The Truth-O-Meter Says:
Whitman

"The proudest accomplishment (of my tenure) was leaving the state with a $1.2 billion surplus, which was the largest we’d ever had, and getting spending under control and a balanced budget."  

Christine Whitman on Monday, September 19th, 2011 in an interview on NJTV

Christie Whitman says she left state with a more than $1 billion budget surplus

Once upon a time, New Jersey had a surplus in the billions of dollars, according to a former governor.

There were surpluses in the state budget and there were surpluses in pension funds.

"The proudest accomplishment (of my tenure) was leaving the state with a $1.2 billion surplus, which was the largest we’d ever had, and getting spending under control and a balanced budget," former Gov. Christine Todd Whitman said in a Sept. 19 interview on NJTV.

Since she is a governor who has been accused of shortchanging pension contributions to fund tax cuts, PolitiFact New Jersey decided to check her statement.

David Rosen, the Legislative Budget and Finance officer for the state’s nonpartisan Office of Legislative Services, confirmed that Whitman left the state with a $1.2 billion surplus. And at least since 1986 – the first year the state’s budgets are available online – that surplus was the state’s largest, PolitiFact New Jersey found. There have been larger surpluses since she left office.

As for balancing the budget? That’s not an accomplishment. State law requires it.

But we questioned the part of Whitman’s statement in which she said she controlled spending.

Let’s review some of the spending during her tenure. Whitman reduced payments to the state’s pension funds to balance a 30-percent income tax cut enacted after she became governor in 1994. Three years later, Whitman had the state borrow $2.75 billion to deposit in the pension funds to address that liability. The stock market at that time was doing well and the infusion helped create a surplus in the accounts -- for a while. Then the stock market took a downtown.

But the pension issue wasn’t the only significant debt during Whitman’s tenure. She also approved an $8.6 billion school construction bill that was largely funded during the Jim McGreevey administration. Taken together, that’s more than $11 billion in debt.

Experts, however, told us that governmental standard accounting practices do not include debt in an annual budget.

Debt is included in the state’s financial statements, said Richard F. Keevey, who was budget director for former Gov. Jim Florio. Keevey, who teaches public budgeting systems and federal finance at Rutgers Newark, also served as a deputy budget director and budget director for former Gov. Tom Kean.

What’s included in the budget is debt service, or the amount paid toward the total debt.

Rosen also noted that New Jersey and the country had a strong economy during the Whitman years, from 1994 to Jan. 31, 2001. Whitman left office in the middle of her second gubernatorial term to become administrator at the U.S. Environmental Protection Agency in Washington, DC.

"We were certainly in a surplus position as was the federal government," Rosen said. "Nationally the economy was doing very well and governments generally were doing quite well. Most states had large surpluses, the federal government was in surplus and New Jersey was as well."

James DiEleuterio, who was state treasurer from 1994 to 1997, said in an email that Whitman controlled spending by reviewing each of the 32,000 line items in the state budget, cutting unnecessary expenses, streamlining operations and cutting the state’s payroll by 5,000.  He also cited the 30 percent tax cut and changes in tax policy that he said improved the state’s economic climate.

"Finally, I want to ensure it is clear that Governor Whitman's surplus was not funded by pension funds," DiEleuterio wrote. "Her tax cuts, and subsequent surplus, were funded the only way they should be: with true spending cuts and a balanced budget."

Our ruling

Whitman says her proudest accomplishment as governor was leaving the state with a more than $1 billion surplus, controlling spending and balancing the budget. Her surplus number is accurate, and two financial experts tell us that basic government accounting principles do not include debt in budgets. Whitman’s former treasurer also claims the governor made traditional spending cuts during her tenure. But how is skipping payments to pension funds controlling spending if those and other bills aren’t being paid in full, or are being deferred to later administrations? We rate Whitman’s claim Mostly True. 

To comment on this ruling, go to NJ.com.

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About this statement:

Published: Monday, October 17th, 2011 at 5:15 a.m.

Subjects: State Budget, State Finances, Taxes

Sources:

Email interview with Andrew Pratt, New Jersey Treasury Department spokesman, Oct. 4, 2011

The New York Times, "History’s Painful Fallout," April 15, 2007, accessed Oct. 5, 2011

The New York Times, "Behind Fraud Charges, New Jersey’s Deep Crisis," Aug. 19, 2010, accessed Oct. 5, 2011

Huffington Post, "An Overblown ‘Crisis’ For State Pension Funds," March 7, 2011, accessed Oct. 5, 2011

CNN Money website, "The public pension bomb," May 12, 2009, accessed Oct. 5, 2011

The Record, "Whitman left N.J. fiscally healthy," Sept. 12, 2010, accessed Oct. 5, 2011

The Star-Ledger, "N.J. governors choose short-term gain without thought of long-term consequences," Aug. 22, 2010, accessed Oct. 5, 2011

Phone and email interviews with David Rosen, Legislative and Budget finance officer, New Jersey Office of Legislative Services, Oct. 7, 10, 11 and 12

Media Matters For America, "Doesn’t Anyone Remember Christine Whitman?" March 7, 2011, accessed Oct. 11, 2011

Phone interview with Richard F. Keevey, Distinguished Practitioner In Residence, Rutgers Newark, Oct. 12, 2011

Email interviews with Heather Grizzle, media representative for Christine Todd Whitman, Oct. 12 and 14, 2011 

Written by: Caryn Shinske
Researched by: Caryn Shinske
Edited by: Tom Curran

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