Corzine warns mayors of decrease in aid to towns

by Maryann Spoto/The Star-Ledger

Wednesday January 14, 2009, 7:05 PM

A day after delivering a somber analysis of the state's financial woes in his State of the State address, Gov. Jon Corzine told mayors today they should expect less state aid in his next budget.

The mayors, in turn, unleashed their frustrations at proposed affordable housing initiatives they said will hinder their efforts to reduce spending and craft balanced budgets. Some criticized Corzine's plan to allow them to skip pension payments, a move supported by the state League of Municipalities.

Patti Sapone/The Star-LedgerGov. Jon Corzine speaks to the state's municipal leaders during the 17th Annual Mayors Legislative Day in Trenton.

"We are in a crisis, in an emergency, with regard to our financing," Corzine told more than 100 mayors and council members at the league's annual Legislative Day. "This is not ordinary times, and if we continue to act as if it is, we are going to end up having problems that I think are much greater."

Corzine, whose State of the State on Tuesday mixed hope with gloom over New Jersey's economic condition, told the mayors to expect a continued drop in revenue from the fallout of the stock market and housing crises.

With the increase in home foreclosures and an anticipated hike in challenges to property tax assessments, towns can expect less property tax revenue, he said.

"Frankly, I worry that you may have far greater shrinking revenues than what are anticipated right now," the governor said.

Nearly all state revenue sources are down at least 7 percent, he said.

At the same time, Corzine called on municipalities to "protect the fundamental basics" of public safety, education and care for the elderly and disabled.

"I'm not doom and gloom. We're going to get through this. We get through every recession," the governor said. "This is not the first recession that this country has ever had, that New Jersey has ever had to deal with. We'll come out stronger."

Foremost on many mayors' list of gripes was Corzine's proposal to impose a one-year moratorium on developers' fees that help pay for building affordable housing.

Mahwah Councilwoman H. Lisa DiGuilio and Bridgewater Mayor Patricia Flannery said the moratorium should also extend to construction because without collecting the developers' fees, the taxpayers would have to foot the bill.

"I do not understand why we continue to go forward with the process," Marlboro Mayor Jonathan Hornik said. "Affordable housing is too important to push forward when it hasn't been carefully and properly thought out."

Saying local officials do not have many options to cut spending, Corzine pleaded his case for municipalities to defer half their pension contributions this year, a measure that stalled in the Senate last month.

"I'm going to be very hard-pressed, however, to be talking about sustaining municipal aid at the levels we had," the governor said. "I'm going to be very hard-pressed to sustain educational aid at the levels that we had. Hospital aid, higher education."

Corzine already has cut about $15 million in aid to municipalities from the current budget year, which began last July 1. His administration says allowing towns to pay less for pensions would more than make up for the loss in state aid.

But that did not sit well with several mayors, who said delaying payments doesn't make sense.

"I'm hoping it won't go through the Legislature because it will wind up costing us more in the long run," Mount Arlington Mayor Arthur Ondish said.

Corzine, who pitched stepping up efforts for towns to share services during his Tuesday speech, did not mention it today. Many mayors said they are giving that option even more consideration.

Plainfield Mayor Sharon Robinson-Briggs said city officials, who have worked out sharing arrangements for animal control and information technology, are exploring what other services can be shared with neighboring communities -- but it won't be police, fire or public works.

"We're trying to do our best to cut corners without cutting services," she said.

Corzine, who has delayed introducing his budget until March 10, said he would not delay it again if the state does not learn how much it will get from the federal economic stimulus package by that time.