Updated: Jun. 12, 2022, 7:16 a.m. | Published: Jun. 12, 2022, 7:15 a.m.

Former Senate President Steve Sweeney convened budget experts from both parties who warn that tax revenues won't keep up with revenues. He praises Gov. Phil Murphy for proposing a huge budget surplus, but worries the Legislature will devour it. Ed Murray | NJ Advance Media for NJ.com

By Tom Moran | Star-Ledger Editorial Board

New Jersey is swimming in cash this year, not because we fixed what’s broken, but because a perfect storm of good luck threw bags of cash at our doorstep.
Covid brought a flood of federal money. A booming stock market caused income-tax revenues to skyrocket as never before. Low interest rates goosed the economy from coast to coast. A nuclear-hot housing market caused more revenues to roll in. Inflation pushed taxpayers into higher brackets.

So now, the Legislature is doing what it does in good times: Throwing a party, the kind where guests put lampshades on their heads by midnight and think it’s hilarious.

Assembly Speaker Craig Coughlin is promising the biggest tax cut in history. Republicans say planned surpluses amount to “hoarding” and demand that we dip in to offer even bigger tax cuts. Plans to boost spending on schools and health care are on the fast track. Happy days.
Enter Steve Sweeney, the former Senate President, preaching restraint, willing again to be the skunk at the party, telling truths that nobody wants to hear.

“We’re probably heading into a recession,” he says, echoing the view of many economists. “But with all this additional spending, the revenues won’t keep up.”
Sweeney isn’t speaking for himself. He’s assembled a team of crack budget experts from the left and right at his new think-tank, stuffed with former treasurers and and experts from the left and right. He gave them 10 weeks to grind numbers, and they reached the consensus that Sweeny is now preaching: These good times won’t last.
“There is an 80% probability that revenue collections from (fiscal year) 2024 to (fiscal year) 2027 will fall $10.5 billion to $20.5 billion short of the projected expenditures needed in those four budget years,” the group found.
Those numbers are scary, and may explain why, even in this golden moment, New Jersey’s credit rating remains the second lowest in the country. Thank God for Illinois, a much larger mess.​

The shocker for those who follow politics is that Sweeney is praising Gov. Phil Murphy, rooting for his old blood rival in negotiations with the Legislature, saying he’ll be Murphy’s “ardent supporter” as we approach the July 1 budget deadline.

The governor’s budget proposes a restrained tax credit to soften the dread-blow of property taxes, a political necessity if Democrats want to prevent another blow-out in the 2023 election.
But it is not packed with new spending programs, and most importantly, it has a fat surplus larger than any in state history, worth nearly $12 billion. Sen. Paul Sarlo, the budget chairman, says he’s pressing for a surplus of $8 billion to $10 billion, which itself would be historic, bringing our surplus up to about the latest national average of 18 percent of total spending.

Add the big surplus to to Murphy’s robust pension payments, and Sweeney is showing new respect.

“We disagreed on a lot, but I always talked about making full pension payments as a game-changer, and he did that,” Sweeney says. “Sometimes it’s better to be lucky than to be good. And we are so lucky. You pray for this stuff, and then it happened. So, the point is not to squander it. Don’t go crazy. That’s all I’m saying.”

The Legislature doesn’t do the kind of long-range fiscal planning that Sweeney’s think-tank has done. It plans a single year ahead, and the crisis that both Murphy and Sweeney’s think-tank foresee won’t hit us hard for a few years, perhaps after the 2023 election.

Every piece of the perfect storm that brought us here is about to flip. The federal money is drying up. The stock market is dropping. Interest rates are rising. The housing market is finally slowing. And inflation has reached 8 percent.

So, enjoy the moment. But understand that it can’t last.

History tells us how the Legislature will deal with a downturn: Cut property tax credits, pinch money for schools and hospitals, and allow the state government’s core capacity to rot by leaving agencies with ancient computers and skeletal staffs. That’s why so many people couldn’t get unemployment checks or driver’s licenses during the pandemic. Tending to those nuts and bolts is not sexy, and yields little political benefit.

A big surplus could save the day, just as a family’s savings can in tough times. But the first job is to see it coming by expanding our horizon from one year to five. Sweeney’s think-tank is doing that now, as the Legislatures in 30 other states already do. But not in New Jersey.

For Sweeney, this role as head of a think tank is something new, born of his shocking loss in November’s red-wave election. Some will dismiss it as a political move, a way to stay in the game until he runs for governor in 2025, a possibility he is considering. That may be true, but it’s also cynical, given his long record of trying to fix the state’s finances.

And for now, the question is not what motivates him. The question is whether he’s right or wrong to urge restraint, and take this longer view. To me, the answer is obvious.