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12-23-09 GSCS: Governor Corzine targets excess school surplus to replace state aid payments starting in Feb '10 - lame duck legislation anticipated
Politickernj.com, 12-22-09 late p.m.- 'GOVERNOR CORZINE ANNOUNCES NEARLY $1BILLION IN BUDGET CUTS AND SAVINGS' TRENTON "...The plan includes a proposal involving excess surplus balances that have been accumulated by school districts across the state. Under the proposal, which would require enactment of legislation, beginning in February 2010 districts would be required to use a portion of those excess surplus balances – totaling $260 million -- in place of state aid payments..."

For additional information, please visit Treasury’s website: www.state.nj.us/treasury/

'Corzine, Christie unveil plans to slash N.J. budget deficit' - nj.com - Statehouse Bureau Staff "...The governor did target school aid in a proposal to require school districts with excess surplus to use the money in place of state aid beginning in February. The plan, which requires legislative approval, would be the first time there have been cuts in direct aid in the middle of a school year..."

'Gov.-elect Chris Christie compiles plans to slash N.J. spending up to 25 percent'- nj.com -Statehouse Bureau

Politickernj.com, 12-22-09 late p.m.

GOVERNOR CORZINE ANNOUNCES NEARLY $1BILLION IN BUDGET CUTS AND SAVINGS FOR FY2010 BUDGET

GOVERNOR CORZINE ANNOUNCES NEARLY $1BILLION IN BUDGET CUTS AND SAVINGS FOR FY2010 BUDGET

TRENTON - Governor Jon S. Corzine today detailed actions to close a projected current-year budget gap of $924 million and fulfill his commitment to ensure that the state’s budget remains balanced as the new administration of Governor-Elect Chris Christie prepares to take office in January.

 “Like nearly every state in the country, New Jersey’s budget faces dual pressures from the severe national economic crisis – a fall-off in revenue and greater demand for safety net services and related needs such as Medicaid, the state food purchasing program, and the senior property tax freeze,” Governor Corzine said.  “We have worked hard over the last few weeks to meet this challenge and have identified $839 million in spending cuts across state government.”

Governor’s Corzine’s FY2010 budget, signed in June, included more than $15 billion in property tax relief.  Today’s plan maintains the Governor’s commitment to provide real property tax relief.

“Throughout this process we have made property tax relief a top priority, and our plan will ensure that all municipal aid that was budgeted this year will be delivered, including the CMPTRA payment that was frozen earlier this month,” Governor Corzine said.  “We also maintained critical funding for charity care and other health care needs, Human Services community providers, and aid to higher education.  Further, we increased the surplus by 10%, to $550 million, to give the incoming administration an additional cushion for the remainder of the fiscal year.”

The plan includes a proposal involving excess surplus balances that have been accumulated by school districts across the state.  Under the proposal, which would require enactment of legislation, beginning in February 2010 districts would be required to use a portion of those excess surplus balances – totaling $260 million -- in place of state aid payments.  Since these surplus balances represent funds in excess of those needed in districts’ operating budgets, substituting the excess surplus balances for state aid payments should have no impact on school district programs, school operations, or local property tax bills.

In addition to the $839 million in budget cuts, the plan recognizes additional federal Recovery Act payments to offset costs from the Earned Income Tax Credit program as well as revenues from the introduction of Powerball lottery in New Jersey and a tax compliance effort relating to the recent IRS program regarding income from previously undisclosed accounts held with the Swiss financial institution UBS.  These items together total $135 million.

 As a result of this plan, spending for fiscal year 2010 will now be $28.6 billion, which is $220 million less than the amount spent the year before Governor Corzine took office.

The plan does not include an expected $250-300 million in revenue that would be generated this fiscal year by an extension of the income tax surcharge for the wealthiest 1% of New Jerseyans – those making over $400,000 per year – that was enacted on a temporary basis in June and will sunset December 31, 2009.  That option would have mitigated a portion of the proposed reductions, including the school surplus action.  Given the incoming administration’s opposition, this extension is not included.

For additional information, please visit Treasury’s website:  www.state.nj.us/treasury/

Corzine, Christie unveil plans to slash N.J. budget deficit

By Statehouse Bureau Staff

December 22, 2009, 9:00PM

TRENTON -- Gov. Jon Corzine unveiled his final spending cuts today and Gov.-elect Chris Christie warned the state could run out of money by March unless even more programs and services disappear.

 

Hours after it was revealed that Christie’s transition team is compiling plans to slash state agency spending by as much as 25 percent next year, Corzine released $839 million of his own current-year cuts, including $260 million to schools. But the Democratic governor, who leaves office Jan. 19, also delivered a welcome surprise to towns and community arts groups by lifting a freeze on state aid that had them scrambling to pay their bills.

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That was a reversal for Corzine, who last week said he’d leave it up to Christie to decide what aid to dole out.

 

As he put the final stamp on a term swallowed by the recession, Corzine said he restored the aid to towns to keep his commitment to property tax relief — a main theme of his failed re-election campaign. He noted his final budget is now $28.6 billion, $220 million smaller than the year before he took office.

 

Christie, though, said he is still inheriting "a horrible bag of problems" as state revenue flows suffer.

 

"Understand this: We have in New Jersey a situation now where in March of this coming year — if projections remain where they are — we won’t have the money to meet payroll," Christie told reporters at Daytop Village, a drug-rehabilitation center in Mendham. "That’s the level of crisis we’re talking about here."

 

The Republican’s transition team has asked cabinet members and agency directors to identify possible cuts ranging from 15 percent to 25 percent — on top of the cuts imposed by Corzine — and is urging them to eliminate or consolidate programs, according to a Dec. 18 internal memo The Star-Ledger obtained today.


Full Star-Ledger coverage of the N.J. Governor-elect Chris Christie transition

Full Star-Ledger coverage of the N.J. budget

Read the Fiscal Year 2010 Extraordinary Aid Awards


But Democrats, who control both houses of the Legislature, already are beginning to balk at sharp cuts at the same time that Christie is planning to let extra income taxes on the state’s wealthiest people expire.

 

Corzine noted in his statement yesterday that the surcharge on people earning more than $400,000 would have raised $250 million to $300 million — offsetting many of his cuts — if it were extended until the end of the fiscal year June 30, but it was dropped at Christie’s request.

 

Assembly budget chairman Louis Greenwald (D-Camden) pointed out that Christie campaigned on an income tax cut for all New Jerseyans.

"The argument is that rolling back the tax increase for the wealthiest 1 percent will help stimulate the economy ... it doesn’t just work for 1 percent of the population," said Greenwald, who added he supports Corzine’s school aid proposal and Christie’s quest to shrink costs, despite two years of seemingly relentless cuts.

 

"There’s always more to be found, but there’s less meat on the bone, so the challenges will be greater," Greenwald said.

 

Corzine’s cuts spared higher education — and actually gave more money to "financially distressed" hospitals and towns facing "extreme circumstances" like Irvington and Perth Amboy.

 

The governor did target school aid in a proposal to require school districts with excess surplus to use the money in place of state aid beginning in February. The plan, which requires legislative approval, would be the first time there have been cuts in direct aid in the middle of a school year, according to the New Jersey School Boards Association.

 

"The problem is that if you don’t have much surplus left, and your boiler breaks or a child that needs specialized services moves in to the district, you need to find a way to pay for that," school boards spokesman Frank Belluscio said.

 

The cuts, which the governor ordered up in November, come as New Jersey deals with a nearly $1 billion hole in the current budget. The state has taken in $412 million less than expected in taxes, and it ended the last fiscal year with $162 million less than it anticipated.

Corzine said he would wipe out the remaining $100 million in contributions to the state pension fund and cut $479 million in other areas. At the same time, the state will pay for $350 million in other midyear spending on programs such as Medicaid, senior property tax relief and tuition grants, as well as release the aid to arts groups and others.

 

"What a great Christmas present," said Mark Hoebee, artistic director of the Paper Mill Playhouse in Millburn, which is waiting for $601,572. "I think it signals a real recognition of the economic impact that the arts have on our communities and our state."

 

Christie’s incoming chief of staff Rich Bagger, however, criticized the "last-minute discretionary spending" as "cause for significant concern."

 

The request by Christie’s team to find cuts between 15 percent and 25 percent for the upcoming budget largely mirrors one the Corzine administration sent last year that sought for 20 percent cuts.

 

Christie’s request urges agency heads to find savings without cutting salary accounts and to "maximize federal revenue," including shifting state employees into empty slots funded by the federal government.

 

The only new spending that is acceptable must "be shown to result in long-term savings" and fit within the cuts framework. Christie has also ruled out raising taxes or fees in his first budget due March 16.

 

Lisa Fleisher, Susan K. Livio, Chris Megerian and Peggy McGlone contributed to this report.

By Josh Margolin and Claire Heininger/Statehouse Bureau

 

 

Gov.-elect Chris Christie compiles plans to slash N.J. spending up to 25 percent

By Statehouse Bureau Staff

December 22, 2009, 11:11AM

TRENTON -- Gov.-elect Chris Christie and his transition aides are compiling plans to slash New Jersey state spending and state programs by as much as 25 percent in response to the continuous flow of dim financial news from the New Jersey Treasury Department, according to an internal document obtained by The Star-Ledger.

Even before he takes office next month, his team is looking for programs that can be eliminated entirely and calling on state administrators to find untapped federal funds to cover whatever they possibly can.

Absent strong action, revenues and expenditures will likely remain out of balance for the foreseeable future," according to a Dec. 18 memo from the state Office of Management and Budget to all cabinet members and agency directors.

The letter was dispatched "at the request of the governor-elect's transition team" and said the deadline for responses is Jan. 6, nearly two weeks before Christie is to be sworn in. Christie, a Republican, defeated Democratic Gov. Jon Corzine in last month's election and has been critical of Corzine's spending practices and budget forecasts.

The latest cuts, aimed at closing a budget gap Christie estimates at $9.5 billion, would come on top of cuts ordered by Corzine to close a $1 billion hole in the current $29 billion budget. The governor has yet to reveal those plans but expects to do so before Christmas. Corzine has also frozen "discretionary" state aid to municipalities and arts groups, forcing them to scramble to pay bills.

Unlike the federal government, state law requires Trenton's spending and revenue to be in balance; deficits are not allowed.


Full Star-Ledger coverage of the N.J. Governor-elect Chris Christie transition

Full Star-Ledger coverage of the N.J. budget



"In light of the state’s fiscal circumstances, all agencies are asked to submit reduction plans equal to 15 percent, 20 percent and 25 percent below their" budget projections for fiscal 2011, according to the memo. The cuts cannot include the recent rounds of reductions enacted by Corzine, but must, instead, be made on top of them -- and must include at least a five percent cut in spending on direct state services. "Across the board reductions are not to be submitted; instead consideration should be given to the elimination of ineffective programs or the consolidation of duplicative programs."

That reflects the "zero-based budgeting" approach Christie laid out during the campaign, to scorn from Democrats who said he lacked specifics. The memo also repeats Christie's vow not to raise taxes or fees, even if it means drastically shrinking the size and scope of government.

"The current situation requires the state to review its operations, to determine which functions should continue and which no longer are necessary," it says. "Revenue enhancements in place of reductions will not be considered at this time."

The document urges agency heads to find savings without cutting salary accounts and to "maximize federal revenue," including by shifting state employees into empty slots funded by the federal government. The only new spending that is acceptable must "be shown to result in long-term savings" and fit within the cuts framework.

For weeks, Christie has been laying the groundwork for extreme budget moves -- from resisting more funding for food pantries to warning that some of his favorite causes, like higher education, might not be spared the ax in his first year.

"We're broke," has become his recurring line.

On Monday, Christie was asked about the possibility of using millions in state revenue to keep the struggling New Jersey Sports and Exposition Authority afloat. "In the end, they’ve got to understand that, despite the season, I’m not in a giving mood," Christie said.

But Democrats -- who control both houses of the Legislature -- are already beginning to balk at sharp cuts at the same time that Christie is planning to let extra income taxes on the state's wealthiest people expire.

Christie will be sworn in Jan. 19 and is due to present his first budget to the Legislature on March 16.

By Josh Margolin and Claire Heininger

 


Garden State Coalition of Schools
160 W. State Street, Trenton New Jersey 08608
609-394-2828