Candidates Lt. Gov. Kim Guadagno, Republican, and Phil Murphy, Democrat, made pointed critiques of their opponent while undermining each other’s main line of attack at the first gubernatorial debate hosted at New Jersey’s Performing Arts Center in Newark Tuesday night.
The themes of the evening emerged quickly.
Murphy’s opening statement painted New Jersey as a state “ravaged by the Christie and Guadagno administration,” and laid the problems of underfunded schools, ignored infrastructure and high property taxes at the feet of his opponent.
In turn, Guadagno criticized Murphy for promising solutions without specifics and made clear her focus was lowering property taxes and making New Jersey affordable. Guadagno would go on to reference the high cost of living in New Jersey for most of her answers in the debate.
The exchange covered the candidates’ views on the 2 percent arbitration cap, the state’s pension crisis, what each candidate would ask of President Donald Trump, employment opportunities in New Jersey, infrastructure, a $15 minimum wage and social issues such as gun control.
Despite the array of topics, the candidates managed to redirect many of their answers back to their core issues.
New Jersey’s pension problem was one of the issues that lacked specifics. Guadagno frequently framed Murphy’s plans to fund projects as unrealistic.
At one point moderator Jim Gardner asked Murphy plainly for specifics on how he would fund the pension program. Murphy responded by saying his plan was “very, very credible,” but Gardner was not impressed.
“Forgive me, but I still haven’t heard how,” Gardner said.
Guadagno presented her approach to the pension problem by name-dropping Tom Byrne, managing director of Byrne Asset Management, who contributed to a bipartisan commission that formulated a solution to the pension problem. But Byrne said implementing the commission’s plan wouldn’t be so simple.
“We were solving a math problem, which is different than solving a political problem,” Byrne said to NJBIZ.
The plan released by the New Jersey Pension and Health Benefit Study Commission in Febuary 2015 detailed a path out of the pension quagmire by suggesting funding pensions at roughly $5 billion a year, almost double the amount of funding allocated by the current administration. State employees would have their benefits program shifted to an equivalent of the Affordable Care Act’s “gold” level, which would save nearly $1.4 billion in pension funding per year. Additionally current pensions would be transferred to a middle ground between a state-ensured pension and a private 401k.
“We thought [private 401ks were] too draconian a solution and we’d be better off with a hybrid plan that would make some changes but still give people a high degree of pension security,” Byrne said. “Taxpayers would no longer be underwriting a guaranteed return of 7.9 percent which frankly doesn’t exist anymore.”
The plan would solve the math of the pension problem, but would cause massive political problems with unions representing workers who were meant to receive state-guaranteed pensions with better benefits.
The commission also advised a constitutional amendment that would ensure the $1.4 billion saved by transferring benefits to a cheaper package would be used specifically to fund pensions. This would eliminate the risk of money being reallocated by the state to other projects.
Despite the undesirable political consequences, no alternative plan has been suggested.
Murphy’s suggestion for funding many of his projects has been to grow the economy of New Jersey, but experts say this idea isn’t necessarily obtainable.
“You can make a theoretical argument but in practice that never seems to happen,” said Rutgers-New Brunswick Professor of Economics Jennifer Hunt, who went on to compare Democrats beliefs that spending will increase growth and Republicans’ beliefs that cutting taxes will increase growth.
“It’s not the same thing but it falls into the category of wishful thinking,” Hunt said.
With the current administration polling at historically low approval ratings, some New Jerseyans may be wishing for a change in direction. Murphy repeatedly attempted to paint Guadagno’s candidacy as a “third term” for the current administration.
“You’ve been alongside Governor Christie every step of the way for 2,821 days. If it’s such a good idea, where have you been?” Murphy said, with repeated support from the audience.
Guadagno formed a defense against this criticism late in the debate.
“The inconvenient truth for Phil is Chris Christie is not on the ballot in November, I am,” Guadagno said in response to Murphy connecting the Christie administration’s raising of transportation fares to Guadagno. The comment drew applause from the crowd.
Guadagno attempted to reframe her attachment to the Christie administration by boasting the state’s unemployment rate went from 9.8 percent to 4.5 percent, a task she was specifically assigned to as lieutenant governor.
“The reason why our unemployment is so low, everybody’s is lower, is because we’re at a 10 year low of labor market participation,” Murphy said.
However labor market participation may not be the best indicator of the health of a market.
“Labor force participation rate is not defined as something bad or good, it’s just a descriptive number,” Hunt said. “We don’t know what number it should be.”
Hunt commented that the national trend of decreased labor force participation rate can be attributed to baby boomers aging into retirement.
Other experts said Guadagno’s track record has improved business in the state.
“What she did during her tenure was strong for small businesses,” New Jersey State Director of the National Federation of Independent Business Laurie Ehlbeck said to NJBIZ.
Ehlbeck said she was “skeptical” Murphy would be able to implement his ideas without raising taxes.
The NFIB announced their endorsement of Guadagno the day after the debate, although the endorsement was the result of a process that took place over multiple months.
Guadagno and Murphy will meet for a second debate at William Paterson University in Wayne on Oct. 18 at 7 p.m. Be sure to read NJBIZ’s recap of the second debate both in the print and online editions.
To review the New Jersey Pension and Health Benefit Study Commission plan, go here: http://www.state.nj.us/treasury/pdf/FinalFebruaryCommissionReport.pdf)