Op-Ed: Lottery/Pensions Deal is a Reckless Budget Gimmick

This op-ed appeared in the June 23, 2017 edition of NJ Spotlight.

Gov. Christie is pushing hard on the legislature to approve his bait-and-switch proposal to use the Lottery’s profits for paying off pensions. There’s a problem with this idea that has received little attention yet from the administration or legislature: where will New Jersey find the shifted $1 billion to help finance education and institutions?

It’s no wonder that Treasurer Scudder is so anxious to see the Lottery switch deal enacted by June 30. Since the governor’s 2018 budget proposal includes $2.5 billion for pension payments, that number could be reduced by the $1 billion in Lottery profits and could be used to finance the $1 billion in educational and institutions now paid by the Lottery. Well at least for one year. And Gov. Christie appears to have gained the cooperation of at least the Senate’s leadership who have put the bill to dedicate the Lottery profits to the pension payments on a greased rail.

Here’s the probable reason for the rush: only if the Lottery switch occurs before July 1 can its proponents claim that the services and programs now supported by the Lottery’s profits will not be negatively affected by the switch. Yes, for one year Tuition Aid Grants and support for disabled veterans can be sustained without cutting other programs or increasing taxes. After that, the jig’s up and disabled vets and striving students can join the long list of essential services that have seen state support suffer because New Jersey is simply running out of money (an indisputable fact that no leaders want to acknowledge).

The result: the next governor’s first budget will be at least $800 million shy of the funding needed to support public colleges, tuition aid, services for the severely disabled or the Katzenbach School for the Deaf.

Here’s what’s worse about the Lottery switch: it mirrors many similar steps taken by previous governors and legislatures (abetted by the state Supreme Court) that took New Jersey from the most highly credit-rated state to 50th on the list. Yes, sneaky actions without essential public analyses and time for sharp questioning are responsible for the two-decade downward slide in New Jersey’s capacity to invest in the assets that made it one of the nation’s wealthiest, most economically vibrant states.

Actually, one need not dig into the distant past to find examples of irresponsible financial practices that have eviscerated New Jersey’s financial and economic conditions. Just last month, Gov. Christie orchestrated a whiz-bang evasion of sensible practice and the state’s Constitution by convening the Economic Development Authority board (all of whom he’s appointed) to approve the issuance of $300 million in debt to finance the State House rehabilitation. No legislative approval was sought or given, nevermind putting the question to the public. Not only did the board approve the deal after 4 minutes of discussion, but a package deal was sealed the same day under the watchful eye of Gov. Christie’s former counsel and U.S. Senate appointee, Jeff Chiesa. Thus, when a bipartisan group of legislators filed a petition to block the clearly unconstitutional deal, a Superior Court judge tossed their case out citing the fact that it had already gone through and could not be undone.

The judge apparently accepted the administration’s bizarre argument that the EDA it was not subject to state constitution’s mandate that new debt be subject to public approval unless that debt had a source of constitutionally-dedicated funding to pay it off. The administration insisted the EDA was exempt because, well, it existed as an agency prior to the 2008 adoption of the constitutional amendment that set this mandate in place. This is akin to suggesting that the Tara plantation of “Gone with the Wind” fame could continue enslaving people after the 13th Amendment to the U.S. Constitution was adopted simply because it was in the slave business before its adoption.

In the end, the Lottery switch is just one more scheme that will dig New Jersey’s already deep hole of shrinking support for essential services and investments even deeper. There is hope since at least 21 Senators and 41 members of the Assembly must approve the bill. Given the untrue assertion that the switch is healthy for the state’s financial future, let’s trust that a majority in one chamber or both will have the brains and guts to say “no.”

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