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Press of Atlantic City: Corzine thinks state pay freeze may cure NJ revenue ills
By DEREK HARPER Statehouse Bureau, 609-292-4935
Published: Saturday, January 03, 2009
TRENTON - Gov. Jon S. Corzine said the state is examining the possibility of salary freezes and budget cuts while shifting other funds to cover for what is now a projected $2.1 billion gap between what the state is going to spend and what it will collect this fiscal year.
Corzine said details of the cuts - which now reside solely on yellow legal pads - would be released at noon Monday. But he told reporters Friday afternoon that the state would cut an additional $812 million from the budget by June 30 while tapping $500 million from the Long Term Obligation Fund and $275 million from the Rainy Day Fund.
There also is $208 million left over from last year's budget, which Corzine said the state plans to use, and he said the federal government likely will contribute about $300 million to cover increased demand for Medicaid.
More cuts could come if conditions worsen, he said. "If things continue at the pace that they have been declining ... I'm fearful that we might have another bite at this apple."
Corzine said if state workers' salaries were frozen for 18 months, it would result in $152 million in savings. About $16 million was saved immediately by freezing salaries to non-union and management employees, and most of the rest of the savings would be comprised of union employees' frozen salaries.
Corzine said he initially broached the topic with unions in early December.
"The fact is," he said Friday, "we would like to negotiate a salary freeze as opposed to turning to more difficult issues, although ones that we believe we can deal with, which are furloughs and layoffs."
Corzine said he would deliver the budget no later than March 10. While this is weeks later than usual, Corzine said he wanted to know the impact of any federal stimulus package on New Jersey's finances.
Corzine previewed the cuts with key Democratic legislators and top legislative aides earlier Friday.
"Things are bad," said state Senate Majority Leader Stephen Sweeney, D-Salem, Gloucester, Cumberland, as he left the Governor's Office at about 12:50 p.m. He was accompanied by Sen. Barbara Buono, D-Middlesex, who chairs the Senate Budget and Appropriations committee, and top Assembly aides.
"It's about the realities were facing in a very difficult economy," Sweeney added. "It's not just New Jersey. It's the nation. It's the world. And the governor's looking to take the bull by the horns, and it's not going to be pleasant."
Trenton Republicans complained they were not briefed on the cuts. Senate Republican Leader Tom Kean Jr., Union, Morris, Somerset, Essex, and Assembly Republican Leader Alex DeCroce, Morris, Passaic, jointly complained that Corzine needed to act and cut, instead of waiting to see what federal bailouts could be delivered. Republicans filed suit earlier this week in a bid to force Corzine to reveal planned cuts.
At 3 p.m., Republican Atlantic County freeholders held a news conference in the lobby of the Atlantic County Criminal Courts Complex in Mays Landing. They demanded Corzine "abandon his disastrous economic and budget policies that are hurting Atlantic County working families."
One request was to roll back recent toll hikes on the state's toll roads, including the Garden State Parkway and Atlantic City Expressway.
Atlantic County Freeholder Joseph McDevitt called for a rollback to 1990 levels, saying the toll hikes amount to a tax on people going to and from work and are an impediment to attracting customers to the region's tourism and casino industry.
But when Corzine arrived at the building after 4 p.m. to swear in two Democratic freeholders during the board's reorganization meeting, the Republican board members mainly thanked him for showing up.
McDevitt was the only Republican freeholder who kept some kind of pressure on Corzine, asking him to cut the state budget and shrink the size of state government.
When the meeting was over, Corzine said it would be "foolish" to roll back the toll hikes, saying the money will be used to finance needed transportation projects.
"We need to put people to work," he said.
In an earlier afternoon conference call, Corzine and fellow Democratic governors of Wisconsin, Massachusetts, New York and Ohio said they presented a plan for $1 trillion bailout package - which included $250 billion for education and $150 billion in middle class tax cuts - to President-elect Barack Obama's transition team as well as congressional leaders.
They said that level of federal aid is needed to deal with unprecedented budget shortfalls in 41 states and Washington, D.C., that the Center on Budget and Policy Priorities pegged at $42 billion for this fiscal year alone.
Obama's aides and congressional leaders have been talking about a package roughly half the size of the two-year plan the five governors proposed Friday.
Over two years, $1 trillion is equal to more than 3 percent of the gross domestic product, the U.S. economy's total output. A package of that size is likely to draw significant opposition from congressional Republicans and concern from moderate and conservative Democratic lawmakers who oppose large budget deficits.
In addition to the money for education and tax cuts, the governors said their plan includes $350 billion for road construction and other infrastructure projects and $250 billion for social service programs such as Medicaid.
Staff Writer Thomas Barlas and The Associated Press contributed to this report.
E-mail Derek Harper:
Highlights of the plan (Press of Atl. City 1-2-08)
Gov. Jon S. Corzine said he plans to
announce all $812 million in proposed budget cuts at noon Monday, but
offered some highlights Friday:
ˇ $116 million less in pension
contributions.
ˇ $90 million taken from discretionary spending.
ˇ $75 million from educational aid
for grade schools.
ˇ $24 million from raises for state employees (the governor is seeking to freeze state salaries until July 2010, saving another $130 million next fiscal year).
ˇ $19 million saved downscaling the number of voting machines retrofitted with paper ballots.
ˇ $15 million from discretionary and
extraordinary municipal aid
