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BY TOM HESTER SR.
NEWJERSEYNEWSROOM.COM
With the deficit for the current 2010-11 state budget growing toward $1 billion, the outgoing Corzine administration could be forced to cut aid to cities, towns, schools, and hospitals as well as state contributions to public employee pension plans.
The grim outlook became public Wednesday in a state report sent to Wall street bond investors.
“Largely due to continuing revenue shortfalls and the need for supplemental appropriations, the projected deficit by the close of the current fiscal year (June 30) is now estimated at $1 billion,’’ said Sen. Barbara Buono, chairman of the Senate Budget and Appropriations Committee. “Obviously, many worthy and deserving programs that are in need of state funding will have to make do without it. We have no choice – there simply isn’t enough money to sustain our current state budget, let alone any additional spending proposals.’’
William G. Dressel, director of the New Jersey State League of Municipalities, said he understands, just as the state report warns, that the administration is examining reductions in aid to education, towns, higher education, hospitals and the state contribution to government employee pension plans.The state Treasury Department Wednesday revealed that October tax revenue collections for the state government fell $222 million below targets for the month, bringing the shortfall since July 1 to $412.7 million, or 5.1 percent below projections.
State Treasurer David Rousseau did not specify where additional spending cuts may be made with less than eight weeks remaining in the Corzine administration.
"The state and national economies continue to reel from the effects of high unemployment, and weak job and income growth,'' he said. "While we have made unprecedented cuts in year to year budget spending and have closed $12 billion in shortfalls over the last two fiscal years, more must be done to keep our budget in balance in the face of chronically sluggish revenue performance."
The Corzine's administration last month identified more than $225 million to close a developing shortfall in the 2009-10 budget. Earlier this month, following a preliminary review of October revenue trends, Corzine ordered the cabinet to identify another $400 million in budget reductions by December 1.
Rousseau said that due to continuing declines in the revenue outlook, and a concurrent increase in anticipated spending needs to, in part, meet pressing human needs in a struggling economy, the state faces more difficult spending decisions in the weeks and months ahead.
Gov.-elect Chris Christie is bracing for at least an $8 billion deficit as he begins to create his first budget, the 2010-11 fiscal package, soon after he takes office Jan. 19, but he is also aware the deficit could continue to grow as New Jersey remains locked in the worst economic period since the Great Depression of the 1930s.
Revenues for October totaled $1.69 billion, which is $221.2 million, or 11.6 percent, below projections. Among the big three taxes, the gross income tax fell $55.4 million below target totaling $2.5 billion, while the sales tax, at $520.7 million was $79.2 million below target, and the corporation business tax, at $73.3 million, was $71 million below projections.
Through the first four months of the fiscal year, revenues are $412.7 million below year to date projections.
"We have taken immediate steps that would fully offset our revenue problem, finding cuts and efficiencies in spending on state operations,'' Rousseau said. ‘But when additional spending pressures are taken into account, additional reductions will be required, and will have to be made from throughout the budget. We are prepared to take these steps and work with the new administration to maintain balance and the surplus in the FY 2010 budget."
Dressel said of potential aid cuts, "Local budgets were carefully crafted and balanced assuming that the state would honor its commitment to a certain level of property tax funding. That level has already been reduced twice within the last twelve months – first, in January, when state revenue projections were not met, and second, in July, when the state's current budget imposed further cuts.
He added, "Cuts in property tax relief funding do not help to speed our state's economic recovery," Dressel said. "They do not help homeowners, especially not those already facing unemployment or possible foreclosure. They do not inspire business confidence in New Jersey. And they destroy the careful plans of municipal officials, already struggling mightily to serve their fellow citizens in the midst of this recession."
Buono, who will become Senate majority leader on Jan. 12, said, "We in the Legislature will continue to work with the current administration as well as the incoming Christie administration to identify the kind of cost savings that will be required to get us through this difficult time."
Assemblyman Joseph Malone (R-Burlington) the ranking Republican on the Assembly Budget Committee, said, "Today's news confirms the harsh reality that we are still in a financial crisis and all new spending by state government must be frozen. We are only one-third of the way through our fiscal year and revenues are significantly less than anticipated. It would be irresponsible to consider any type of spending that adds to the mounting deficit. Any proposals that rely on dipping into Treasury's coffers should be tabled. It is imperative that we exercise stringent discipline in order to right our fiscal ship."
