State lawmakers yesterday moved to relax strict spending caps they imposed on local school boards last June, conceding that legislation they adopted hastily just six months ago was flawed.

"It's the hallmark of this house that we listen, we hear and we act," said Assemblyman Joseph Cryan (D-Union), one of seven Assembly sponsors of legislation (A-3680) that would retool spending limits that lawmakers imposed on school districts during state budget debates last June.

Republican members of the Assembly Education Committee were less generous in their assessment of the Assembly's actions to revamp the spending limits that they passed six months earlier.

"A terrible idea when it started," said Assemblyman Bill Baroni (R-Mercer). "It's still not perfect."

Advocates for local school officials want to get the spending limit changes passed by February, when local school boards are scheduled to begin assembling their new budget proposals.

Under limits lawmakers approved in June, school boards would have to spend down much of their budget surpluses, and would be held to tight limits on budget increases regardless of increases in enrollment, the opening of new schools or hikes in nonlocal expenses such as insurance premiums and utilities.

Many of the same advocates who supported the relief bill yesterday had argued against the original spending limits when they first swept to approval in the waning days of the June legislative session. But lawmakers, who presented the limits as a trade-off to win support for an income tax hike on residents earning more than $500,000, adopted the bill with little public discussion, just three days after it had been drafted and introduced.

The new bill would allow school districts to claim credits against their budget caps for expenses such as utilities, insurance, security and the costs of busing offered to students who would otherwise have to walk along dangerous roadways to reach school. The new bill also raises the amount of surplus school districts can retain after this school year.

"This strikes a balance to ensure our school kids get what they need to get the best education, and the need to ensure our taxpayers don't get taxed out of their homes," said Assemblywoman Linda Greenstein (D-Mercer), another sponsor of the new bill.

Committee members endorsed the bill 7-0.

Only one lawmaker, Assemblyman Robert Morgan (D-Monmouth) declined to endorse the bill. Morgan abstained, saying he was still concerned about spending at the local school level.

"Senior citizens and those on fixed incomes have no cap on their utility costs," he said. "They just have ever increasing property taxes."

Backers of the bill now face the challenge of winning a full Assembly vote on the legislation, and of finding a sponsor for the measure in the Senate. They must secure passage before mid-February, when the state Department of Education typically distributes the computer software used to assemble local school budget.

"No question timing is of the essence," said Johon Donahue, lobbyist for the New Jersey Association of School Business Officials. "It's going to be tough."

Dunstan McNichol covers state government issues. He can be reached at dmcnichol@starledger.com or (609) 989-0341.

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