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Gannett News Bureau, 1-24-08, Corzine to seek borrowing $2.5 billion to build schools..................Star Ledger editorial: A $2.5 billion complication Friday, January 25, 2008...................Star Ledger 1-24-08 - Corzine seeks $2.5B more for poor schools
January 24, 2008
Corzine to seek borrowing $2.5 billion to build schools
By GREGORY J. VOLPE
GANNETT STATE BUREAU
Before Gov. Jon S. Corzine gets approval for his plan to halve state debt by hiking tolls and borrowing more money, he plans to begin a separate push to borrow at least $2.5 billion to fund school construction projects in the state's poorest districts.
That plan was revealed in a letter released Wednesday as the state Supreme Court heard arguments from lawyers representing children in the so-called Abbott districts who want a court-ordered deadline for the governor to approve the $2.5 billion needed to restart dozens of projects that were delayed when it became apparent the construction fund was depleting.
"The bottom line for the children in this case, the plaintiffs, is not just the introduction of a bill. We've heard that before," said David Sciarra, director of the Education Law Center, which brought the case. "... The bottom line is the actual provision of funds so that work can resume."
Abbott advocates have been in court on this matter before. Last year, the state Supreme Court declined to impose a deadline because the state suggested the matter would be handled as part of the fiscal 2008 budget adopted last summer.
The Legislature passed a measures to reform the state Schools Construction Corp. and rename it the Schools Development Authority but allocated no funds.
"You said to us, "It's going to be taken care of in the '08 budget,"' Justice Virginia A. Long told the assistant attorney general representing the state. "... So again you certainly have to acknowledge there's reason for them to be leery."
Now, the state points out that Corzine has announced his financial restructuring plan, which calls for halving the state's debt and funding 75 years of transportation projects by borrowing up to $38 billion to be repaid through large toll hikes.
With the plan targeted for approval this spring, Corzine plans to begin pushing a separate piece of legislation to borrow the $2.5 billion seen as a stop-gap for two more years worth of school construction projects.
The administration expects legislation to be introduced in February and signed by Corzine before the July 1 budget deadline but cannot vouch for the Legislature.
"That is what the administration can do," assistant attorney general Robert Gilson said. "They are one branch of government. They have spoken as to what they will address in terms of their obligations."
Gilson wrote to the court in a letter dated Tuesday that Corzine's plan to borrow the $2.5 billion will strive to be repaid through existing taxes, meaning it wouldn't have to be put before the voters, something Abbott advocates have feared after Corzine proposed requiring voter approval for borrowing without a dedicated funding source.
"Not that it gets around it," said Scott Weiner, chief executive officer of the schools authority, "it's consistent with his plan that voter approval is required in absence of an identified, dedicated source of funding."
Corzine spokeswoman Lilo Stainton said via e-mail that funding will likely come from the income tax — a move Republicans are already questioning since that tax is dedicated to property tax relief.
Senators from both parties questioned more borrowing when the governor is pushing a controversial plan to cut state debt.
"We are in the trouble we are in now in New Jersey because we have borrowed and borrowed and borrowed without asking the people themselves for approval to borrow," Sen. Leonard Lance, R-Hunterdon, said. "Almost 90 percent of our debt is based upon this type of borrowing."
Senate Majority Leader Stephen Sweeney, D-Gloucester, also questioned the move.
"It sends a mixed message to the public," said Sweeney. "It just sends the wrong message right now."
Corzine chief of staff Bradley Abelow said it was an unusual situation.
"We're responding to a court mandate where we must provide funding to construct facilities in a certain number of school districts," Abelow said. "And that funding has run out."
Star Ledger editorial: A $2.5 billion complication
Friday, January 25, 2008
Confusing. Confounding. Contradictory. Those are the political three C's of Gov. Jon Corzine, who, in the midst of preaching "No more borrowing," promised the Supreme Court the state will borrow $2.5 billion to restart a court-ordered school construction program.
Don't get us wrong. Rebuilding crumbling, unsafe schools is important as well as required by the court. What is needed, however, is a sound plan for getting the job done and providing long-term, adequate funding for the bonds required to build.
There is something curiously contradictory about Corzine plopping $2.5 billion on the table at the last minute -- in a letter forwarded the evening before the court hearing -- so that the news broke the same day that the Legislature started its hearings on Corzine's "Read my lips: No more borrowing" fiscal reconstruction plan.
The $2.5 billion is what a study commission said would be needed for the 31 districts covered by the court order but leaves out nearly $1 billion suggested for the state's other districts. Would it have been better to tell the court the administration is working on a financial new day for New Jersey and to have asked for more time to work out funding sources for re paying the school bonds? If the court refused and ordered Corzine to ante up, the result would be similar, the political fallout quite different.
Republican leaders quickly declared the governor had reneged on his promise to hold the line on debt and was talking out of both sides of his mouth. Many Democratic districts will benefit from the school construction. Even so, the administration dropped a $2.5 billion brick on the support he will need to get both the school construction and fiscal reordering plans through.
Corzine wants to sell future toll road revenues to secure a big chunk of cash for paying down existing state debt. Reducing that drain on revenues is as critically important as Corzine says it is.To many taxpayers, however, that goal may seem abstract compared with the day-to-day personal pain of substantially higher tolls. The governor's plan will not be an easy political sell. A $2.5 billion surprise does not help.
There must be flexibility built into any belt-tightening. From the beginning, Corzine should have outlined a mechanism for deciding limited exceptions to his no-borrowing, budget-freezing promises. He needs to do it soon so there is no confusion to make lawmakers think the money from the toll road monetization will be an excuse to ignore the budget's structural deficit.
The timing of the administration's $2.5 billion pledge was confounding, as inexplicable as Corzine's decision to go off as planned to the annual meeting of the World Economic Forum this week in Davos, Switzerland.
He may prefer the intellectual ambiance of Davos, but the down-and-dirty of Trenton and New Jersey's economic needs require him and his attention right now.
Star Ledger - Corzine seeks $2.5B more for poor schools
Move made the night before state top court hears arguments on new funding plan
Thursday, January 24, 2008
BY JOHN MOONEY
Star-Ledger Staff
In a last-minute bid to head off Supreme Court action, the Corzine administration announced yesterday it would ask lawmakers for at least another $2.5 billion to restart the troubled school-construction program in the state's poorest districts.
The plan to borrow another massive infusion of cash follows controversy about how the initial $6 billion was spent and comes just weeks after Corzine lectured lawmakers in his State of the State address on New Jersey's burgeoning debt.
A letter revealing the plan was delivered to the court on the eve of yesterday's oral arguments to determine the fate of the troubled facilities program, which was ordered by the justices nearly a decade ago.
Lawyers for schoolchildren in the 31 districts covered under the court's Abbott v. Burke rulings have asked the justices to force the state to further fund the program, which stalled in 2005 after running dry amid questions of waste and mismanagement.
Some of the justices seemed sympathetic to the request, but they raised questions about the timing and logistics of such an order. More than an hour of questioning focused from the start on the latest proposal.
In one exchange, Justice Virginia Long asked the chief lawyer for the Abbott schoolchildren, David Sciarra, whether his appeal would end if the state could produce a $2.5 billion check.
Sciarra said it would be a start but quickly noted it wouldn't be enough to finish the job. The state estimates it would cost more than $10 billion to build all the schools the districts say are needed and the Department of Education has approved.
He faulted the state for a long history of delays, and noted that introducing legislation is no guarantee it will pass.
"So, you also want to see if it (the check) clears?" Justice Barry Albin interjected, drawing some laughter from the full gallery.
State Republican leaders weren't laughing, however, blasting the latest proposal in vociferous tones and accusing Corzine of having "reneged" on his Jan. 8 pledge to cut the state's debt.
"The words are barely out of his mouth and the ink isn't even on the paper yet on his 'debt reduction' plan and he intends to borrow an additional $2.5 billion," said state Sen. Leonard Lance (R-Hunterdon) in a statement.
Senate President Richard Codey (D-Essex) said it was likely the Legislature would approve the measure -- as long as it also includes money for suburban districts -- and noted the state was in a bind given previous court orders.
"We knew this was looming, and, frankly, if the governor didn't do something, the court would," Codey said.
The development was the latest in the checkered history of a program that began as one of the nation's largest school construction efforts. In addition to the $6 billion for the Abbott schools, the state approved $2.6 billion to partially fund hundreds of projects in suburban districts.
Lawyers for the state had held Abbott representatives at bay for more than a year, pleading for more time given the state's fiscal crisis. Now, the administration's latest plan comes as part of Gov. Jon Corzine's broader proposal to restructure -- and reduce -- the state's overall debt with the help of hefty highway toll increases.
The letter to the court said "a portion of existing state taxes" would be dedicated to cover the additional debt service. Lawyers said the administration expects a bill to be introduced next month.
Sciarra and Richard Shapiro, the lawyer for 13 of the Abbott districts, implored the court to set a deadline for legislative action as early as March or, at least, the end of the current fiscal year on June 30. The justices will rule at a later, unspecified date.
"This is not something where children need to be penalized any longer due to bureaucratic delays and politics," Shapiro said. "The time for action is now."
Assistant Attorney General Robert Gilson said the good-faith effort by the administration meant no deadline was necessary. He said he anticipated the proposal being enacted by the end of June.
"What can't be debated is the state has taken significant steps in what all agree is a long-term problem," Gilson said.
Albin peppered the state attorney with questions, however, about long-pending projects, including badly overcrowded and aging facilities in Elizabeth, Jersey City and Keansburg.
"There are students at risk today," Albin said. "The point is can a child get a thorough and efficient education if you can't even insure their health and safety?"
John Mooney may be reached at jmooney@starledger.com, or (973) 392-1548.
