Corzine: Tough choices ahead

December 23, 2008 4:11:25 AM PST
With the economic recession showing no sign of loosening its grip on New Jersey, Gov. Jon S. Corzine said Monday that he will be forced to consider layoffs, tax increases and other harsh fiscal measures in a re-election year. While the state is in better shape than some because of $600 million in spending cuts enacted in the current budget, the more daunting task will be putting together the fiscal 2010 budget as tax collections of all types continue to decline, Corzine said.

"What's going to be a much harsher challenge is putting together a budget that reflects the cumulative falling off of revenues that is occurring and sustaining itself through the year," said Corzine, who will introduce the new budget in February.

He said layoffs, wage freezes and furloughs are all "on the table" and said saving jobs will require cooperation from unions.

The state work force has 4,000 fewer employees than when he took office. But an early retirement incentive package failed to attract the number of workers the administration had hoped, mainly because the economy had already begun to sour.

New Jersey's Constitution requires a balanced budget, and Corzine said his choices are to cut programs and services or raise taxes to sustain them, as New York Gov. David Paterson has proposed.

"None of those things are attractive in the best of times," Corzine acknowledged.

The governor identified school and municipal aid, Medicaid and property tax rebates as the big-ticket budget items that could see cuts.

Corzine said he expects to announce some additional cuts to the current budget after the new year. He declined to be more specific, saying he is waiting to see how much economic stimulus aid the states will get from the federal government.

The governor gave his grim economic assessment during a year-end news conference at his official residence in Princeton Township.

The year saw New Jersey's unemployment rate climb from 4.5 percent to 6.1 percent and state revenues fall $411 million below estimates in just the last two months.

Corzine offered an economic life raft to the towns by proposing that they be allowed to defer half their contribution to the employee pension fund next year, but the Legislature so far has refused to go along.

"Under normal circumstances, I would never have proposed the pension deferral," Corzine said. "I think it's bad long-term fiscal policy. I think it's good fiscal policy when the only alternative is to see either significant layoffs or a hike in property taxes."

Government workers and their unions fear chronic underfunding of the pension system could result in its ultimate collapse.

Corzine and the entire state Assembly are up for re-election next year.