Corzine trims current budgets as fiscal year ends

TRENTON - Releasing some details yesterday about spending cuts for the final weeks of the fiscal year, Gov. Corzine described the trims as "tough but necessary choices."

"The cuts we are making are unprecedented, but we are experiencing a national economic crisis the likes of which we haven't seen in generations," Corzine said in a statement. "We are living up to our fiscal responsibility as we face even more difficult choices in the next two months."

For the current fiscal year, which ends June 30, the budget shortfall has grown to nearly $4.4 billion out of a budget of $32.5 billion, or about 13.5 percent. A dramatic decline in most revenue categories accounted for about 92 percent of the shortfall, according to the administration.

To close that gap, Corzine made cuts totaling just over $2 billion, including deferring about $1 billion in payments to the pension funds for government workers and teachers.

Federal Medicaid and economic-stimulus aid covered more than $700 million of the shortfall. The remainder was made up with measures that included spending $555 million in surplus from the previous year and the rainy-day fund, using $365 million that had been intended to reduce long-term debt, and redirecting $157 million dedicated to special funds such as new-home warranties and temporary disability.

The latest round of financial maneuvering, the broad outline of which was announced Thursday, includes deferring school-aid payments to the next fiscal year to save $383 million.

The latest $150 million in cuts to departmental spending touched on a range of areas. Many of the cuts come from programs whose original budgets were larger than needed, which means the trims will not result in the elimination of any programs or services.

In the Department of Community Affairs, the administration took $7 million from a $17 million fund to cover expenses for municipalities to study and implement mergers.

"Currently, municipalities are in the early stages of examining consolidation and, generally speaking, studying the issue is less costly than actual implementation," DCA spokeswoman Lisa Ryan said.

In the Health Department, the administration scraped back balances as small as 24 cents from an array of programs. Although the cuts total $72 million, a health official said the reductions were all from line items that had money left over heading into the end of the fiscal year.

Leftover money also accounted for $5.7 million in savings from the Department of Law and Public Safety, making up the bulk of the $7.6 million in reductions there.

In other areas, planned savings did not pan out. The administration hoped to save $25 million by furloughing state employees for two days. But after a number of employees, including corrections officers, were exempted because they were considered critical, the savings dropped to $16.1 million.

A wage freeze for all executive-branch employees was expected to save $4 million, but negotiations with the unions continue, so the money was restored pending the outcome. Corzine has said repeatedly he would prefer furloughs and wage freezes to layoffs, an issue that remains to be settled for the next fiscal year.

Republicans attacked the latest budget announcement, saying the governor had done little to actually trim spending.

Assembly Republican Leader Alex DeCroce (R., Morris) said Corzine "still fails to embrace significant cuts and wholesale government reform."

"Instead of cutting large pots of new or politically motivated money, such as preschool expansion or special municipal aid to hand-picked cities, the governor shirks his obligation to schoolchildren and future retirees," DeCroce said. "He fiddles with accounting practices while hoping that something will eventually come along to save the day for New Jersey."

A coalition of liberal interest groups took the opposite view, saying that instead of paring back programs, Corzine should raise taxes to pay for services.

"The budget already proposes $4 billion in cuts that will mean critical loss in services to our most vulnerable residents: seniors in nursing homes, college students burdened with debt, and children and families who rely on after-school care," said Eva Bonime, coordinator of the Better Choices Budget Campaign. "Shared recovery from this economic crisis will come only through shared responsibility, not cuts or gimmicks."

The group called on Corzine this week to raise income taxes on filers earning between $300,000 and $500,000 and to raise business taxes and taxes on heavy "gas-guzzling" automobiles.

Asked Thursday about the prospects of tax increases, Corzine said only that his administration would lay out updated plans next week for the budget that begins July 1.

Corzine already has proposed a tax increase on incomes of $500,000 and up, along with other increases. The governor said he faces a $2 billion shortfall in the new budget, requiring another round of savings or tax hikes.