Facing a $7 billion shortfall and what may be a tough reelection campaign, Gov. Corzine delivered some harsh but welcome budget reality yesterday in Trenton.
His proposed $29.8 billion budget is a responsible effort at protecting residents who are struggling the most in this economic crisis.
The spending plan for fiscal 2010 is about $3 billion less than the $32.9 billion budget adopted last summer. (Although he since has cut $2 billion from the current budget.)
It's the second year in a row that Corzine would cut the overall budget. It's about $1 billion less than the first budget he introduced in 2006. The economy, and past spending frenzies, left him with little choice.
That means some unpopular moves, including eliminating property-tax rebates for homeowners under age 65 who earn more than $75,000 annually. Corzine would again cut state aid to municipalities, which increases the likelihood of local property-tax hikes.
In all, more than 850 line-item programs would be trimmed.
State employees, who enjoy generous benefits, would take furloughs and relinquish a scheduled 3.5-percent raise. Otherwise, Corzine said, he'll need to lay off up to 7,000 workers. Under the circumstances, the givebacks are a necessary request that the unions should approve.
The proposed budget cuts total about $4 billion. Corzine is calling for tax increases of about $1 billion to close the budget gap. The rest of the shortfall, $2 billion, would be made up with federal stimulus aid.
Corzine would eliminate property-tax deductions for state income-tax filers for one year. He also would raise taxes on cigarettes, wine and liquor. Income taxes would rise by 0.75 percent, for one year only, on wages above $500,000. And employers would face a payroll-tax increase of about $90 per worker to replenish the state's unemployment insurance fund.
Budgets are moral documents, and on that front, Corzine's few proposed spending increases are commendable. He would increase K-12 classroom spending by $374 million. He'd preserve property-tax rebates averaging $700 for families earning less than $50,000 and for seniors. The budget would boost spending on children's health care, senior health programs, and home heating aid for seniors. Charity care for hospitals would be preserved.
Republican legislators and GOP gubernatorial candidate Chris Christie immediately panned the proposed tax increases. But they weren't as forthcoming with suggestions on where to cut an additional $1 billion from the budget.
The GOP is correct that, while the economy is to blame for declining state revenues, New Jersey wouldn't be in such a deep budget hole if officials had controlled spending in previous years. Nine years ago, the state budget was only $25 billion.
Now, the state's debt has nearly doubled in less than a decade, and Corzine has retreated on his pledge to fully fund pension obligations. The governor did note that his administration has contributed more to the pension fund in the past three years than in the previous 15 years combined.
New Jerseyans probably don't care whether Corzine can win reelection on such a budget. But they should care that this proposal is a reasonable effort to put the state on the right fiscal course and help those hurting the most in tough economic times.