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GSCS was at the Gov's Summit. The program was a straightforward, rather personal dialogue with Governor Corzine, his cabinet and fiscal consultants as billed:"This summit seeks to draw together New Jersey’s leaders, policy makers and experts in an effort to foster discussion, dialogue, and understanding about the state’s multibillion-dollar budget crisis." Factual presentations set a grim table re the state's fiscal stability and practical availability of funding for FY07 is clearly fragile. The need for additional revenue was the unspoken elephant in the room. GSCS met with Commissioner of Education Lucille Davy later in the day to discuss future options for school support in this context. While the Corzine administration is now into its 49th day in its new role, regular operating school districts are somewhere around their 2000th day of no formula funding with no predictable funding to build their own budgets that must support growing enrollments. Local taxes will continue to have to pay for cost drivers beyond local control [such as special education, health benefits, utilities]. Property taxes will continue to increase while quality education remains subject to being leveled down. A difficult mix. Meanwhile, school board members from around the state visited in with Legislators and the Governor in Trenton during the day's session, hearing a similar message. The Governor continues public outreach with 3 regional hearings on the budget, starting this evening. See EMAILNET 3-3-06 below.
Budget gap's likely result: Higher taxes
Corzine levels with public at first of week's summits
Posted by the Asbury Park Press on 03/7/06
BY JONATHAN TAMARI
Although no one in the administration would say it directly, Corzine's team gave its most clear indications yet that tax hikes might be needed to make up what they estimate as a $4.5 billion deficit. Corzine said budget cuts alone would almost certainly not go far enough to close the gap.
"There's going to be serious cuts, it's going to be real, but I think anybody that's reasonable would have to say . . . the probability of that being enough to close that gap on any structural basis is not great," Corzine said.
Michael Horn, state treasurer under former Gov. Thomas H. Kean, helped lay out the financial problems facing the state Monday and said tax increases seem unavoidable.
"The problem is huge, the bills are coming due," Horn told a crowd of more than 300 economists and business leaders. "Tax increases, whether they are permanent or temporary, have to be done."
Corzine is scheduled to lay out his budget proposal March 21. Lawmakers have until July 1 to adopt a budget.
Corzine indicated that he expects to shrink the state work force and may back off of a pledge to fully fund the state's pension obligations.
He said a partial pension payment along the lines of past administrations would cost $350 million extra this year, while a full payment would increase state costs by about $1 billion. "We haven't decided where we're going to cut that," Corzine said.
Corzine also said he expects to see pension reforms to crack down on abuses that allow some government workers to boost their benefits.
While many people have called for trimming government fat, Corzine's aides said much of state spending goes back to residents in the form of property tax relief or aid to higher education. Cutting those areas would likely only increase other taxes and fees, they said.
In laying out the budget deficit, administration staff pointed to growing pension costs, debt payments, Corzine's property-tax relief plan and fixed expenses that get larger each year. At the same time, they said the state has increased spending, sometimes for valuable programs, without finding ways to pay for them.
"For years, we've been getting bills and putting them in the bottom drawer," Corzine said. "This is our day of reckoning."
Later in the day, Corzine's economic-growth czar, Gary Rose, led a discussion about how to improve the state's economy, a move Corzine said would ultimately be the best way to balance the state budget.
Corzine will take to the road this week to explain the choices he said the state faces, starting with a 7 p.m. event tonight at
"The public understands that life isn't free," Corzine said, calling for "an honest discussion."
Corzine also said he plans to re-examine a stadium deal for the Giants and Jets at the Meadowlands.
"We need to make sure that the interests of the public are served as well as what I think are a worthy objective of having the Giants and Jets here," Corzine said.
He said he would like to see the stadium useful year-round — likely meaning it would need a roof — so the state could host national sports and political conventions. Corzine also raised concerns about repaying debt on old Meadowlands projects.
In a memorandum of understanding signed last September, the Giants and Jets agreed to jointly finance the $1 billion stadium, expected to open for the 2010 season and seat about 81,000.
The state doesn't have a contract with the teams, Corzine noted.
Alice McGillion, a spokeswoman for New Meadowlands Stadium Corp., a company that represents the team owners, said the possibility of putting a roof on the arena is not "a feasible additional investment."
The Associated Press contributed to this story. Jon Tamari: (609) 984-4343 or jtamari@app.com
School officials told of the hard lessons in the next budget
Tuesday, March 07, 2006
BY TOM HESTER
Star-Ledger Staff
In the face of a $4.5billion budget deficit, Gov. Jon Corzine yesterday told school officials they shouldn't expect any increase in state aid and that he would try to keep it at about the same level as in the current spending plan.
"We all know that our state faces serious financial challenges that must be addressed -- and addressed now," Corzine told more than 100 superintendents, board members and other school officials at the Statehouse. "Passing our problems on to the next generation is not an option. We must find ways to do more with less, and we will have to live with cuts in many of our programs."
The current state budget sends more than $9.5billion to public schools. Corzine said he would attempt to "hold harmless" -- or not reduce -- state aid for education as he and lawmakers shape the budget for the fiscal year that begins July 1. However, the governor said the budget gap is a major obstacle to maintaining school aid and that all areas of state spending must be addressed.
"This will require fiscal responsibility from all of us," he said. "But we are not going to balance this budget on the backs of our children."
School board members and school superintendents at the Statehouse to lobby legislators on education issues said they are willing to accept level funding but stressed that there have been no state aid increases for six years.
They said that if they get the same state aid, many districts may still order layoffs and program cutbacks because enrollments are growing and there are increased costs for construction, salaries and benefits.
"I hope his proposed budget keeps us harmless (with no reduction in aid) and the Legislature complies with that," said School Boards Association president Edwina Lee. "The hard conversation will be about cuts elsewhere. Cuts in state aid to local budgets would raise property taxes."
"It would be nice if he could do that (maintain level aid)," said Bedminster Superintendent Andrew Rinko, "but the jury is still out and we have a long way to go before that comes to fruition."
Corzine warns of fiscal disaster
Bluntly tells officials to prepare for the worst
Tuesday, March 07, 2006
By JOE DONOHUE
Newhouse News Service
In his starkest remarks yet about the state's bleak financial outlook, Gov. Jon Corzine said yesterday he will have to impose deep cuts and possibly raise taxes to close a projected multibillion-dollar budget gap. "
Corzine will recommend a new state budget in two weeks. He said during last year's campaign that tax increases would be a "last resort." But yesterday he acknowledged he doubts that cuts alone can overcome a shortfall that his advisers now project at $4.5 billion.
"There are real cuts coming, and if we're not able to do it all with cuts, we'll fill that gap,"said the governor.
Former state Treasurer Michael Horn, a Republican and a member of Corzine's transition team, said he thinks tax increases are inevitable. "I think enhanced revenues through tax increases, whether they be permanent or temporary, will have to be done," Horn told the gathering.
Some of those attending the five-hour session said they were stunned by the governor's candor.
"Quite frankly, I've got knots in my stomach right now because it's abundantly clear to me there's going have to be some hard choices," said William Dressel, executive director of the New Jersey State League of Municipalities. "I am very concerned that municipal aid could be on the chopping block."
James Hughes, a
"This is unprecedented and it's probably a very, very wise move," said Hughes. "Because the problems are going to involve an awful lot of pain and you might as well be out in front and prepare people for what's coming."
In addition to yesterday's meeting, Corzine has slated town meetings with the public about the budget crisis tonight at
Corzine said that after more than two decades at the investment firm Goldman Sachs, he understands the need to be accountable to "stakeholders" -- in this case, the general public.
"There needs to be a dialogue so that people understand that these choices we talk about are not free. They come with real costs," the governor said.
"This year's budget is in trouble, plain and simple. You could argue about what the size of that trouble is. But it's real. We've got a huge hole to fill," Corzine said. He added that he believes he won election because people expect a "business focus on the problems we have as a state. I intend to deliver on that."
While Corzine deftly avoided saying the "t-word" directly, his transition team weeks ago recommended a temporary surtax, possibly on state income taxes, and an extension of the sales tax to currently untaxed services as possible solutions.
On a recent radio show, Corzine raised the possibility of a gross receipts tax like one used on businesses in
Former state Treasurer Clifford Goldman, a Democrat, said Corzine is a victim of too many years when state officials of both parties spent too much, then delayed dealing with the full cost through fiscal tricks, such as borrowing and raiding the unemployment trust fund.
Just between 2002 and this year, officials raised about $16 billion through such gimmicks, Goldman said.
Court edicts also have made the state's budget problem more difficult. On the one hand, the state Supreme Court ordered billions in new spending for poor school districts. But it also has banned the state from using new debt to balance the budget.
Goldman said spending will consistently exceed revenue growth unless Corzine takes painful steps now to bridge the gap.
Corzine said a crackdown on waste, fraud and abuse will only go so far. He estimated, for example, that it might reduce Medicaid costs by $50 million next year. But he said the efforts will not be anywhere near enough to close the gap -- or avoid tax increases. "It is not going to be a fundamental solution to our budget problems," he said.
Added new Treasurer Bradley Abelow: "We don't have great choices. There is no choice but to reduce the growth of state spending."
While the news presented at
Panel backs
By ANNA NGUYEN
Courier-Post Staff
The state Senate Budget and Appropriations Committee on Monday passed a bill that would provide the
The measure -- sponsored by Sen. Diane Allen,
The bill now goes to the full Senate, which could vote on it as early as next Monday, Allen said.
Assemblymen Herb Conaway, D-Burlington City, and Jack Conners, D-Pennsauken, introduced the bill in the state Assembly but a committee hearing date has not been set, said Rick McKelvey, a spokesman for the lawmakers.
Interim Superintendent Melindo Persi also presented the Senate committee with several scenarios regarding the district's 2006-07 budget. The district would like to include the loan in the budget, along with $800,000 reinstated from the previous year's defeated budget and another $721,000 saved through a sick-leave incentive plan for staff.
With those parameters, the district would ask residents to support a $33.8 million budget.
A resident with a home assessed at the average of $98,000 would pay $3,015 in annual school taxes, a $1,044 increase from last year.
The school board will approve the final budget figures at a special meeting Thursday, and Persi emphasized the tax impact could be lower by then.
"We're still massaging the numbers," he said.
Sen. Shirley Turner, D-Lawrence,
Although it is designed for the
The bill "will allow the Commissioner of Education to come in to correct the situation and keep the district running," Bryant said. "This is a practical solution to a very tragic problem."
Under the bill, the district would repay the loan over a 10-year period.
The state education commissioner would appoint a monitor and additional staff to oversee the district's finances, including budget allocations, approval of purchase orders and payment of bills.
The monitor also will have the ability to hire, promote and terminate employees, and the authority to overturn a chief school administrator's action or a school board vote.
The district would assume all costs associated with the monitor.
The district only will need to pay interest on the loan if the state Department of the Education has not appointed a monitor within 90 days of the bill's approval.
"The people of
Persi, school board President Sarah Holley and school board Vice President Anthony Clemons testified Monday in support of the bill.
So did township residents Roslyn Bradford and Robert Nock.
"We need to keep our schools open and we need to make sure our kids aren't victims next year," Nock said. "The bottom line is that we have to take care of it ourselves."
Persi reiterated the district's efforts to control the budget this year and its plan to close three of its schools next year.
"The district faces an unprecedented crisis. The bill is critical for the operation of the district," Persi said.
During the hearing, several Senate committee members questioned why the school board has not pursued criminal prosecution against former business administrator William Greene and Superintendent Alonzo Kittrels.
Greene resigned last May over mistakes he made in financial reports. The board suspended Kittrels in July, claiming he misled members about the district's financial status.
Kittrels has denied any wrongdoing; Greene has not commented publicly about the matter.
Holley said she plans to look into the committee's suggestion.
"I'm elated," Holley said after the committee passed the bill. "I think it's a good step moving forward to put us back on track."
Reach Anna Nguyen at (856) 317-7828 or anguyen@courierpostonline.com
