newjerseynewsroom.com

State's Office of Legislative Services already calculating a major shortfall for next year

BY BOB HOLT

NEWJERSEYNEWSROOM.COM

New Jersey faces a $10.5 billion budget deficit heading into next year — nearly the same size as the gap that opened up before this year's spending plan passed, according to an analysis by a nonpartisan legislative office.

The internal report means next year's budget challenges could be just as difficult as this year, when Gov. Chris Christie slashed funding for schools, municipalities and property tax rebates.

The Office of Legislative Services calculated a $10.5 billion shortfall by counting all mandatory increases in state funding and assuming all programs now in the budget would be included next year.

The state will need $3.53 billion to fully fund its pension contribution and $2.3 billion for public schools. It also faces the loss of $1 billion in federal stimulus money, Rosen said. He projected a total spending increase of $11.5 billion, and only $1 billion of higher revenue. Christie and the Democratic-led Legislature filled a record deficit of $10.7 billion this year.

At a rally Monday night in Ocean County celebrating his first six months in office, the Republican governor told a crowd of more than 200 supporters that he closed an $11 billion budget gap without raising taxes for the budget he signed in June, according to NorthJersey.com.

Christie took office in January pledging to fix state finances without raising taxes.

On Jan. 25, NewJerseyNewsroom.com quoted OLS budget expert David Rosen as saying, "In 2011, let's say we have a real recovery, it will take until 2014 to get back to where the state was in 2008. It is going to be very hard for us to simply grow out of this problem. We have taken such a revenue hit in the last two years that it is going to take up to multiple years to get back to where we were in terms of a state revenue base. It is going to have a profound impact in the years going forward.''

State Treasury spokesman Andrew Pratt told NJ.com it was too early to release predictions for next year's deficit.

"If you're saying, will we face many of the same issues this year that we faced last year, then the answer is yes," Pratt said. "It's not something [Christie] can wave his magic wand and eliminate."

Assemblyman Joseph Cryan (D-Union) said Christie's cuts to funding for schools and towns, missed pension payment and rebate cuts amounted to "cost avoidance." New Jersey will need to look at ways to increase revenue, through a rebounding economy or new sources, as a way of fixing finances, Cryan said.

"He just didn't pay the bills," Cryan told Bloomberg.com. "We've got to look at ways to grow revenue. We haven't solved anything yet and clearly there's a whole lot of work that needs to be done for next year."

Assembly Budget Committee Chairman Louis Greenwald (D-Camden) Tuesday announced the panel will hold a public hearing on Aug. 5 to gather information on a projected $10.5 billion deficit facing the 2011-12 state budget 11 months away.

"This is obviously a big concern that needs to be addressed," Greenwald said. "We cannot continue to rely on moves such as failing to make pension payments and slashing property tax relief. Real change and plans to stimulate our economy, create jobs and put people back to work are what's needed. We cannot continue to do the same the old things."

Greenwald said he expects to hear from OLS officials at the hearing and then from administration officials at a subsequent hearing.

— TOM HESTER SR. CONTRIBUTED TO THIS REPORT