New Jersey Gov. Jon Corzine yesterday rejected a call from Republican lawmakers to hold a special joint session to re-examine the state's current $32.8 billion budget in light of an anticipated decline in income tax revenues.
GOP legislators held a press conference yesterday to promote their corporate-tax incentive measures to help New Jersey businesses grow and announced previously detailed spending cuts to offset an expected drop in income tax receipts.
Yet the Democratic governor said he would not call for a special joint session and pointed to a closed-door economic summit that he held on Monday with business leaders, public officials, and financial academics to address the issue.
"I would like to hear [Republican] suggestions but I do not think they need a special session to do that .... Any Republican that is thinking about anything in the economic sphere I think ought to look at what is happening to the country's economy and question whether they have any credibility on the subject," Corzine said in a press release.
James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, said New Jersey's income tax revenue could decrease by as much as 13% and the state could lose as much as 100,000 jobs as a result of the recent shake-ups on Wall Street. Hughes testified before an Assembly Labor Committee meeting on Monday to evaluate how market disruptions could affect the Garden State.
On the same day, Corzine held the economic summit to address short- and long-term options for New Jersey in light of the massive changes in Wall Street's landscape. Salary cutbacks and layoffs will directly affect New Jersey as 1% of its taxpayers pay for 40% of the state's income-tax revenue.
Corzine said the panel did not address potential spending cuts or alterations to the current $32.8 billion fiscal 2009 budget to help absorb the expected drop in income tax receipts.
"That was not the focus today of the conversation," Corzine said to reporters after Monday's meeting. "We are assuming that there are going to be some serious repercussions for New Jersey's economy as there will be for the country. We'll probably actually have risks associated with the financial services industry that in some of those areas might impact us more than others. It's pretty hard to imagine that bonus season is going to be as attractive in 2008 as it was in 2007."
To help spark job growth and maintain the state's appeal for businesses, Corzine said road, bridge, and school construction projects would create jobs and help stimulate the economy.
"The sooner we can get shovels in the ground, the sooner we get people to work, the sooner we get the multiplier effect of that operating in the economy," he said.
Yet Corzine did not specify where the funds for additional investment would come from. Even prior to the economic slowdown, officials had planned on borrowing $200 million of general obligation debt each year in fiscal 2009 and 2010. The state will also issue $4 billion of New Jersey Transportation Trust Fund Authority bonds over the next three years. The state now has more than $3.9 billion of borrowing capacity for school construction after lawmakers in late June passed a measure to increase borrowing for those capital projects.
The governor downplayed the use of additional borrowing beyond the transactions already on the state's calendar. Overall officials are looking to curb bonding, and voters in November will weigh in on a constitutional amendment that would restrict all state-appropriation borrowing to voter approval. Debt service costs currently take up nearly 8% of New Jersey's operating budget.
"Most of those [capacities] are pretty tightly drawn, and as you know I've asked the public to support a constitutional amendment that we borrow only on the basis of voter approval going forward from this November," Corzine said. "So you have to be very careful about that. Historically, sometimes people would put out economic development bonds right now and I don't think we should accede to that."