N.J.'s Gov. Corzine Presents 'Turning Point' $33B Budget

TRENTON - Calling his $33 billion 2009 budget proposal a "turning point" in New Jersey's fiscal management, Gov. Jon Corzine yesterday presented the Legislature with a fiscal plan that is $500 million smaller than the current year's budget of $33.5 billion and includes approximately $3.2 billion of budgetary cuts to bring next year's expenditures in line with decreasing revenues.

The governor said his proposal includes the second-largest spending cut of any budget in New Jersey history and only the fourth budget since 1951 to actually shrink in comparison to preceding budgets. The reality of the rising cost of government due to higher health care payments, debt service costs, and added school funding aid contrasted with a projected modest increase of only $500 million of net revenue for fiscal 2009, which begins July 1, forces the governor to incorporate the $3.2 billion of decreased spending into next year's fiscal strategy.

"It's certainly not a budget designed to please, but it is a prudent blueprint to meet difficult economic circumstances, correct past mistakes, and it does lay a foundation for a responsible future," Corzine said before the joint session of the legislature at the state house in Trenton.

And while the overall size of the proposed budget decreases to $33 billion from $33.5 billion for the current year, Treasury officials expect debt service to increase by $100 million in 2009 to total $2.8 billion. Interest and principal payments take up a sizable portion of the budget, an issue that the governor mentioned in his speech.

"It's clear that increasing debt payments crowd out other important priorities every year," Corzine said. "We should be cutting debt service, not cutting parks or raising co-pays."

Last month, the governor presented a debt restructuring strategy that would decrease debt service payments and help finance transportation infrastructure by paying down half of New Jersey's $32 billion of outstanding debt with up to $38 billion of new debt backed by a 50% toll increase on the state's three toll roads. In response, Assemblyman John Wisniewski, D-Middlesex, who chairs the Assembly Transportation, Public Works & Independent Authorities Committee, last week released an alternative debt restructuring plan that calls for smaller toll hikes than Corzine's 50% boost yet incorporates an 18-cent gas-tax increase and potentially selling or leasing the state lottery.

And while debt restructuring could decrease New Jersey's annual debt service payments, the governor proposed the fiscal 2009 budget, including the $3.2 billion of proposed spending cuts, as well as passing legislation to require all non-revenue debt to receive voter approval and limiting future spending to match recurring revenues, as priorities before the state begins implementing either the governor's or Wisniewski's debt restructuring strategy, a sentiment that legislators from both parties expressed agreement with after Corzine's speech.

"I think it would be completely inappropriate to talk about raising revenue of any kind whether it be tolls or whether it be taxes or whether it be fees, until we've demonstrated that we've found every single way to cut the budget and delivered on that promise," said General Assembly speaker Joseph Roberts, D-Camden and Gloucester.

Wisniewski agreed with placing debt restructuring on the back burner until the 2009 budget represents all possible spending cuts.

"Hopefully, I think, there are pieces of both [debt restructuring] plans that work together and we could achieve a consensus, but before we get to that part of it the first part of it has to be about cutting the size of the state government, about reducing state expenditures, about approving the constitutional amendments that restrict our ability to borrow," Wisniewski said. "Those are things that have to be done first, then we need to get to our transportation infrastructure."

While there's agreement to implement cuts to the fiscal 2009 budget, the amount of spending decreases does bring forth debate, with Democrats saying the governor's limitations are adequate and Republicans believing more can be done to decrease next year's budget. In particular, Republican lawmakers mentioned potential savings in the state's Abbot program, which allocates funds to 31 special-needs school districts.

"The governor's not going far enough," said Senator Leonard Lance, R-Warren and Hunterdon, who is the Republican budget officer. "At least $500 million should be cut from the Abbot school districts - that's for bureaucracies, not monies that go directly to the children in those schools."

Assembly Minority Leader Alex DeCroce, R-Morris and Passaic, said the $3.2 billion of cuts is a good start, but more can be done to decrease government spending.

"I believe there may be opportunities for us both in the Senate and the Assembly to assist the governor in even looking at additional cuts in certain areas and that may help him put this budget together and get us back to normality," DeCroce said.

In contrast, Roberts believes the $33 billion proposed budget is an adequate size for New Jersey's needs and the $3.2 billion of decreased expenditures will get the job done.

"I think this is plenty. I think that this is a budget that's filled with pain on every single page. . . I think you may see some revisions made as a result of the legislature fufilling its legitimate responsibility, but at the end of the day this budget probably will not differ too much from what the government proposed today and the bottom line certainly won't differ much at all," Roberts said.

Corzine said the $3.2 billion would come from eliminating at least 5,000 government jobs, closing three departments including the departments of Personnel, Agriculture, and the Commerce Commission, and decreasing municipal aid and state grants by roughly $1.35 billion.

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