TRENTON - New Jersey Gov. Jon Corzine yesterday presented a $29.8 billion fiscal 2010 budget proposal, $3.4 billion smaller than the fiscal 2009 budget, and the toughest spending plan that many legislators said they have ever seen.
Corzine's $29.8 billion budget plan for fiscal 2010, which begins July 1, includes a $7 billion deficit that the Democratic governor proposes closing through tax hikes, decreasing the state's pension contribution, reducing wages and implementing furloughs for state employees, and scaling back on property-tax rebates, among other recommendations. The plan would also utilize $2 billion of federal stimulus funds.
The governor is up for re-election this November and is widely rumored to seek the office for a second term but has yet to announce his bid. Corzine has slumped in the polls recently, with 41% of those questioned in a Feb. 4 Quinnipiac University poll approving the governor's job performance compared to 50% disapproving. It is in that political environment that the governor is releasing a budget that cuts spending in every department to help keep expenditures in line with revenues.
"I come before you today to speak candidly and directly about our state's finances - not just to you, but also to the people of New Jersey," Corzine said to a joint session of the Legislature. "Make no mistake: because of where the world is right now, we must move in directions we might not otherwise choose. Tough times require that we make the right choices, and that we do the right thing for the common good. By making the right decisions now, New Jersey can and will emerge from this national economic crisis stronger, sooner, and more prosperous."
Senate President Richard Codey and General Assembly Speaker Joseph Roberts, both Democrats, said they do not anticipate the budget varying much from what Corzine proposed yesterday. Both lawmakers said it was the most difficult budget they have ever encountered due to the recession.
"I've never seen anything like this, even in my lifetime when I was a student at Trenton Junior College sitting upstairs back in the late '60s," Codey said to reporters on the Assembly floor after Corzine's budget speech. "[The budget] is not going to change. The only thing I think we should hope for and maybe pray for is that it doesn't get any worse, and then we have to make more cuts before we pass it before July 1."
State officials anticipate New Jersey will take in $29.6 billion of total revenue next year, down slightly from the projected $29.9 billion of total revenue for fiscal 2009, according to the fiscal 2010 budget in brief. Debt service costs will stay level at $2.51 billion for fiscal 2010, the same amount as this year.
In response to Corzine's speech, Republican Minority Leader Tom Kean said the state needs to reduce expenditures rather than placing additional taxes on residents.
"This is not the time to increase taxes in a time of economic hardship, in a recession," Kean told reporters. "I think we need to focus on ways to make the state budget more affordable and reduce expenses. Even [President Obama] has said increasing taxes in the midst of an economic recession is the wrong direction."
While all programs will see a cut in spending, Corzine said he will reduce municipal aid by only 2% as local governments received a larger cut in fiscal 2009, a plan that William Dressel, executive director of the New Jersey State League of Municipalities, said he was pleased to hear. Cities and towns would receive $1.8 billion in fiscal 2010, roughly $30 million less than the current fiscal year.
"It sounds like local governments are not going to be hit nearly as hard as they were last year, so given the dire fiscal condition, that's an improvement," Dressel said.
In addition, the governor in his speech briefly mentioned a bill that would allow for more tax-increment financing - which is called revenue allocation district financing in New Jersey - and said the measure would help promote business activity in the state. The bill is sponsored by Sen. Ray Lesniak and is in committees.
"We absolutely support that, and there is RAD legislation on the books, but the Lesniak bill would basically make it workable," Dressel said after the governor's speech. "We have not been able to utilize that as an economic stimulus, if you will, because of some major problems dealing with the bureaucratic entanglements within the various departments that have to coordinate and that has not happened. So, this is definitely a good step forward not only for urban municipalities but for suburban communities as well."
Corzine's proposal includes a one-time, 0.75% increase for those earning $500,000 or more, an income tax hike that would generate $380 million for the state's coffers. He also recommended reducing New Jersey's pension contribution next year by $500 million. In addition, decreasing property-tax rebates for non-seniors would provide another $500 million and a one-year suspension of property-tax deductions for non-seniors would generate $400 million, according to the fiscal 2010 budget in brief.
The governor is negotiating with labor unions and hopes to reduce payroll expenditures by $400 million through wage freezes and furloughs for state employees. Other plans include extending a 4% corporate tax, increasing New Jersey's cigarette tax by 12.5 cents a pack to $2.70, and implementing a 25% tax increase on alcohol, excluding beer.
