While some progress has been made this year in addressing New Jersey’s fiscal crisis, significant government structural reform is required to close what remains a daunting structural budget deficit.
A recent Office of Legislative Services analysis projects the structural deficit for next year at $10.5 billion—even higher than the $8 billion that was projected for the current fiscal year—and this is despite major cuts in property tax rebates and local aid in the recently enacted budget.
Further, the unfunded pension liability for New Jersey’s public pension system—both state and local—is, at a minimum, $53.9 billion and climbing. And last year, the state did not make the scheduled $3 billion annual payment into the system and another payment failure is projected for this year.
Cutbacks in state and local employee positions and salaries, achievable pension changes, and a return to economic growth are all important parts of the solution, but the problem is so big that more is required. We must also rethink how costly governmental services, especially administrative functions, are delivered amidst the waste and inefficiency of 565 municipalities and over 600 school districts, all spending a large portion of their budgets to administer their own government functions.
Throughout New Jersey, municipalities are moving towards sharing some services with neighboring municipalities or with their school boards. For example, we are seeing more joint tax assessor offices and municipal courts as well as the sharing of computer administration between municipalities and school boards. Major savings can also be realized by doing joint maintenance of parks and ball-fields between municipalities and school districts. The Citizens’ Campaign is working to encourage these developments and has put forward its own series of waste-cutting measures that emphasize shared-services.
These municipal efforts will remain important. However, the largest source of cost-savings can be realized by seizing the far greater economies of scale available at the county level. We need to make county government the primary locus of local government purchases and service delivery by first building in strong incentives for municipal governments and school districts to take advantage of the greater cost-savings afforded by consolidating purchasing and services in county governments. Services such as emergency dispatch, health inspection, road and parking lot resurfacing and purchases including expensive garbage and fire truck acquisitions, to name a few examples, can all be delivered by county government now.
Second, we need to capitalize on New Jersey’s county based political power to muster the political support for legislatively mandated consolidation of high cost administrative salaries and consulting fees including, for example, those of school districts and police departments. Salaries and consulting fees are the lion’s share of local government budgets and most of the biggest salaries and consulting fees can be consolidated at the county level to achieve the largest potential savings.
Some services are best delivered at the local level and certain current county functions such as County Improvement Authorities can be done better and less wastefully by the state. Still, a strengthened and expanded role for counties in purchasing and service delivery provides an opportunity for big savings.
.Finally, there will need to be one more step to making this all work. If we are going to consolidate and increase the governmental responsibilities of county governments, we need to build in more transparency and accountability. For example, our strong state pay-to-play reform law must be expanded to county governments. Otherwise, consolidating services at the county level will just put more power in the hands of county political bosses. It may also be wise to consider mandating that all counties have a County Executive so there is a visible and accountable elected official ultimately responsible for the delivery of quality and cost-effective services. Further, all county salaries and labor agreements should be required to be available online in easy to access form for public and municipal government scrutiny.
Fundamental structural reform will be difficult to accomplish. It will require bold leadership at the state level and a thoughtful package of state legislation designed to bring it about. But is can be accomplished, if our politicians are willing to bring real changes to the state’s status quo, and we the people call for it Its is time to get to work and put this major cost-saving initiative in place.
Harry S. Pozycki
Harry S. Pozycki is the Chairman of the Citizens’ Campaign, a non-partisan organization dedicated to inspiring citizen leadership and devising innovative, cost-effective solutions.