REINHART: N.J. must confront fiscal crisis

The Aug. 27 editorial regarding the issues and questions the voters should consider for the New Jersey gubernatorial election are excellent and worthy of all voters’ consideration. However, there is one other set of issues and related questions that should be added to the list. That is the issue of how the next governor (and Legislature) should address the longer-term concerns of the staggering pension and health care costs for the public employees and the equally daunting challenge of how to address the tremendous infrastructure deficit facing the state.

In recent years and acutely in recent months, we have witnessed the severe impact of failing to plan longer term. The Penn Station fiasco, the “kick the can down the road” pension deficit approach, the crying need for the Gateway Tunnel, the potentially horrific scenario of failed bridges or tunnels, or water quality and quantity failures will not go away by the next election.

Multiple independent studies demonstrate the staggering financial costs of the continued delay in addressing the state’s longer term needs in pension, health care, transportation, water quality and quantity. The combined costs are in excess of $100 billion and growing.

The Pension and Health Benefits Study Commission report in 2015 showed the deficit to be in excess of $80 billion and growing. The “Facing Our Future Infrastructure Report” was completed in 2013 and showed a staggering annual funding deficit for transportation alone in excess of $2 billion.

The use of short-term gimmicks will not work any longer. How will the state balance a budget if it is forced to make dramatically larger pension fund payments without either tax increases or huge budget cuts? Borrowing is a very expensive option as the state’s ability to borrow has been significantly eroded and the resultant impact on the cost of borrowing would be expensive.

Given that most politicians are more interested in current problems and their impact on budgets and taxes, the various levels of government — state, county, and local — have paid little attention to the need for long-range planning. The failure of multiple administrations to address these long-term strategic issues going back decades in New Jersey is a major reason why the state now is faced with these multi-billion dollar problems.

So far, the general public has shown little interest in these long-term critical issues. A recent Monmouth University poll showed that the property tax issue is the number one concern for residents. The pension and transportation issues were much further down the list. But imagine what the state would look like if there was a sudden major problem, like a closure of a tunnel under the Hudson River. Can you say “Armageddon” with a Jersey accent?

What would happen to residential property values if the New Jersey economy declined dramatically? What would happen to the job market? How would New Jersey be able to compete with other states for new companies in the relocation wars? How will the state pay for its portion of these sudden costs? Suddenly, the public’s interest in these issues would increase dramatically. The public would ask, “Why wasn’t this addressed before?”

So, what should the next governor and Legislature do?

First, acknowledge publicly that the state is at a critical point on fiscal and infrastructure issues. This acknowledgment is an important step in rallying public support for other tougher steps down the road.

Second, undertake a comprehensive long-range fiscal plan beginning with the establishment of a Long-Range Strategic Planning Commission composed of business and community leaders that includes no elected officials from any level of government. The commission would be given financial support from the state for its work, including research. The charge to the commission would be to study the long-range risks facing the state and develop a strategic plan to address the risk findings.

The breadth of the commission’s study would include the fiscal deficit, infrastructure deficit, climate impacts and other long-range concerns. The commission’s recommendations should not focus on what is politically feasible in the short-term but rather create a plan that maps the decisions and direction needed.

The governor and Legislature would then have to come up with a plan to deal with the commission’s findings.

New Jersey has some wonderful strategic advantages and is still a wonderful place to live and work. Let’s not waste them by ignoring the structural fiscal issues that threaten to undermine our strengths.

Bold leadership from the next governor and Legislature has never been more critical. We are very close to the “tipping point.” Let’s not fall over the fiscal cliff as we chase that can down the road and over the edge.

Peter S. Reinhart is director of the Kislak Real Estate Institute at Monmouth University and of counsel with the Greenbaum Rowe Smith law firm.