Corzine: Painful budget will position NJ for rebound

Gov. Corzine said the budget he presents today, filled with spending cuts and tax increases, makes tough choices, but will position New Jersey to rebound when the economy recovers.

"Make no mistake: because of where the world is right now, we must move in directions we might not otherwise choose," Corzine said in his prepared budget address to the Legislature. "Tough times require that we make the right choices, and that we do the right thing for the common good.

"By making the right decisions now, New Jersey can and will emerge from this national economic crisis stronger, sooner and more prosperous."

Corzine's plan would cut state spending to $29.8 billion, about $1 billion less than the first budget he signed in 2006.

His speech emphasized that he will be the first governor since 1947 to end a term with state spending lower than when he started.

"It is a demonstration that here in Trenton, we are dealing with the state's finances exactly as every family in New Jersey is dealing with theirs. We are living within our means," said an advance copy of Corzine's speech.

The largest hits would be on property tax rebates, which would be reduced by $500 million, and the state's contribution to its pension fund, a $500 million decrease. Corzine is also calling for saving $400 million by freezing state employee wages and requiring unpaid furloughs throughout the year.

Among the other highlights:

homeowners, except for those 65 and older, would no longer be able to deduct their property tax payments in their state income taxes;

property tax rebates would be preserved for seniors and those earning $50,000 or less; those making between $50,000 and $75,000 would see a reduction;

residents would pay an additional 0.75 percent in income taxes on income over $500,000;

taxes will increase on alcohol and cigarettes;

the state will spend $25 million to expand preschool programs;

and schools will see an overall aid increase of $300 million.

William Dressel, executive director of New Jersey State League of Municipalities, said the budget would put pressure on towns to increase property taxes.

He called on the Legislature to help local governments by eliminating some of the many unfunded mandates "that have been imposed, legislatively and administratively, over the course of decades."