New Jersey Republican lawmakers yesterday proposed efficiency and belt-tightening measures to generate $1.32 billion of savings in Gov. Jon Corzine's proposed $33 billion fiscal 2009 budget. They also announced a plan to use $500 million of the potential savings to help finance the New Jersey Transportation Trust Fund Authority for an additional two years and generate a funding nest egg for long-term capital projects.

The financing plan would allow the TTFA to issue $1.6 billion of debt in fiscal 2012 and 2013, with those bond sales backed by a dedication of motor vehicle revenues that currently flow into the general fund. Without changes, the authority, which finances the state's transportation system, will run out of funding in 2012, an issue that has left officials over the past few months debating as to how best to keep the TTFA afloat.

GOP leaders Sen. Tom Kean and Assemblyman Alex DeCroce presented their party's plan to constitutionally dedicate $500 million of motor vehicle fees that currently flow into the general fund to the TTFA. The dedication would give the authority $300 million per year from fiscal 2009 through fiscal 2011 to pay for current infrastructure needs on a pay-as-you-go basis.

The remaining $200 million would be placed in a fund for future transportation capital projects, the most notable being a $7.5 billion passenger rail tunnel that would run between Newark and Pennsylvania Station in New York City under the Hudson River.

In addition, Republicans proposed funding the TTFA in 2012 and 2013 with annual bond sales of $1.6 billion backed by $100 million per year from the $500 million dedicated fund. That would leave $300 million for pay-as-you-go projects and another $100 million for future transportation needs, with that pot growing to $700 million by fiscal 2014, according to the lawmakers' presentation.

That $700 million could help New Jersey meet its $1 billion to $1.5 billion contribution towards the new Hudson passenger rail tunnel, called the Access to the Region's Core, or ARC project.

In addition to funding the TTFA, the Republicans proposed using the remaining $800 million or so of savings to give homeowners $525 million of property tax relief and restore $195 million of cuts the Corzine administration proposed to aid to hospitals and higher educational institutions, along with other programs.

In response to the lawmakers' announcement, the governor said the proposal does not add up.

Corzine criticized the GOP plan as "gimmickry and trickery" in a prepared statement, and called it "make-believe math."

Yet the Republicans said the $1.32 billion of savings would come from several initiatives, including decreasing special municipal aid for distressed cities by $107 million. A recent state auditor's report of the special aid program indicated that money was being allocated without proper oversight.

"There remains a need for funding to address true emergencies in distressed areas, but the amount available six years ago [$38 million], remains the appropriate level for funding the program," according to the GOP presentation.

Additional savings would come from decreasing aid to special-needs school districts, called Abbott districts, by $105 million as aid increases to several areas are in excess of the inflation rate. Pension and health benefit reforms - including raising the retirement age for state employees to 62 from 60 and calculating pensions based on an employee's final five years of service as opposed to three years - would generate $85 million.

In response to the Republican plan, Senate Budget Committee chairwoman Barbara Buono, D-Middlesex, said she welcomes any proposals that maintain the governor's proposed spending reduction of $1 billion over last year's budget, and said legislators would need to evaluate any alternatives to the budget.

"We can't follow the failed philosophy of multiple past administrations and try to spend our way out of this crisis," Buono said in a press release. "We need to tackle state spending rationally and pragmatically to ensure we don't repeat the mistakes of the past."


Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.