Critic says Wall Street wizard Phil Murphy imperils New Jersey’s long-term fate

New Jersey, known for its bustling economy and diverse communities, faces mounting concerns about its long-term fiscal fate because massive federal pandemic aid empowered Governor Phil Murphy’s administration to adopt large spending increases that will quickly become unaffordable.

Murphy’s ambitious spending increased total outlays from Governor Chris Christie’s last budget of $35 billion in Fiscal Year 2018 to $55.9 billion for Fiscal Year 2025, and the Wall Street millionaire has two more budgets.

Policies addressing critical needs led to significant increases in state spending but without corresponding revenue growth, Lisa McCormick, a progressive Murphy critic, expressed worries about budgetary sustainability and financial stability.

“Since taking office, millionaire Murphy has recklessly championed investments in education, healthcare, infrastructure, and social programs,” said McCormick. “These spending increases address some pressing issues but the former Goldman Sachs executive made few preparations for funding them after federal coronavirus aid runs out.”

One of the primary concerns is the lack of sustainable revenue sources to support the expanded budgetary commitments.

“The state’s revenue growth has not kept pace with Murphy’s $21 billion surge in spending, inviting budgetary imbalances and potential funding gaps that will cause a crisis some future administration must clean up,” said McCormick. “This situation will strain New Jersey’s finances, limit its ability to fund essential services, and hinder our efforts to address long-term liabilities, such as pension obligations.”

“We are facing a critical juncture where the gap between spending and revenue is widening,” said McCormick, who earned four of ten votes cast in the 2018 primary for US Senate. “Without a balanced approach to fiscal management and revenue generation, New Jersey could face challenges in maintaining fiscal sustainability and meeting future financial obligations.”

The reliance on excess borrowing to cover budget shortfalls encouraged spending increases, creating another concern. While borrowing provided immediate funding, it also led to debt accumulation and interest payments, adding to the state’s financial burden.

Moreover, the pressure on revenue generation has implications for taxpayers, businesses, and the overall economic climate. Calls for tax increases or other revenue-generating measures to support the expanded budget have sparked debates about the potential impact on economic growth, investment, and competitiveness.

Murphy said a tax on highly profitable businesses that will generate $818 million annually, is not meant to be a permanent solution to NJ Transit’s funding woes, and the agency’s board is expected to approve 15% fare hikes at its April 10 meeting.

After state tax collections slowed during the worst months of the COVID-19 pandemic, Murphy and state lawmakers agreed to take on debt which means taxpayers will be responsible for repaying the borrowed funds with interest until mid-2032.

Future administrations may inherit other consequences of Murphy’s spending policies, facing challenges in balancing budgets, managing debt, and navigating fiscal pressures. Tough decisions about spending cuts, tax hikes, or alternative revenue strategies, may be necessary to restore New Jersey’s fiscal balance and well-being.

“Responsible state fiscal policy requires more than balancing the current year’s budget,” said McCormick. “It also means ensuring that the budget is sustainable.”

In response to these concerns, McCormick advocates for fiscal responsibility by calling for prudent financial management, strategic budget planning, and a comprehensive approach to address structural budgetary challenges.

She emphasizes the importance of sustainable fiscal policies, transparency in budgeting, and collaboration between policymakers, stakeholders, and the public to secure New Jersey’s fiscal future.

McCormick has called on Congress to ‘reverse Reaganomics’ and restore the kind of New Deal and Great Society programs that invested in people and the nation’s long-term prosperity.

New Jersey will someday grapple with these fiscal realities, but the spotlight remains on Murphy’s spending plans and not any implications for the state’s long-term economic health and financial stability.