February 17, 2009

NJ's deficit up another $1.5B; furloughs planned

By MICHAEL SYMONS
GANNETT STATE BUREAU

New Jersey's budget deficit has grown by an additional $1.5 billion in the last month to $3.6 billion this fiscal year, Gov. Jon S. Corzine announced today.

In response, state officials are planning two unpaid furlough days for state employees, one each in May and June, saving $35 million. State Treasurer David Rousseau said the furloughs can be done without the consent of public worker unions, which have already objected to a proposed salary freeze.

In all, Corzine announced there will be an additional $472 million in budget cuts, $550 million in additional funds from the federal stimulus bill and $335 million in extra funds from state surpluses and trust funds.

The state also plans a tax amnesty program, which will need legislative approval, that would bring the state an additional $100 million.

This year's deficit now exceeds 10 percent of the original budget adopted last summer. It includes a $2.8 billion shortfall in revenue, a $600 million increase in spending -- including a $270 million deposit into the depleted unemployment fund, to avoid an automatic tax hike on businesses -- and $135 million extra to repay debt.

"That comes with difficult choices and real pain in a lot of places," Corzine said.

Revenue in the current budget is forecast at $29.5 billion. Collections for the upcoming fiscal year, beginning in July, are now $28.5 billion, meaning another group of budget cuts can be expected in Corzine's March 10 budget speech.

With budget crisis worsening, Corzine calls for two-day state worker furlough

Star Ledger: Posted February 17, 2009 20:26PM

Faced with a deepening budget crisis, Gov. Jon Corzine today called for a two-day furlough of state workers and warned of more furloughs or layoffs if unions do not accept a wage freeze starting in July.

"Wage freezes and furloughs are ways to avoid layoffs," said Corzine. "We need to have cooperation in this area. We intend to have a fair sharing of the costs."

AP Photo/Mel EvansNew Jersey Gov. Jon S. Corzine emphasizes a point as he talks today in Trenton about how he plans to keep New Jersey in the black.

The proposed furloughs are one of a series of steps the administration laid out today to close the widening hole in state finances.

The governor said the current budget, which runs through June 30, has been battered by declining tax revenues and now has an estimated revenue shortfall of $2.8 billion, up from $2.1 billion projected last month. The budget originally passed at $32.9 billion.

"We are flatlining," Corzine said.

Unions and their allies vowed to fight the furloughs and wage freeze, saying Corzine is violating their contract and balancing the budget on the backs of the middle class.

"The actual dollars that will be saved by furloughing state workers will provide little relief to the state -- but will cause a tremendous hardship for our members who live paycheck to paycheck and whose wages go directly back into the economy," said Hetty Rosenstein, state director for the Communications Workers of America, the largest state union representing about 42,000 employees.

Corzine said the state would save $35 million if workers took two unpaid days off this spring.

In addition to cutting into tax revenues, the recession has also forced the state to spend an extra $800 million to cover a variety of social programs -- including $270 million to the state's Unemployment Insurance Trust Fund to avoid a $350 million tax hike on businesses, Corzine said.

The unemployment fund will also get more than $200 million from the federal stimulus package signed by President Obama today. Another $850 million of the stimulus money will help balance the current budget.

Corzine also proposed a $100 million tax amnesty program -- which would forgive penalties if tax cheats come froward -- and $472 million in new cuts.

The cuts -- which come on top of $812 million he proposed slicing from the budget last month -- include $168 million of the state's pension contribution, $13.2 million in stem cell research grants, and $882,000 from the Election Law Enforcement Commission. Some will require approval by the Legislature, where Democratic leaders today pledged cooperation.

The latest round of cuts includes $7 million in "savings" found in Early Intervention, a therapy program for children born with developmental disabilities. That is in addition to the $11 million Corzine deducted in January.

The state also trimmed an additonal $3.6 million from the account dedicated to moving developmentally disabled adults off the 8,000-person waiting list for community housing. The state cut $4.5 million in January from what was a $12.5 million fund.

"The governor said he would protect the most vulnerable, but that is not the case when you look at these numbers," said Lowell Arye, executive director for the Alliance for the Betterment of Citizens with Disabilities.

Corzine said his priorities remain preserving as much funding as possible for education, public safety and the most vulnerable, but warned that next year's budget picture could be even worse.

The governor said state revenues are estimated at $28.5 billion for the proposed budget he'll unveil March 10 -- comparable to 2006. He declined to say how much stimulus money the state will be able to use on that budget.

The administration also declined to say how much it hoped to save by imposing a wage freeze on state workers for the budget year starting in July.

Sen. Bill Baroni (R-Mercer), who represents thousands of state workers, said Corzine is wrong to seek wage freezes and furloughs.

"We're all in this together," Baroni said, but "until the governor can show them he's wrung every penny of wasteful spending out of the state budget, we shouldn't be attacking state employees."

Business leaders, meanwhile, praised Corzine's payment into an unemployment fund that is being drained by rising joblessness, averting a tax hike on business.

"Employers are struggling to hang on to the employees they have now," said Philip Kirschner, president of the New Jersey Business & Industry Association. "I believe that by avoiding this tax increase, the governor is saving jobs."

Staff writers Chris Megerian, Josh Margolin and Susan K. Livio contributed to this report