Comparing Culver's I-JOBS to Christie's borrowing in New Jersey

New Jersey Governor Chris Christie is headlining a sold-out fundraiser for Republican gubernatorial candidate Terry Branstad in Des Moines this evening. Branstad has praised Christie for “cleaning up the state’s budget and again putting his state on the right track.” One Republican speaker after another tonight will bash Iowa Governor Chet Culver, ignoring the fact that our state ended the last fiscal year with a sizable surplus and has been described as one of the states “least like California” in terms of budget problems.

Bleeding Heartland would like to welcome Christie to Iowa by comparing his record on state borrowing with Culver’s I-JOBS infrastructure bonding program, a frequent Republican punching bag.

First, consider the debt loads Culver and Christie inherited as governors of their respective states. In August, Moody’s published a report on state debt (pdf file) as of June 30, 2009. That was shortly before Iowa began selling I-JOBS bonds and several months before Christie won the New Jersey governor’s race.

As of June 30, 2009, Iowa’s gross tax supported debt was about $3.19 billion (40th in the country); New Jersey’s was $37.7 billion (third place).

Iowa’s net tax supported state debt was 0.2 percent of personal income (48th place); New Jersey’s was 36 times times higher at 7.2 percent (fourth place).

Iowa’s net tax-supported state debt as a percentage of GDP was 0.16 percent (48th place); New Jersey’s was 37 times higher at 6.82 percent (fourth place).

Iowa’s total net tax supported state debt was about $219 million (46th place); New Jersey’s was $31.9 billion (third place).

Iowa’s net tax-supported state debt per capita was $73 (49th place); New Jersey’s was $3,669 (fourth place).

To sum up, Christie became governor of a state with one of the highest debt loads in the country. No matter how you look at the data, Iowa’s state debt is low by comparison. Christie said during his gubernatorial campaign, “We should not be borrowing any more money without voter approval….” It didn’t take him long to break that promise. In less than a year as governor, he has presided over more state borrowing than Culver’s I-JOBS program. From an April report by NJ.com:

Faced with a rocky and uncooperative financial market, New Jersey last June [2009] borrowed $400 million in short-term debt to build schools, with the understanding it would be paid off with an additional round of borrowing this year.

Today, the state took a step toward that goal when the Economic Development Authority approved up to $2 billion in bond sales in April and May. The size of the eventual bond sale, however, will likely be somewhere around $1.6 billion, Assistant Treasurer Steve Petrecca said.

The bonds will include $500 million in new borrowing for school construction projects already approved, and about $665 million in debt payments pushed into the future.

The governor’s office did not identify which projects would be funded.

“It is important for these school projects to move forward with state financial support,” Gov. Chris Christie said in a statement. “The sale of these bonds is a fiscally responsible way to continue to address the school-construction needs of New Jersey’s public schools.” […]

The state expects to sell $850 million in bonds on April 22 and another $750 million in bonds on May 11, according to a memo from the treasurer’s office.

Iowa Republicans are outraged about  I-JOBS, but Culver’s borrowing was 100 percent dedicated to capital investments. A significant chunk went toward rebuilding the University of Iowa campus and other projects related to disaster and flood recovery and prevention. In the midst of a nationwide recession, we didn’t have a lot of money lying around to “pay as you go” to clean up after the worst flooding in state history.

Christie not only approved borrowing hundreds of millions of dollars to build schools in New Jersey (a worthy goal), he also approved hundreds of millions of dollars to push old debt payments into the future. If a Democrat had done this, you can be sure Republican crowds in Des Moines wouldn’t pay to hear him give a speech.

New Jersey’s debt load (whether measured in terms of gross debt or per capita debt) is about ten times Iowa’s level, even if you include all of the I-JOBS bonds sold in 2009 and 2010.

What do you think, Bleeding Heartland readers: are Branstad and his fans uninformed about Christie’s record of borrowing, or is this yet another case of “It’s ok if you’re a Republican”? I vote for the latter, since Iowa Republicans have welcomed Minnesota Governor Tim Pawlenty, who also presided over much more state borrowing for infrastructure than Culver.

UPDATE: Tom Beaumont covered Christie’s speech for the Des Moines Register. The New Jersey governor stated emphatically that he isn’t running for president in 2012.

The Culver campaign released a statement bashing Christie’s proposed changes to the public pension system. Excerpt:

Lt. Governor Patty Judge today spoke with reporters to discuss Branstad’s efforts to bring to Iowa Christie’s policy of slashing benefits for retirees. Branstad and Christie share a record of irresponsible borrowing and risky financial policies that endanger their state’s economic success and pension funds for public servants like firefighters and police officers.

“I’m beginning to think that Terry Branstad has no ideas of his own,” Lt. Governor Judge said. “First, he says he wants to implement the Indiana model of economic development. That plan has led to the eighth-highest unemployment rate in the country, a lack of transparency, and scandal after scandal. Now he is bringing in his buddy, New Jersey Gov. Chris Christie, who is balancing the budget in his state on the backs of retirees.”

Branstad recently said at a campaign event that he wanted to talk with Gov. Christie about his ideas on how to solve pension problems. Gov. Christie’s plan involves slashing benefits, breaking promises, raising the retirement age, eliminating cost-of-living increases for retirees, and hiking contribution rates.

Branstad would likely go down the same path as Christie if elected governor again. During four terms in office, Branstad twice proposed a tax on social security. He has proposed privatizing Social Security, and would put Iowans’ benefits in the hands of Wall Street. And in the early 1990s, Branstad proposed raiding IPERS to make up for his overspending, putting the economic security of thousands of Iowans in jeopardy.

Now, Branstad wants to cut state government by 15 percent — even though last week he said the Culver/Judge Administration had already cut it too much.  

“It doesn’t take a rocket scientist to figure out that if Branstad wants to make additional cuts at that level, the only places left to cut are jobs, and raiding the pension fund,” Lt. Governor Judge said.

Last week, the Iowa Teamsters endorsed Governor Culver for re-election because they said they cannot trust Branstad not to raid their pensions.

“Governor Culver and I do not believe in balancing the budget on the backs of retirees, as Gov. Christie has done in New Jersey and as Branstad might do here,” Lt. Governor Judge said. “We need to live up to the promises that we made to people when they began their employment with us.”

SECOND UPDATE: Branstad offered a not very convincing defense of Christie’s decisions on borrowing after last night’s fundraiser.

THIRD UPDATE: Conservative columnist Paul Mulshine of the Newark-based Star Ledger dismisses the excuses Christie offered in Des Moines:

The [Iowa Independent] article also cites Christie’s decision to bond  for school construction, though the correct number is $750 million, not $400 million. Also it wasn’t “previously established debt.” It is his own, brand-new debt. This broke his campaign promise not to bond without voter approval. And the money was not to clear up past debts, as the Governor implies. It will be used to build new schools that are not needed.

Mulshine didn’t get the memo: It’s ok if you’re a Republican.

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