Expect more bad news from Corzine

Gov. Corzine's poll numbers are falling, his state's economy is faltering, he has to run for reelection in eight months, and on Tuesday he is likely to deliver more grim news.

That's when the governor will propose a New Jersey budget that he has promised will include deep spending cuts and a call for givebacks from state workers. It might include tax hikes.

Homeowners younger than 65 are likely to lose at least some, if not all, of their property-tax rebates. Among the other ideas that have been floated is a tax increase on individuals or couples who earn more than $250,000, although administration officials said late Friday afternoon that many key decisions were still fluid as Corzine and his top advisers huddled.

Whatever the final choices, presenting them will be a tricky proposition for Corzine, a former Wall Street executive elected partly on his financial acumen. His fourth budget, due to be completed in June, will be a major test of his ability to handle the economic downturn.

"A lot of both his political fortunes and political capital rests on it," said Brigid Harrison, a political scientist at Montclair State University.

"I don't know that there's any good way to talk to people about increasing taxes, about cutting rebates, about freezing wages and furloughing state workers," she said. "Typically when governors are faced with that situation, they don't do it. What they do is rob pension plans and use one-shot budget deals."

Corzine has decried such steps, saying they contributed to the budget holes that New Jersey faced even during good times. But the national economic crisis and falling state revenue leave him facing unpopular options for balancing the budget.

He will have to push his plan through the Democrat-controlled Legislature, where all 80 Assembly seats are up for election this year. The Assembly and Senate will have the chance to reshape what the governor proposes, but his speech Tuesday will frame the debate and provide fodder for both his and his opponents' campaigns.

Assembly Democrats said residents understood the state's financial straits and were prepared for tough decisions. "The public is primed in the sense that we know we are in the greatest economic crisis" in decades, Speaker Joseph J. Roberts Jr. (D., Camden) said. "They want the governor to tell them the truth, not to mince words."

Added Assembly Budget Chairman Louis Greenwald (D., Camden): "You have to live within your means, and that's exactly what the state's going to do. . . . For the thousands of people that are screaming that government should cut back and government should be smaller, they're going to get their wish."

That could mean less money for towns, which could put pressure on property taxes. Hospitals could lose some state support, and schools - even though Corzine has emphasized the importance of education - could get only modest aid increases or flat funding. The state's $1.7 billion property-tax rebate program is likely to be scaled back, meaning smaller checks, lower income caps, or both in a program that sent an average of $1,000 to about one million homeowners last year.

Corzine is also demanding a wage freeze for state workers and considering requiring them to take up to 12 unpaid furlough days, one per month, to save money. If unions block those plans, layoffs could follow, Corzine has warned.

The rebate cut would hit homeowners with incomes below $150,000, the limit for receiving the checks. The administration is also eyeing tax increases on higher income. Households earning $250,000 or more could see an income-tax surcharge of 5 percent or less. Talk of the tax hike was part of what administration aides say is an effort to spread the impact of a bad budget among all segments of the state.

Corzine also has considered higher taxes on cigarettes, wine, and liquor, but not beer.

Republicans said Corzine should have done more already to repair the state's fiscal situation, particularly early in his term, when the economy was strong. Although he cut state spending by $600 million in June and by $1.3 billion more as the economy tumbled, Assemblyman Joseph Malone (R., Burlington) said the governor had not truly transformed government.

Malone, the ranking Republican on the Assembly Budget Commitee said trying to fix New Jersey's finances now was like calling the rescue squad after a train wreck. "You've been telling somebody they're going too fast. . . . Now they hit the brick wall," he said. "I can't go back and say to the engineer, 'Don't go that fast.' They were the engineer the last eight years of that train."

Monmouth University pollster Patrick Murray said Corzine's low approval ratings showed that voters already thought he had failed to prepare the state for the economic downturn. "Now that things are going bad, he has to literally pull a rabbit out of his hat in what is an incredibly difficult situation," Murray said. "In a year's time, he won't be governor if he doesn't pull this out."