The New Jersey Legislature passed a $32.8 billion budget late Monday night that authorized the sale of $3.9 billion of bonds for school construction and pays down $650 million of outstanding debt.
"By its actions, the Legislature provided the means to build decent schools for New Jersey's children, offered quality health care for children and those who are without access to health insurance, and made a $650 million payment toward reducing the state's debt," Gov. Jon Corzine, a Democrat,said in press release. "It was, all things considered, an important day's work for the future of New Jersey."
The $650 million debt reduction measure creates a fund that will pay debt service and defease bonds over five years, state Treasury spokesman Tom Vincz said. However, Andy Pratt, director of communications for the Senate Republicans, criticized the measure as merely moving money off budget.
The legislature also approved a constitutional amendment that would restrict the ability of public authorities to borrow without voter approval. Although state general obligation debt and bonds backed by a dedicated revenue stream require voter approval, state agencies, corporations, and authorities have been able to issue, on their own, state contract bonds that are backed by the state's pledge to repay. The issuance of only about $12 billion of New Jersey's $32 billion of outstanding debt was approved in a voter referendum.
The budget cut spending by $2.9 billion, including cuts in municipal aid to towns and villages and came in $600 million below last year's budget. The Legislature also abolished the state Commerce Commission and Department of Personnel and set a minimum salary requirement of $7,500 for state and local employees to qualify to for pension benefits.
Yesterday Corzine signed legislation that he said would reduce the state workforce by 3,000 positions through incentives and attrition in fiscal 2009. The law applies to certain state workers, aged 58 to 60, who choose to retire by August 1. The plan will initially cost $250 million in additional pension liabilities but the payroll savings will offset the cost in three years, the governor's office said.
"This incentive delivers recurring annual savings of $90 million beginning immediately, will pay for itself in three years and will continue to deliver amplified payroll and benefit savings in the long term," Corzine said in a press release.
