New Jersey Gov. Jon Corzine last week signed into law a $32.9 billion budget for fiscal 2009, a plan that benefits from a new debt-reduction fund designed to help ease debt service costs for the state.
Legislators passed the $32.9 billion fiscal plan before the June 30 deadline.
The current budget is slightly smaller than the $33.5 billion fiscal 2008 budget, as officials anticipate revenues to decline this year. Overall cuts in the spending plan total $2.9 billion, with hospitals and municipalities receiving less support.
“This budget takes us through a turning point and confirms our commitment to a common-sense principle of finance, often ignored, that we should spend no more than we take in,” Corzine said in a press release. “Make no mistake, the spending cuts are painful and bring no pleasure or applause.”
To help address New Jersey’s rising debt service costs, the administration will create a fund from $684 million of surplus revenue that it will then use to pay down existing debt and in turn generate $130 million of refunding savings in fiscal 2009. The debt-reduction fund will be used to defease outstanding debt, pay down the state’s pension and other-post-employment benefits obligations, and support capital projects.
In addition to the fiscal 2009 budget, Corzine signed into law legislation to restrict all future state budgets from using one-time revenues to help fill deficits. The governor said limiting fiscal plans so that recurring expenditures match recurring revenue will give the state financial stability.
This is the second year in a row that lawmakers passed a fiscal plan by the June 30 deadline, yet the governor last week signed a measure that will keep casinos and racetracks up and running in the event of any future governmental shutdowns due to budget delays. In 2006, Corzine suspended all non-essential government services for six days, a first for New Jersey, while lawmakers debated a plan to increase the state sales tax. Officials anticipate that casinos will generate an estimated $426 million of revenue for the state in fiscal 2009.