New Jersey Gov. Jon Corzine yesterday announced he will utilize $450 million of surplus funds, defer payments, and cut an additional $150 million during the remaining six weeks of fiscal 2009 to close a $1.2 billion shortfall before June 30.
The deficit is due to underperforming revenues. The governor and state Treasurer David Rousseau said April income tax collections were $747 million less than earlier projections. However, calculations from the Office of Legislative Services peg April income tax receipts at $800 million below prior estimates.
In February, officials closed a roughly $3.6 billion shortfall with spending cuts, furloughs, rainy-day funds, and revenue from the federal stimulus package.
“The weakness in the April collections re-opens a shortfall that we had closed three times previously this fiscal year, creating an additional problem of $1.2 billion,” Rousseau said in a press release. “Collectively, our shortfall for fiscal year 2009, discounting all solutions implemented or proposed to date, has now reached $4.4 billion. Closing a $1.2 billion shortfall with six weeks remaining in the fiscal year is daunting, and leaves New Jersey few choices — none of which is pleasant or painless.”
The administration will grab $450 million from the state’s $700 million of surplus funds, defer the state’s pension payment by $150 million, postpone $383 million of school aid payments until July, and put off another $70 million of grants for the Business Employment Incentive Program until fiscal 2010.
In addition, the governor will implement $150 million of additional spending cuts in departments and agencies, with the details of those reductions to be posted today on the Treasury Department Web site.
The announcement follows a request for proposals earlier this month for a $2 billion line of credit. Officials are looking to implement the $2 billion buffer by July 1 in the event that the state needs additional funds before its yearly tax and revenue anticipation note sale, set for August or September.
Rousseau and OLS budget and finance officer David Rosen will present their budget and revenue updates to the Assembly Budget Committee on May 19.
