker politics do not lend themselves to (that) kind of decision-making,” said Steve Wollmer, spokesman for the powerful New Jersey Education Association teachers union. “It would really limit or potentially cripple the state’s ability to make timely investments for the public good.”
But supporters of the amendment say lawmakers have proven incapable of putting on the brakes.
“You always have to borrow, but you need to slow down the pace,” said Hyman Grossman, retired managing director of Standard & Poor’s Ratings Group and an observer of New Jersey budgets.
Corzine touted it as part of his financial reforms, but it got a fraction of the attention paid to the aggressive toll hike plan he pitched in town hall meetings. He acknowledges that part of his plan is dead, but says the amendment — along with freezing spending and trying to match spending to revenues — helps keep his promise of getting the state’s fiscal house in order.
Sen. Raymond J. Lesniak (D-Union), a primary sponsor of the amendment, said the aborted toll plan did highlight the state’s fiscal woes.
“The public is demanding that we make reforms like this or else they’re not going to support anything we do to solve our debt problem,” he said.
Corzine has drawn cries of hypocrisy for backing the amendment while pushing $2.5 billion in new nonvoter-approved borrowing for school construction. He says the short-term schools borrowing is a “constitutional responsibility” mandated by a state Supreme Court order to repair or replace hundreds of schools.
The court has also “been guilty” in enabling the creative borrowing, said Joseph Marbach, political scientist at Seton Hall University. In 2003, a sharply divided court ruled the state could continue to issue bonds through its authorities without asking voters first. The justices in the minority said the decision essentially killed the clause in the constitution giving voters control.
“The fact that we need a constitutional amendment to tell the court what the constitution says is also a little bit troubling,” Marbach said.
Lance agreed, rejecting the idea of relaxing regulations for school construction or anything else.
“Those who wish to borrow always give a reason why this borrowing is different from all other borrowing, why we don’t need to go to the people,” Lance said. “And that’s gotten us where we are.”
Staff writer Kasi Addison contributed to this report.
http://www.nj.com/news/index.ssf/2008/06/proposed_voters_to_ok_all_borr.html
