Corzine proposes steep budget cuts

January 2, 2009 5:53:11 PM PST
Gov. Jon S. Corzine proposed budget cuts totaling $2.1 billion Friday to make up for a severe shortfall affecting the Garden State's bottom line. The cuts come halfway into the current fiscal year budget, as the national recession picks up speed. That's led to lower tax collections and required additional state spending on Medicaid, children's health insurance and other items.

"Economic and financial conditions are about as serious as the country has experienced since the '30s," Corzine said.

The governor has proposed cutting $800 million from departments and agencies, using $275 million in rainy-day savings and asking union workers to concede to an 18-month salary freeze.

The cuts come on top of the $600 million the governor already pared from the $32.4 billion budget that went into effect July 1.

Corzine is rebalancing the budget because New Jersey is required by law to keep its budget balanced. He said additional cuts could be necessary before the fiscal year ends June 30.

Corzine briefed legislative and union leaders on his plan Friday. He needs legislative approval to enact some components of his plan.

The governor promised to release a full 12-page list of spending cuts on Monday, after his office has briefed those affected.

On Friday, Corzine revealed a few of the proposals: - $160 million reduction in the state's payment to the pension fund.

- $15 million less for municipal aid.

- $75 million cut in K-12 school aid.

- $19 million savings by putting off installation of paper printers on the state's touch-screen voting machines. The printers are for added security, but some say the technology is flawed.

Corzine said higher education and hospitals would be spared because they were hit hard in June. However, some state grants - including those for cancer research - will be reduced, though none would be eliminated.

The cuts would remain in effect through 2010, Corzine said.

Five Republican state senators sued Corzine on Wednesday over what they claim is his refusal to answer questions about how he is rebalancing the budget. Corzine showed reporters a yellow legal tablet Friday, saying the list is being worked on.

Corzine said his administration was planning to keep municipal spending in check by holding towns to a 4 percent increase in their budgets.

The governor said he's still hoping to provide property tax relief to towns by allowing them to skip half their contribution to the pension fund for government workers. That plan has stalled in the Legislature, however, amid concerns that chronically underfunding the pension system could cause its collapse.

Reaction to Corzine's budget plans was swift and predictably political.

Senate Budget Committee Chairwoman Barbara Buono said the cuts are unpleasant but necessary.

"These unprecedented times are necessitating that we take pretty distasteful actions to keep the budget in balance," said Buono, D-Middlesex.

Republican leaders Tom Kean Jr. in the Senate and Alex DeCroce in the Assembly issued a joint statement accusing Corzine of continuing to spend more than the state is taking in and ignoring GOP calls for fiscal restraint.

They also criticized Corzine for counting on money from the federal government to bail out New Jersey.

Corzine was on a conference call with four other governors Friday, saying he hoped President-elect Barack Obama's federal stimulus package would include at least $300 million in Medicaid aid for New Jersey.