Corzine cuts $150 million more from budget

For the third time since January, Gov. Corzine went back to his spending plan yesterday to help close a budget gap, trimming an additional $150 million in spending.

The governor said he would release details on the spending cuts today. He characterized them as "very substantial" in some departments.

Corzine plans several additional steps to close the rest of the $1.2 billion budget gap for the fiscal year that ends June 30.

Among them, he plans to dip into the state's rainy-day fund again, spending a total of $450 million from the surplus funds and leaving a cushion of $250 million.

The state Constitution requires a balanced budget.

"We have an honest, straightforward but unavoidable reality of having to deal with making adjustments to the 2009 current fiscal-year budget," Corzine said. "Almost every state is in the same situation of revising downward their revenue numbers."

Borrowing a tactic from the McGreevey administration, Corzine also proposed moving expenditures for the remainder of the fiscal year into July, the start of the next fiscal year. Those expenses include $383 million in school aid and $70 million in grants to businesses that hire new employees.

The remainder of the shortfall would be closed by further reducing pension-fund payments for government and school employees by $150 million, following a $500 million cut in March.

The original budget envisioned pumping $1.1 billion into the severely underfunded pension system, less than half of the amount called for by actuaries. That amount has dwindled to $100 million.

Overall, a budget that began at $32.9 billion has been whittled to about $30 billion.

"It's not a perfect picture," Corzine said in an afternoon news conference, flanked by Democratic legislative budget leaders in the governor's outer office. He said the measures represented "a lot of choices we would not otherwise be making."

On the bright side, the governor noted there were indications that the rate of decline in the economy had slowed. Foreclosure rates in New Jersey, he said, have gone from among the highest in the country to among the lowest.

Corzine previously proposed cutting $812 million from the budget in January and $472 million in February to make up for sharply declining revenues.

Included in those cuts were furloughs of state workers, one day each in May and June. The state Casino Control Commission is first up, with about 139 employees scheduled to take an unpaid day off today. The state Motor Vehicles Commission is scheduled for a furlough day on Monday, although the unions hope a final effort to challenge the plan before the Public Employees Relations Commission will scuttle it.

For the next fiscal year, the governor has said he already needs to trim $2 billion from the $29.8 billion budget he proposed in March.

Treasurer David Rousseau is scheduled to report more details on the next fiscal year's numbers next Tuesday.

Within minutes of the governor's announcement, Republican critics had fired off cutting remarks.

Assembly Republican Budget Officer Joe Malone (R., Burlington) said Corzine's plan "relies on more borrowing to push the state's problems into the future and onto the backs of local school districts."

"This is nothing more than McGreevey II. 'Back to the future' is not good for the future of New Jersey," Malone said.

School districts also were not pleased with the governor's proposal.

Frank Belluscio, spokesman for the New Jersey School Boards Association, said his members were "very concerned" because deferring school-aid payments to districts means some districts "may have real cash-flow problems in terms of meeting payroll."

"This will make things much tighter and more difficult to close out the year," Belluscio said.

After McGreevey deferred school-aid payments in 2003, the deferred payment was never made up but simply pushed into the following year, according to Belluscio.

The Corzine administration has not yet determined whether to make up the deferred payments this time or defer them again, according to Treasury spokesman Tom Vincz.

Corzine, who seeks reelection in November, has begun running cable-television ads touting his efforts to battle the recession. The governor has marginal opposition in the June 2 primary.