More budget illusions in New Jersey
Last Friday, New Jersey Governor Chris Christie proposed to levy a $10,000 fine on anyone who leaked the state‚Äôs fiscal data ahead of official announcements. Politicker NJ¬†quoted New Jersey state Senator Barbara Buono (a Democrat from Middlesex):
“Governor Christie came into office promising ‚Äėfiscal transparency‚Äô and signed an executive order [in 2010] requiring his Treasury Department to issue revenue reports on the 10th business day of each month,‚ÄĚ Buono noted. ‚ÄúBut now that revenues are coming in below the governor‚Äôs wildly optimistic projections, revenue numbers are suddenly a state secret and the governor wants total control over the flow of information.”
“Whether New Jersey taxes are coming in as expected should not be kept secret from New Jersey taxpayers and it should not be kept secret from New Jersey legislators who are responsible for ensuring that the state budget remains in balance. Like the United States Constitution, the 1947 New Jersey Constitution established a government with three equal branches. It did not establish an imperial governorship.”
New Jersey has been struggling this fiscal year to meet those ‚Äúwildly optimistic‚ÄĚ budget projections. Christie‚Äôs used a projection of seven percent growth in state revenues to push for income tax cuts, would go mainly to the wealthiest taxpayers. They nonetheless would earn Christie his coveted mantle of tax-cutter. I wrote¬†in¬†May:
Since February, when Christie proposed his budget for fiscal year 2013 (beginning July 1, 2012), he has been very optimistic about the state‚Äôs revenues and has been fixated on cutting the state income tax. Moody‚Äôs and others warned at the time that the tax cut was imprudent because New Jersey‚Äôs budget was based on fanciful assumptions.
Now Christie‚Äôs revenue projections are not happening, and with no money to fund it, his tax cut is unlikely to pass the Democrat-controlled legislature. Rather than going back to the drawing board, Christie is trying to muzzle the public release of tax revenue data.
There are no ‚Äúinsider trading‚ÄĚ or ‚Äúmaterial non-public information‚ÄĚ provisions in the municipal bond market like there are in the equity markets. Internal budget data is released all the time to credit rating agencies, underwriters and others on Wall Street. New Jersey‚Äôs problem is not that the public is seeing data too early. New Jersey‚Äôs problem is that its Republican governor wants to create the illusion that he can cut taxes, even while state revenue this year does not nearly support a cut.