‘This budget pretty clearly represents a refutation of austerity budgeting’

NJPP’s McKoy isn’t totally sold on budget — but says increase in spending (and some borrowing) is only road to success

We get it: You either love the budget or hate the budget. And almost every member of the business community will take the second choice. We ran some of that sentiment here and here.

Looking to balance it out, we sought out Brandon McKoy, the head of New Jersey Policy Perspective. Whether you agree with him or not, most feel McKoy makes his cases eloquently. (His take on what is considered a “fair share” drew raves from both sides.)

So, we reached out to him on budget day to get his take. Overall, he is supportive of the budget. But he’s not 100% behind it. Not even close. Why?

We will let him explain in a Q&A (that has been condensed for space and clarity).

ROI-NJ: Give us your view of the budget from 10,000 feet?

Brandon McKoy: This budget pretty clearly represents a refutation of austerity budgeting — and the idea that we can cut ourselves to freedom or to success. We tried that in response to the 2008 financial crisis and it failed us. It worsened poverty for a very long time. It worsened racial inequality. And we had the slowest and weakest recovery of any state in the nation.

It seems a lot of folks, from our perspective, have learned the painful lessons of those mistakes, and said: ‘OK, we’re not going to do it this time. Austerity is not really an option.’

ROI: Of course, borrowing is an option. Talk about that — as well as Murphy’s long-desired millionaire’s tax?

BM: We’re happy to see the millionaire’s tax and we think making improvements to the tax code when it comes to an equitable and fair tax code is important and critical. We’re all about it.

There is more borrowing in this budget than what the governor even proposed. And, while we recognize the importance of having borrowing as an option available — because we don’t really know where things are going to go — we could have done better than borrowing more.

ROI: How so?

BM: We could have raised revenue more. We could have had a more robust income tax change that added brackets at higher levels and recognized disparities in grossly high levels of income. We could have done the one thing that everybody seems to agree is a gimmick, but nobody actually wants to do anything on, which is restore the sales tax back to the level it was at, 7%.

We even could have done some of the smaller-scale things that the governor had proposed but were taken out, like getting rid of the tax cap on yacht purchases and increasing gun fees. Getting rid of those things sort of makes you scratch your head a bit. If we’re in a crisis, then we’re in a crisis and we should do everything we can. When you’re in crisis, you take every penny you can get. I think it’s hard to argue that we should be subsidizing yacht purchases when we’re still trying to fund health care for children and make sure that relief is delivered to workers, families and businesses.

ROI: Let’s go back to borrowing — is that really something we want to do, considering our past? Proponents say that’s the part of the budget that we’ll be feeling for decades.

BM: Everyone should look at the borrowing with a critical eye. New Jersey does not have a good history of borrowing. It would be foolish to argue otherwise.

I think that the Legislature and the administration are not helped in their desire to have the authority to borrow when they sort of randomly increase the amount of borrowing by $500 million and extend the term from 10 years to 12 years and nobody really knows that it happened until it happened. That indicates, can you be trusted?

I think the case for borrowing is a sound one, because austerity is going to be more costly in the long term because of exploding poverty, crumbling assets and worsening inequality. But, now, the Legislature and the administration need to show that they have the wherewithal to steward the state and raise the revenue to pay that borrowing back swiftly. They need to be responsible in the power that they’ve been given, because if they are not, they will absolutely be challenged.

ROI: It’s getting tough to get a read on you. Are you pro-budget or anti-budget?

BM: I’ll answer that this way: It’s always important to compare relative situations. Look at what every other state is going through right now. We are approaching this crisis in a way that at least seems to be better than other states. There was a ton of praise for the state passing a budget that avoided drastic cuts. It doesn’t mean there’s no cuts. We’re still in a recession, we’re still in a pandemic, but compared to (what) other states are doing and compared to what we did last time, it’s a heck of a lot better.

ROI: Who is included in the ‘we’? I can tell you that the business community feels left out.

BM: For those who are concerned about what’s going to happen to business, or what’s going to happen to corporations, I would say, 1) Let us not conflate small business and major corporations; I think that is a disingenuous position that is often put out there. Corporations, we all know, are doing just fine. And 2) For small businesses, basic math tells you the state cannot provide relief to small businesses if it’s giving away tax breaks left and right. Let’s make sure that the state is able to raise revenue, marshal resources and then direct relief to the small businesses and the workers and the families that need it the most.

ROI: But, if we don’t take care of businesses, they will close or leave, yes?

BM: Those businesses are not going to go have any success, if customers — aka workers and families — do not have the wherewithal to shop. So, let’s not be coy or disingenuous about job creators. Job creators are customers. If you don’t have any customers, you don’t have any jobs to create. Taking care of the foundation of the pyramid in the state, which has been ignored for far too long, and has been consistently ignored when it comes to moments of crisis — that is a positive development. And one that I will defend and applaud any day of the week.

ROI: There is some pork in there. Not a lot, but, of all years, it was stunning to see anyone put anything in there that wasn’t essential. Agree?

BM: I do. But I think the challenge here is different people have different definitions of essential — and I don’t say that to be glib. For a lack of a better term, there’s definitely some Christmas tree items in there that legislators claim that they don’t do anymore, but clearly still occur. Take the $4 million for First Tee (a golf program in Essex County). As a product of First Tee, I will say I think it’s a great program, but, yes, I understand that’s not a priority right now.

To me, this all comes down to the big elephant in the room.

ROI: We’ll bite. What is it?

BM: This has been the least transparent process that we have had in a budget for a long time. You’ll have a lot of legislators say this has been the most transparent process. I’m sorry, transparency is not measured by how legislators feel that they are included in the process. And, honestly, if they are saying that this is the most transparent process that they have seen, I’m very concerned about past processes.

Transparency is measured by the public’s engagement in the process and the public’s understanding of what’s going on and the public’s sense that their voice is being heard by the legislators. And there’s a reason that our budget coalition had a people’s budget committee hearing, because the Legislature wouldn’t. So, when it comes to some of these concerns around pork, well, it’s really hard to call those things out when there’s no public process to flag them ahead of time.

ROI: What you and others have said was transparent was a lack of input from people of color, both in the public and the Legislature. Talk about that?

BM: There’s a lot of hypocrisy from leaders who tripped over their own feet to say that they support the fight against systemic racism, but then do nothing to revisit the processes by which they develop budgets (to) ensure that marginalized voices and legislators of color have a real seat at the table to be included. And, as long as that continues, their supposed values to the fight against racism ring incredibly hollow.

ROI: OK, last question. Rate the budget between 1 and 10 — with 1 being awful and 10 being the best budget ever.

BM: I’m somewhere between a 7 and a 7.5.

I think a lot of careful consideration went into different parts of this budget, even though we have some concerns and some not so happy thoughts on certain things.

But I’m also grading on the curve a little bit, too. Look at New York: You have a governor who is cutting Medicaid during a pandemic. You have a governor who is cutting public services. We don’t have that right now. I’m thankful for that. And I’m thankful that it seems that the extra three months seems to help a little bit with consideration on what are the opportunities and the resources available to us.

Read more from ROI-NJ: