Corzine budget: Aid up, not taxes

TRENTON - No tax hikes or new taxes. Increased aid to public school districts. And money for property-tax relief for most households.

Gov. Corzine today will propose a legislative-election-year budget that his administration says is full of good news, a spending plan "not designed to please any constituency . . . other than the taxpayers of the state," state Treasurer Bradley Abelow said at a news conference yesterday.

All school districts - poor and wealthy - would get at least 3 percent more in aid; for most, the increase would be the first in three years. Municipalities would receive a 2 percent aid boost - also their first in several years.

The budget also includes the property-tax credit program, approved by the Legislature, that gives most households a 20 percent credit or rebate.

It also would expand a tax break to 200,000 low-income working families. And it includes $50 million more for higher education.

While some Republicans and school advocates complained that it would not boost aid to suburban districts enough, the budget was largely praised by Corzine's fellow Democrats, who control the Legislature.

Revenue growth and spending restraint helped allow the breaks, Abelow said. Corzine's proposal also includes no funding for capital improvements for higher education, open space or state buildings.

The fiscal 2008 budget would contribute only half the recommended amount to the state's pension system, and it would set New Jersey up for a $2.5 billion budget shortfall next year, Abelow said.

Last year, Corzine proposed a budget that hiked the sales tax, cut higher education funding, and resulted in a stalemate with legislators that forced a weeklong government shutdown.

This year, Senate President Richard J. Codey (D., Essex) said Corzine had told him that his budget was "pretty boring."

"I said, 'That's good, Jon. When it comes to a budget, boring is good. It means we're not storming the Bastille,' " Codey said.

The $33.29 billion budget is about 7 percent bigger than last year's, but Codey said critics should note that most of the extra money would not go to operate the state.

"Almost all of it," he said, "is going back [to taxpayers] in the form of property-tax relief."

Assembly Speaker Joseph Roberts (D., Camden) was also enthusiastic: "In these tough fiscal times, to have a budget with no new taxes and no new fees is an extraordinary achievement." He said his major area of concern was that charity care - state aid to hospitals to care for the uninsured - was kept flat.

He did praise the increase in school aid. Suburban districts, he said, "have been strangling, and this is a lifeline for them."

Total school aid would increase $580 million under Corzine's plan. Of that, $270 million would be indirect relief for items such as debt service and retiree benefits.

The remaining $310 million in additional funding would go toward direct aid. About a third would go to the so-called Abbotts - 31 needy, mostly urban districts. Another third would go to all other schools. And the last third would be additional aid for low-income or high-needs children in non-Abbott districts.

Lynne Strickland, an advocate for middle-class districts, said the increase was "a step in the right direction" but not quite enough.

"We're still feeling like we're still taking a big part of the brunt of the budget deficit," said Strickland, head of the Garden State Coalition of Schools.

Corzine and lawmakers had pledged the boost in school aid because they were unable to work out a new formula for distributing aid to schools during their property-tax overhaul, which Strickland said was still desperately needed.

Assemblyman Joseph Malone (R., Burlington), who sits on the Budget Committee, said the increased aid to suburban middle-class districts was not enough, especially for those whose enrollment has surged.

"In some regards, I respect the governor for what he's trying to do, but I don't think it goes far enough to relieve the inequities," Malone said.

William Dressel, director of the New Jersey State League of Municipalities, said he was pleasantly surprised by the small boost Corzine wanted to give towns. "I'd like to have more, but given the fiscal realities of the state, I can handle that," he said.

The plan includes $40 million in savings from the state labor agreement announced yesterday, Abelow said. But the state would increase spending on retiree benefits, debt service, and contractual salary and benefits increases for state workers.

In his speech to the Legislature this morning, Corzine is expected to address late-night, last-minute legislative additions to the budget, also known as "pork" or "Christmas tree grants." The U.S. Attorney's Office last week issued a flurry of subpoenas targeting such spending, and lawmakers are pushing ways to make that process more transparent.

Though Abelow praised the budget as fair and frugal, he also said it was "starving" government by not improving the state's outdated technology and infrastructure.

"That's what's really hidden in this - how much we're not able to do," he said.

The plan

The $33.29 billion total is about a 7 percent increase from last year's budget.

It includes the first sizable school and municipal aid increases in years.

Nearly half the budget - $16.6 billion - is some form of property-tax relief.

Taxes

The budget proposal is the first since 2001 with no tax increases.

Included is $2.3 billion for a plan to cut property taxes by 20 percent for most homeowners.

School aid would rise 3 percent and municipal aid 2 percent. Those increases, too, are intended to control property taxes.

Two business taxes, including a tax on a type of corporation often used by small businesses, would be eliminated.

Education and families

Aid to higher education would rise $50 million; it was cut by about $170 million last year.

A tax credit for working families who earn less than $20,000 a year would be expanded to those earning up to $38,000 a year.

Other spending and savings

The budget relies on savings from a new state-worker contract that would raise salaries for next four years but force employees to contribute to their health care for the first time and contribute more toward their pensions.

It includes $9 million for a new state comptroller's office to oversee government spending.

No extra money is included for open-space preservation or construction for state colleges and public schools.

The governor wants three days to review the final budget and identify who requested specific changes.

SOURCE: Associated PressEndText