A philanthropic group called The Fund for New Jersey wants candidates running for governor and Legislature, as well as the public at large, to know just what they getting into.

The first in its Crossroads NJ reports is an election-year downer on fixing the Garden State’s fiscal problems. That will followed by a report this week on jobs and the economy, then five more reports in the weeks ahead.

New Jersey’s fiscal position is so precarious that the next governor and Legislature need to consider reducing health benefits for retired public workers to save $1.4 billion a year, while raising $5 billion in taxes, the report recommends.

“We are not suggesting that those are the only options, the only ways to solve the state’s fiscal problem,” said Deborah Poritz, a trustee for the group and former New Jersey chief justice. “We are suggesting that if others are considered that the other options reflect the urgency and the scale of the crisis that confronts New Jersey.”

Rutgers University professor Henry Coleman said the solution needs to include both tax hikes and reductions in employee benefits; if only one side was used, the impacts would be “enormous … off the charts.”

“We understand that what we are proposing here will mean some unpleasant situations for many here in the state of New Jersey, but we think that these actions are necessary,” Coleman said. “We think that the impact of our reforms will be widespread. Moreover, we think that if we don’t do these steps … the problems are only going to compound going forward.

“It’s almost like the old Fram oil filter commercial: You can pay now, or you can pay later,” he said. “And we think that the price of paying now is going to be significantly lower than the future price if these issues remain unresponded to.”

The suggested tax changes include increasing income taxes to boost revenues by 10 percent and revoking a law exempting more retirement income from taxes, raising the sales tax to 8 percent and expanding it to more services, reinstating the estate tax, taxing legalized marijuana and more.

Former state treasurer Feather O’Connor Houstoun said candidates for governor shouldn’t say “never, never, never, never” because New Jersey’s quality of life is at risk.

“It’s the conundrum that the political environment has right now, obviously,” Houstoun said. “I think people value New Jersey for many things that are in jeopardy if we don’t address these issues.

“I think if you stop the conversation with ‘We can’t afford any more taxes,’ then the state will not be a place where people want to live,” Houstoun said.

Houstoun, who was state treasurer under Gov. Tom Kean, said it’s not clear what will happen when the state can no longer afford to pay its pensions but that the time is now on the horizon.

“The accumulating problem in the state pensions simply jeopardizes almost everything,” Houstoun said.

Senate President Stephen Sweeney, D-Gloucester, has said that if the pension funds go bankrupt, the annual benefits – some $9 billion – would have to come from the general state budget. This year, $2.5 billion will be put into the pension fund, including a direct deposit of lottery profits. Actuaries say the state should be putting in $5 billion.

Coleman, who was a senior adviser to Gov. Jim Florio, said there aren’t many acceptable options for big-ticket spending cuts in the budget, saying education and Medicaid could use more spending, not less.

“We didn’t get into detail about some of the other spending options. What we did say is we’re limited in terms of what we can do there,” Coleman said.

New Jersey: Decoded cuts through the cruft and gets to what matters in New Jersey news and politics. Follow on Facebook and Twitter.

Michael Symons is State House bureau chief for New Jersey 101.5 and the editor of New Jersey: Decoded. Follow @NJDecoded on Twitter and Facebook. Contact him at michael.symons@townsquaremedia.com

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