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June 08, 2015

New Jersey uses 'one-shot' budget-balancing maneuvers: study

Many states balance their budgets using short-term techniques to make it appear that spending does not exceed revenue, according to a report released on Monday by the Volcker Alliance, which singles out New Jersey for using budget-balancing maneuvers.

New Jersey, whose governor, Chris Christie, is a potential Republican presidential contender in 2016, has produced a balanced budget by shifting resources intended for other programs to its general fund and increased borrowing, according to the report by public policy nonprofit Volcker Alliance, founded by former Federal Reserve Chairman Paul Volcker.  

“New Jersey is one of the habitual offenders that can’t seem to or hasn’t been able to come up with a lasting set of political and fiscal reforms that stick,” said William Glasgall, Volcker Alliance's director of state and local programs. “It’s a state that hasn’t really been able to reform its ways and continues to use one-shot deals.”

Practices included sweeping funds out of accounts earmarked for specific purposes, accelerating revenue from future budget years, draining rainy-day fund reserves and delaying property tax rebates, the report said.

A representative of Christie's office could not immediately be reached for comment. 

The study said many states include "short-term sleight of hand" moves such as obscuring budgeting decisions by borrowing long-term to fund current expenditures, delaying funding public worker pensions and shifting the timing of receipts and expenditures across fiscal years. 

The report said it focused on three states - New Jersey, California and Virginia - but considered state budget practices nationwide.       

These practices lead to poorly informed policy-making and limit future spending options, as well as passing government costs on to future generations, the report said.

The report recommends that states use recurring revenue to pay recurring costs and not use proceeds from borrowings to cover operating expenses.