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7-9&10-06 State Budget news articles -wrap up & news analyses

How a budget dispute became a brawl

Gaffes, egos and stubbornness helped fuel unprecedented crisis

Sunday, July 09, 2006


Star-Ledger Staff

The Delaware River rose and rose, spilling into Trenton, cascading across roads, nipping at the lower level of the Statehouse. The National Weather Service said it could be a big one, a 50-year flood. In his wood-paneled office, Gov. Jon Corzine declared a state of emergency.

It was a fitting backdrop to the events in the Statehouse, for on that wet Wednesday, June 28, New Jersey's government was sinking into a deep and unprecedented crisis. The state constitution required the approval of a balanced budget by midnight on June 30. Without one, New Jersey no longer could spend money.

But Corzine and his splintered Democratic Party were nowhere near a budget agreement. The stalemate would lead, three days after the flood's onset, to the first government shutdown in state history. No lottery. No new driver's licenses. No courts. No state parks or beaches. No work for 45,000 state employees. For a time, no horse racing and no casinos.

Corzine lifted the shutdown order yesterday morning, one costly and tumultuous week after it went into effect. In a compromise with the Assembly Democrats who opposed him, Corzine won his penny-per-dollar increase in the sales tax. The Assembly members ensured that half of the new revenue would be earmarked for property tax relief.

But if the settlement sounds simple enough, the path to it was not. Interviews with those involved in the fight paint a disturbing portrait of how a disagreement on policy became a perfect storm, fed by misunderstandings, mistrust, behind-the-scenes maneuvering and hardheaded stands on principle.

To that volatile mixture add two strong-willed men, both rookies at their jobs: Corzine and Assembly Speaker Joseph Roberts (D-Camden). Neither wanted to be pushed around by the other.

"It was a blood bath," Senate Majority Leader Bernard Kenny (D-Hudson) said yesterday after the budget had passed the Legislature. "Careers were at stake. It was war. It reminded me of one of those local elections where you feel that your whole self-worth is endangered if you lose. People are going for your jugular. They are going to destroy you."

Those involved in the struggle say mistakes were made all around.

Roberts is faulted for taking a rigid stand against the governor, then ultimately accepting a deal similar to the one he rejected before the shutdown.

Democrats in the Assembly believe some administration officials were condescending and arrogant, acting as if the lawmakers had never before put together a budget.

They also found Corzine's approach to the process autocratic, confirming their assumptions about a man who served as a chief executive on Wall Street. Some complained they were treated like "junior traders."

Senate President Richard Codey, who helped shepherd Corzine through the crisis, said he was impressed by the governor's attention to detail on budget matters but conceded Corzine wasn't as inclusive as he should have been.

"Unfortunately, he didn't study the politics of the budget at all," Codey said. "He should have realized early on that it's not Goldman Sachs. You can't do a budget by yourself. Other people have opinions and values. There's nothing wrong with that. The more ideas you have, the better off you are."

But for all their complaints about Corzine, his opponents appeared to underestimate him.

"Nobody thought the governor was as strong-willed as he is," said Assemblyman Albio Sires (D-Hudson), a former Assembly speaker. "I don't think people measured the intensity. They never thought the governor would go through with (the shutdown)."

Sires was less surprised.

"That guy made $500 million among the biggest sharks in the world on Wall Street," Sires said. "He's no slouch."


Throughout his self-financed campaign for governor, Corzine pledged to fix New Jersey's financial problems, which he said had been spurred, in part, by years of copious borrowing and budget "gimmicks."

When it came time to craft his own budget, Corzine faced a $4.5 billion deficit. Part of the solution he proposed in his March 1 spending plan was an increase in the sales tax from 6 percent to 7 percent, which would raise $1.1 billion.

Democrats in the Assembly, where Election Day comes every two years, worried about making their constituents dig deeper while living in a state that already carried one of the nation's highest tax burdens. Gov. Jim Florio had raised taxes by $2.8 billion in 1990, and voters responded by eviscerating the Democratic majority.

Those opposed to Corzine's sales tax hike didn't want to see an encore. Their stance would harden in June, when a poll showed voters opposed a sales tax increase by a 2-1 margin.

Assembly Speaker Roberts, a veteran lawmaker and longtime proponent of property tax reform, also thought it was the wrong fight at the wrong time. The public had long been in a froth about spiraling property taxes, and if a sales tax hike were to be enacted at all, Roberts wanted every cent of it to go toward that problem.

On June 16, Roberts and other leaders met with Corzine in the governor's Statehouse office. Their message was blunt: The sales tax increase was dead in the Legislature's lower house.

Corzine held firm, lobbying privately with Assembly members and warning publicly that failure to increase the sales tax would result in "draconian" cuts elsewhere.

By June 28, as the rain-engorged Delaware began flooding the Statehouse garage, the crisis was at full throttle and quickly approaching the surreal.

In a fourth-floor committee room, Louis Greenwald (D-Camden), the chairman of the Assembly Budget Committee, dispatched the burly sergeant-at-arms to fetch the state treasurer, Bradley Abelow. The night before, Corzine had threatened to veto any budget that didn't include a sales tax increase, and a furious Greenwald wanted an explanation.

An equally furious Assemblyman Joseph Cryan (D-Union), a Corzine ally, poked Greenwald in the chest and shouted profanities at him for orchestrating the political theater.

Abelow, on Corzine's orders, refused to show.

Corzine had put in place contingency plans for a shutdown, and as he toured a flooded neighborhood in Trenton, he warned he would act on them unless "people come to their senses."

In an interview later, Corzine said he didn't want to order a shutdown, nor did he anticipate he would have to. But he said he was adamant about following the law, and the law in New Jersey was clear: no budget, no authorization to spend.

"The rule of law actually means something," he said. "Constitutions were written ... for a reason, and they lay down the basic framework in which we make decisions. They're the rules for the game, and they're not that hard to read in New Jersey."

But to Corzine, the crisis had larger ramifications. In a state notorious for its political bosses and backroom deals, Corzine was making a point.

"I do believe we are in the midst -- actually in the early stages -- of change that will end up making the state government a more credible circle of people," he said. "For too long we have allowed short-run considerations and individual preferences and special interests ... to dictate what policies should be.

"There's a recognition that the public has had it with this," he added. "You're seeing one incarnation in that conflict. It's not about individuals. It's about how business is done. It's an issue of change."

As time slipped away, rhetoric escalated. On that Friday, the constitutional deadline for a balanced budget, Roberts thundered that Corzine was "trying to strong-arm a tax increase upon the citizens of this state."

At 10 p.m., two hours before the deadline, the Assembly still had not produced a budget. Instead, Roberts offered another angry press conference.

"Governor, we have no interest in having a gun placed to our head and passing a sales tax for a state budget that doesn't need it," he said.

Corzine stayed at his desk until the midnight deadline before heading to Drumthwacket, the governor's mansion in Princeton, for a few hours of sleep.


At 9:40 a.m. on Saturday, July 1, Corzine signed an executive order calling for the "'orderly" shutdown of nonessential state operations.

With the shutdown order, 45,000 state workers were immediately furloughed. Most road construction projects came to a halt. Motor Vehicle Commission offices closed. New Jersey's two state-run horse-racing tracks, Monmouth Park and the Meadowlands, went dark at 6 p.m. The lottery stopped selling tickets two hours later.

The order included Atlantic City's 12 casinos because state-employed casino inspectors were not deemed "essential." The matter ended up in court. Administration officials said that was fine with Corzine, who was in no rush to see the casinos close. State lawyers asked an appellate division judge for 24 hours to submit legal papers.

The maneuver was part of the strategy worked out between Corzine and Codey, both well aware of the financial impact of the shutdown. The casinos produced $1.3 million a day in gaming revenue for the state. Over the busy holiday weekend, they were projected to produce up to $7 million.

"The only issue was fudging it so (the casinos) wouldn't be closed until after July 4th," Codey said.

Corzine knew Roberts and his allies were "dug in," Codey said, but he also knew he could bank on the pressure created by the shutdown. Closing the casinos, especially, could be catastrophic to the Assembly Democrats, many of whom represented South Jersey districts.

"With each day, it would be harder for them to survive the onslaught," Codey said.

In essence, Corzine was playing political chicken.

While administration officials felt the state could not withstand a shutdown for more than two weeks, they say Corzine was betting the Assembly Democrats would fear voter reaction to the shutdown more than they feared the sales tax.

Roberts spent most of that Saturday in his Statehouse office, a bottle of Tums atop his desk. He called the shutdown order "enormously unfair" to state workers.

He spoke to Corzine only briefly, to arrange a meeting for the next day.


For four hours Sunday, Assembly leaders huddled with Codey and Corzine in the governor's mansion. And for four hours, neither side budged.

Roberts and his allies proposed a broad mix of new taxes to replace the sales tax increase. Tom Shea, Corzine's chief of staff, said the governor rejected the ideas because they had not been vetted with the public.

Codey emerged from Drumthwacket pessimistic.

"I don't know the recipe," he said. "Simple as that."

Looking back, Codey said Corzine's reluctance to firmly reject proposals he didn't like proved an obstacle.

"I would say, 'Jon, say yes or no,'" Codey said. "I would say to him, 'You're just encouraging them to put things on the table that you know you're going to reject.'"

Assembly members shared that assessment, according to a lawmaker active in the negotiations. The lawmaker, who asked his name be withheld to avoid additional difficulties with the governor, said Corzine liked to say yes but seldom offered a flat-out no.

"He was wishy-washy," the lawmaker said.


The din of bullhorns echoed outside the Statehouse as the shutdown entered its third day. State employees were rallying, demanding an end to the impasse. Their union leaders were calling working conditions chaotic, with too few people to get anything done.

The unions were squarely in Corzine's corner, largely because his budget included $1.5 billion for the state employees' pension fund, which had been raided repeatedly by previous administrations to plug budget holes.

The unions demanded Roberts acquiesce, but they might as well have been whistling in the wind.

After a 30-minute meeting with Corzine, Roberts emerged from the governor's office frustrated with what he called Corzine's "singular focus" on the sales tax.

"It is almost as if his position is, 'If there is no sales tax, there is no state of New Jersey,'" Roberts said.

Corzine countered by signing an executive order requiring lawmakers to appear at the Statehouse the next day, July 4th, for a historic special joint session that would continue until a budget was in place.

He also pushed for a compromise offer put up by Codey weeks earlier. Under that deal, the sales tax would increase, but half of the revenue would be dedicated to property tax relief -- essentially the same compromise that would end the deadlock days later. Corzine embraced the Codey plan. Roberts rejected it.

To Kenny, the Senate majority leader, the unfolding events seemed "unreal."

"People are starting to become concerned," he said. "People are getting afraid."

For lawmakers from South Jersey, it would get even scarier.

Late Monday night, a single justice of the state Supreme Court backed the administration's view that casino inspectors were nonessential state workers. Barring a last-minute settlement, the casinos would close Wednesday, July 5. It would be the first time they were not open since 1992, when gambling in Atlantic City was expanded to 24 hours a day.


Standing before a packed chamber at the Statehouse, Corzine spoke for 20 minutes Tuesday morning. The situation, he said, had gone from "unfortunate to unacceptable." People were being hurt, he said.

The dramatic Independence Day speech dominated newscasts and headlines, but the real fireworks would come later, out of public view.

In the Assembly majority's caucus room, in the Statehouse basement, Roberts asked his members to raise their hands if they supported Corzine's sales tax hike. Only 15 of the 49 Democrats did.

For the administration, the show of hands looked like a serious setback. For weeks, Corzine's allies had been counting on 24 to 30 votes. Clearly, there had been defections.

"It was a critical time," Codey said. "If you're an Assembly member, you're thinking, 'Maybe I'm on the wrong train here.'"

Several lawmakers from Bergen and Passaic counties were among those who bolted.

An emboldened Roberts reiterated his opposition to the sales tax increase, declaring it "dead."

The momentum for the Assembly quickly dissipated, however, after what Codey described as a tactical error.

Assemblyman Lou Manzo (D-Hudson) floated a proposal to replace the sales tax increase, in part, with an income tax hike on families earning between $200,000 and $500,000.

"That turned out to be a disaster (for the Assembly)," Codey said.

The Corzine administration quickly ran numbers that showed just 10 percent of the money raised from such a tax would come from South Jersey, while 90 percent would come from the North.

Codey worked the phones, calling North Jersey lawmakers, saying it would hit their constituents hardest.

"I said, 'Do you want an income tax hike in Bergen County in an election year? I don't think so,'" Codey said. Bergen County lawmakers said the proposal swung them firmly back into Corzine's camp.

Roberts didn't know it yet, but the momentum was beginning to swing against him.


In Atlantic City's casinos, the most unusual sound of all -- silence -- supplanted the humming of slot machines just before 8 a.m. As the shutdown entered its fifth day, state parks, beaches and historic sites also closed, but it was the casinos that would cause the most economic and political pain.

The gambling halls employed 36,000 people, and 20,000 were immediately out of work. Casino executives, urged on in personal phone calls by Corzine and Codey, in turn worked the phones themselves, pressuring South Jersey lawmakers aligned with Roberts.

"People were reaching out, obviously," state Sen. William Gormley (R-Atlantic) said. "The governor was very attentive to that. Clearly the calls were going out, and they were supporting the governor."

That night, Corzine made a last-ditch effort for a compromise at another meeting with Roberts and Codey. Roberts, in an interview yesterday, said Corzine made the sales tax increase more attractive by pledging to earmark half the revenues for property tax reform for a decade instead of a single year. Corzine and Codey dispute that, saying the offer had always been geared toward the long term.

If Roberts was intrigued, he didn't show it.

At a press conference afterward, he vowed to introduce an alternate budget that did not include Corzine's sales tax increase. Later that night, he did, but he wouldn't keep the spotlight for long.


Corzine has never been called a master orator. He sometimes drones on, lost in the particulars of policy and financial minutia. But as he stood before the Legislature for a third day on Thursday, July 6, his emotions did the talking.

He chastised the Assembly Budget Committee for failing to take action. He said the state was drowning "in a recurring sea of red ink." And he outlined for lawmakers what he had told Roberts the night before -- that half the revenue from a sales tax increase would be dedicated to property tax relief for a decade.

In his most dramatic moment, he pounded the podium and declared, his voice booming, "We can do this today. Today! Today!"

Weary lawmakers, suddenly energized, jumped to their feet to applaud.

"When I saw people start to stand up to give the governor a standing ovation, my instinct told me it was over right then and there," said Sires, the Hudson County assemblyman, who had sided with Roberts in the fight. "I knew we had lost the Assembly. It was time to cut a deal."

Sires said he sought out Roberts and bluntly told him it was over.

Roberts already had lost the support of another key ally, Assembly Speaker Pro Tempore Wilfredo Caraballo (D-Essex), that morning. Caraballo defected after receiving a visit from Essex County Executive Joseph DiVincenzo, a longtime friend and ally.

"We talked," DiVincenzo said. "Then he came in to see the governor, by himself. Freddy made a commitment to the governor that he was going to support the governor's plan."

In the hours that followed Corzine's speech, lawmakers joined Corzine's side one by one.

When Roberts addressed the caucus, "it was a concession speech," said Assemblyman Upendra Chivukula (D-Somerset).

At noon, Corzine walked into Roberts' office. Together, they worked out the details in time for the evening news.


The slots are singing again in Atlantic City. State parks and beaches will reopen today. And tomorrow, state employees will report to work. It is unlikely, however, voters will quickly forget the shutdown or the intraparty fight that led to it.

Casino workers lost wages and tips. Vacationers had their plans scuttled. Convenience stores suffered with the cutoff of lottery tickets. Over and over during the week, New Jerseyans affected by the shutdown asked whether it had to happen.

Though Corzine is widely viewed as the winner in the battle, the victory didn't come without serious costs, and Republicans are certain to use the shutdown and the sales tax hike as a campaign issue when they seek to retake the Legislature next year.

In an interview at the Statehouse last night, Corzine acknowledged his popularity will suffer. It concerns him, but not very much.

"It's not like the end of the world to me," he said. "I don't mean it because I'm a rich guy. I'm not going to define myself only in life by whether I get re-elected, and I'm just not going to make decisions in that context. I'm not sitting around quivering in my boots because my poll numbers are going to go down."

Indeed, more tumult could be on the way. Corzine has called the budget fight the first step in his effort to strip Trenton of special interests and backroom politics. He plans to also take on property tax reform and ethics reform.

Kenny, the Senate majority leader, said he hopes the party first gets a chance to heal.

"I wish we had a month off for everybody to just calm down," he said. "We can't carry this tumult into this next opportunity to do state business."

Roberts, badly bruised, said the conflict "took a real toll on everyone involved and certainly put a lot of people who depend on state government in harm's way." But he said he believes the Assembly did the right thing.

"If you look at where we started and where we ended up," he said, "it's clear the fight achieved substantial progress, and it was a fight worth fighting."

Staff writers Deborah Howlett and Joe Donohue contributed to this report.


Long night's journey to budget


Sunday, July 09, 2006


Star-Ledger Staff

It's finally over.

One week, nine hours and 11 minutes after he signed an executive order to shut down New Jersey, Gov. Jon Corzine sat at a small table beside the governor's lectern in the Statehouse last night and enacted his first state budget.

The contentious $30.8 billion spending plan ends an unprecedented government shutdown that idled more than 100,000 workers, including 45,000 state employees. It also closed everything from casinos to state parks and opened a gaping divide in the Democratic Party.

"This crisis should never have occurred and it must never be repeated," Corzine said after the signing. "The process of arriving at a real budget in Trenton is broken."

Then, in a private moment away from the crowd, he allowed some enthusiasm. "This is a great package," Corzine said. "This is big, big change."

Some 13 hours earlier, with the early-morning light filtering through windows of the Statehouse, exhausted legislators approved the budget after an all-night session that left garbage spilling onto the floors of the historic building.

With the budget out of the legislature, Corzine was able to reopen some of the government. Within an hour, casinos in Atlantic City that had been closed for three days were back in business, and lottery tickets again were spitting of machines. Combined, they add $3.5 million to the state's coffers every day.

New Jersey-run parks and beaches will reopen today, and the rest of state government resumes operations tomorrow. Many agencies are expecting crippling backlogs after being closed last week.

"Let me express for all of us involved, particularly my administration, our appreciation for the forbearance of the citizens of New Jersey," Corzine said. "But let me repeat my personal and deep regret for the economic, emotional and personal disruptions our citizens have had to endure."

Across the state, people expressed satisfaction that business had returned to normal.

Patrick Cassio, 41, of Rahway stood before a bank of simulcast screens at Monmouth Park Racetrack in Oceanport, an unlit cigar dangling from his lips.

"I'm just glad to be back," said Cassio, who goes to the track every weekend.

In Atlantic City, Julia Hazel, 25, hit the slot machines while her boyfriend, Mike Simms, played blackjack. They had driven up from Virginia, hoping the casinos would be open in time for their 6 a.m. arrival.

"He's ecstatic," Hazel said. "He's like a little kid. I don't think he slept all night."

He had plenty of company 75 miles away in Trenton.

The budget, which will raise the 6 percent sales tax to 7 percent this Saturday, was approved by the Assembly by a 44-35 vote, about an hour after the Senate had passed it, 23-17, at 4:19 a.m. Half of the new budget's sales tax increase will be devoted to property tax relief.

After most legislators packed up and left Trenton yesterday morning, the governor stayed behind and went over each line of the budget, trimming $51 million of the $330 million of local "pork barrel" projects lawmakers had added at the last minute.

Left in the budget by Corzine, though, were grants to the home districts of legislative leaders and budget committee members, including $4 million to Hoboken's St. Mary Hospital in Senate Majority Leader Bernard Kenny's district; $50,000 to Paulsboro, where Assembly Budget Committee member John Burzichelli (D-Gloucester) is mayor; and $350,000 for developing contaminated property in Wood-Ridge, whose mayor, Paul Sarlo, is a member of the Senate budget panel.

Republicans said the added spending belied Corzine's contention he would accept only a fiscally prudent budget -- a stance that helped fuel the weeklong shutdown after Assembly Speaker Joseph Roberts (D-Camden) resisted the sales tax increase.

"It's absolutely appalling. No other word describes it," said Senate Republican leader Leonard Lance (R-Hunterdon). "It's worse than business as usual. ... Certainly this kept government shut down for an extra day."

Corzine acknowledged these annual "Christmas tree" requests are a problem, and he vowed to change the budget process. He also said it is a "pretty small piece" of the budget.

"It is less than it was last year," he said. "I tried to put constraints on it. We've taken steps to bring change to that issue."

In addition to the Christmas tree items that made their way into the final budget, Corzine took other hits from the spending plan he first proposed in March. School aid, property tax rebates and contributions to state workers' pensions all fell at least $125 million. And the budget introduced or increased taxes on everything from smokeless tobacco to fur coats.


Lawmakers weren't enthusiastic after the longest budget fight in state history finally was resolved. In total, the spending plan raises taxes by about $1.9 billion. The governor noted $300 million in other taxes expired with the budget.

"This budget before us tonight is not one anyone really wants to rally around," Sen. Wayne Bryant (D-Camden) said as the Senate deliberated early into the morning yesterday. "It's a lot of pain for everyone. No one accepted this budget with the thought that they love to raise taxes."

Lawmakers did not receive the 278-page budget document until it was delivered to their desks on the floors of their respective chambers at 3:30 a.m.

When they read the document, Republicans railed against the grants to Democratic districts. Assemblywoman Jennifer Beck (R-Monmouth) called it "brazen." Sen. Gerald Cardinale (R-Bergen) condemned it as "venal."

Assemblyman Kevin O'Toole (R-Essex) said, "This was all about Democrats behaving badly."

The wee-hours voting sessions capped a 45-hour whirl at the Statehouse that began when Corzine hinted at a compromise in a Thursday morning speech to lawmakers, and Assembly Democrats later agreed to support the sales tax increase as long as half went to property tax relief.

But the announced end of the budget war was followed by two sleepless nights negotiating the peace. And the late-night voting session caused more than a few lawmakers to adapt and adjust.

Assemblyman Tom Giblin (D-Essex) was wearing a tuxedo on the floor, having left his son Ted's wedding reception in West Orange to vote. Assemblyman Gary Schaer (D-Passaic), who was observing the Sabbath in offices in the basement of the Statehouse, had an aide cast votes for him on the floor. (Legislative rules allow a vote by proxy as long as the lawmaker is in the Statehouse.)

The most dramatic vote came in the Assembly, over the bill to increase the sales tax. Roberts posted the bill for a vote just after 3:30 a.m. and opened the electronic voting board to the 80 Assembly members.

Thirty-nine votes went up fairly quickly after Assembly Majority Leader Bonnie Watson Coleman gave a nudge to Assemblyman Louis Manzo (D-Hudson).

But Assemblymen Joseph Vas and John Wisniewski, both Middlesex County Democrats, held out, and the bill was stuck two votes shy of passing.

"Good for them," Manzo said. "Make them sweat. This is great drama. They are going to make the governor wait, to make him show respect for the house."

Party leaders swarmed around the two lawmakers' desks. Wisniewski's cell phone kept ringing, but he'd look at the number and ignore the calls.

At 3:38, with a low hum of chatter in the chamber, Assemblyman Joseph Cryan, the state Democratic chairman, walked over and told Wisniewski he was embarrassing the governor, Wisniewski later said.

Twelve minutes later, Vas and Wisniewski took their seats, voted yes, and the bill passed.


Earlier Friday night, John Budzash of Howell, who had formed Hands Across New Jersey to lead a revolt in 1990 against Gov. Jim Florio's tax increases, warned the Assembly Budget Committee people wanted cuts, not tax increases.

"We have budgets again that are balanced on the backs of the people," he said. "Look for ways to cut the budget. Thirty-one billion dollars -- my God! That's insane."

The Statehouse looked a mess. The elegant wood table in the conference room across from the Senate chambers was strewn with empty boxes of coffee and doughnuts, and the garbage was spilling over bags alongside the wall. Offices were littered with pizza boxes. The budget committee room was ripe with the smell of onions from sandwiches.

The lawmakers were near exhaustion. Five o'clock shadows had become midnight stubble. Senate President Richard Codey (D-Essex) presided in khaki pants and a red shirt under his blazer. Members nodded off in the comfy leather chairs at their desks.

Finally, Roberts dropped the gavel to end it all.

"On to routine business," he said.

Wisniewski chirped from the back of the room: "There's nothing routine about this business."

Staff writers Jeff Whelan, Dunstan McNichol and Joe Donohue contributed to this report.



Shutdown leaves a bitter aftertaste

All say budget flaws need fixing

Monday, July 10, 2006


Star-Ledger Staff

Throughout the Statehouse, there is agreement with Gov. Jon Corzine that the budget impasse that shut down government for the first time in state history "absolutely must not happen again."

At the same time, there is no consensus on how to make sure it does not. Some say all that is needed is a return to the self-discipline lawmakers practiced for six decades in passing a budget by the June 30 constitutional deadline.

Others, including Corzine, want more drastic changes.

"The process of arriving at a real budget in Trenton is broken," he said at a budget-signing ceremony Saturday night. "If one drops down a budget in March, I don't think the serious negotiations of give and take should start on the 20th of June or the 22nd of June.

"We ought to start this process earlier," he said.

It is the second consecutive year lawmakers have missed the June 30 deadline. But last year the deal was signed on July 1 and a shutdown was deemed unnecessary because a deal was imminent.

A few Republicans have introduced measures that would punish lawmakers, particularly legislative leaders, if the budget is not adopted on time.

Assemblyman Richard Merkt (R-Morris) wants to amend the constitution to dock lawmakers 10 percent of their pay -- $4,900 at current rates -- for each day they go past the deadline without a budget. He predicted any Senate president or Assembly speaker who allowed that to happen "would be deposed overnight."

Assemblywoman Jennifer Beck (R-Monmouth) would accomplish that result more directly. Under her proposal, if the budget deadline is missed, the Assembly speaker and Senate president would forfeit their leadership posts.

"They are no longer allowed to lead these two bodies because they have failed their most critical responsibility as a state leader," Beck said. She said if a budget is not passed on time, "there should be pain inflicted on your elected officials."

Democrats who control both houses of the Legislature were not receptive to such proposals.

"That's just grandstanding," said Sen. Joseph Vitale (D-Middlesex). Assemblyman Neil Cohen (D-Union) said such punitive measures could backfire by making a lawmaker who holds up a budget into "a martyr."

Robert Williams, a professor at Rutgers Law School in Camden and author of a guide to the New Jersey Constitution, said he worries about the "unintended consequences" of such proposals. During budget negotiations, he said, they would give the governor "an ax in each hand" and perhaps a perverse incentive to deliberately miss the deadline.

"He or she could be rid of someone he didn't like," Williams said.

He agreed that when delegates to the 1947 constitutional convention adopted a provision prohibiting the state from spending money without a balanced budget in place, they never could have foreseen what transpired last week.

The 12 Atlantic City casinos were closed for three days and missed paychecks for 36,000 casino employees. Casinos lost about $48 million; and that does not include the costs to bus companies and Boardwalk businesses.

The lottery was out for six days, depriving 6,100 agents of a steady stream of revenue and customers. Canceled races cost horse owners, jockeys and trainers $1.5 million in unpaid purses.

State parks were shut for three days at the height of their season, inconveniencing vacationers and shutting concessionaires such as canoe rentals.

The cost of the seven-day shutdown to the state's treasury was estimated to be $18.3 million. Nobody may ever be able to calculate the long-term effects of closing casinos and state parks in the summer.

"We have shut down the profit centers for state government," Beck said. "It's bad public policy. We should amend the constitution."

Merkt said that constitution was written "60 years ago, and it was a different world. There was no lottery. There were no casinos. The worst that would have happened is they would have shut down the courts for a few days -- and they weren't that busy then anyway."

He has prepared an amendment that would allow spending to continue at the prior year's levels if a new budget is not passed by the June 30 deadline. Cohen also likes that approach.

"Most of the states in the country do not have drop-dead dates" for adopting budgets, Cohen said. "Chaos is not the best way to have a decision-making process."

Vitale said that without "a drop-dead date," budget negotiations "would go on indefinitely."

Senate President Richard Codey (D-Essex) said a firm deadline "forces you" to confront the hard choices involved in crafting a budget.

"The people in 1947 were wise," Codey said.

Senate Minority Leader Leonard Lance (R-Hunterdon), whose father, Wesley, was a delegate at that convention, heartily agrees.

"I do not think changing our constitution in this regard is necessary. I think we should comply with it," Lance said.

Williams said that in states without constitutional budget deadlines, notably New York, "they virtually never have a budget on time." He said New Jersey's deadline served the state well for 58 years prior to this year's debacle, which may have taught lawmakers a lesson they will not forget.

"The score is now 58-1," Williams said. "Fifty-eight to one isn't a time to panic, it seems to me."

Robert Schwaneberg covers legal issues. He may be reached at rschwaneberg@starledger.com or (609) 989-0324.


Jersey's political jungle has new Lion King
Sunday, July 9, 2006

Only two months ago a lot people around the State House were calling Jon Corzine a wimp, a Trenton novice knuckling under to the hardball politicos and party bosses.

"Poor Corzine's getting eaten alive by those wolves over there,'' veteran lobbyist Jeff Tittel said in May, reacting to the governor's public apology for an ill-considered attempt to push self-serve gas on New Jersey drivers. "He's looking like some kind of helpless kitten.''

Kitty finally roared last week, and Trenton may never be the same.

Corzine's decision to close state government risked the livelihoods of 105,000 state and private sector employees who were forced out of work. It forced members of his own party, who must seek reelection next year, to embrace tax hikes that will sting consumers almost every time they open their wallets.

And it reminded everyday citizens who pay scant attention to budgetary minutia that New Jersey's elected leaders have given us America's highest property taxes and saddled taxpayers with more debt per capita than almost any other state.

Yet, even though Corzine ultimately compromised to end the Great Budget Standoff of '06, he was widely seen as the victor in pushing his 1-cent on the dollar sales tax hike on reluctant members of the Assembly.

He will no longer be viewed as just a rich Wall Street dilettante who bought his way into politics. Corzine's sheer chutzpah, his stubborn sticking to principle, has provoked admiration even among old Trenton hands who've witnessed years of State House theater.

"No one ever doubted his intellect. But now, in the finest tradition of New Jersey politics, Jon Corzine is a tough guy,'' said Bob Sommer, a Democratic strategist who is advising U.S. Senate candidate Robert Menendez.

Michael Murphy, a former Morris County prosecutor and Democratic candidate for governor, put it like this: "We now have a governor.''

Corzine will now bring his clout to what promises to be an even more bruising battle, a special legislative session on property taxes later this summer. The session will bring forth all of New Jersey's peculiar demons: inequality in public education, wasteful duplication in government, a bankrupt pension system, overbearing taxes.

With his new strength, Corzine could be positioned to bring about reform and, at the same time, forge a national profile for himself.

"What happened this week in Trenton has very much reshaped the playing field,'' said Ross Baker, a political scientist from Rutgers University. "The effects could be real and lasting. If Corzine can take this momentum and use it to change the tax system, to get a handle on all the abuses that have made New Jersey a joke, he becomes a figure of national prominence.''

Corzine's display of guts last week may have startled the public and political class in Trenton, but it does not surprise people familiar with his methodical rise to the top of Wall Street's most prestigious finance house, Goldman Sachs.

Starting out with virtually no connections as a Midwest farm boy, Corzine took an entry-level job in Goldman's once-sleepy bond trading office and turned his department into the firm's most profitable. His specialty, besides hard work, was a capacity to take risks and beat the other guy. He brought that same resolve to Trenton, friends say.

"We've known all along that the governor is a man of principle, a strong man who will not back down when it comes to the things he considers important,'' Corzine's chief of staff, Tom Shea, said Thursday afternoon as he exchanged hugs and thumbs up with supporters following the announcement that the budget had been tentatively settled. "Now, all New Jersey knows how strong he is.''

Critics say that Corzine may be a man of principle, but only part time.

They say he has backed away from campaign promises to increase property tax rebates, and tricked voters last fall by claiming he would support broad-based tax hikes only as a last resort. Corzine has also been less than aggressive in pursuing comprehensive ethics reform, they say.

Republican leaders complained bitterly last week that the Democrats' new budget does little to curb wasteful spending, long-term debt or the state's ever-growing payroll.

"I don't see how anyone can celebrate this deal,'' said Senate Minority Leader Leonard Lance, of Hunterdon County. "The budget proposal perpetuates the state's structural deficit, increasing the projected revenue shortfall ... from $2 billion to $3 billion. Robbing Peter to pay Paul is not the solution to our property tax crisis.''

Corzine has also made key appointments that many said were beneath someone who promised to be a reform governor. The appointment of Zulima Farber as attorney general and Susan Bass Levin as Department of Community Affairs commissioner raised many eyebrows and were widely seen as sops to the Democratic establishment.

The governor was also criticized when he appointed Menendez, the Hudson County political boss, to the U.S. Senate to fill his old seat.

"So much for the guy who claimed he was going to take on the bosses,'' Tom Wilson, the state GOP chairman, said at the time.

Baker, the political scientist from Rutgers University, points out that until the budget battle, Corzine's record was, at best, mixed.

On the one hand, Baker said, were "outstanding appointments" such as Chief Counsel Stuart Rabner and Treasury commissioner Bradley Abelow, as well as Corzine's controversial backing of Loretta Weinberg for the state Senate over a candidate sponsored by the Bergen County Democratic bosses.

"On the other hand, you have some questionable calls about his Cabinet appointments and policies,'' Baker said. "The jury was certainly out on Corzine. Now, with his sales tax proposal, it appears he took a major stand against the bosses and won.''

E-mail: pillets@northjersey.com



SALES TAX HIKE: 7% rate takes effect Saturday; what's covered expands Oct. 1

POLITICAL RISK: Governor hoping for praise, not blame, over budget decisions


GANNETT/Posted by the Asbury Park Press on 07/9/06


TRENTON As a candidate, Gov. Corzine promised to change the way Trenton does business.

For better or worse, he followed through over the past week.

In the most significant initiative of his young term, Corzine muscled through a politically risky sales tax increase it takes effect Saturday that he believes is an important step in mending the state's festering financial problems. He took on entrenched political leaders and conventional electoral wisdom.

His supporters, and even some opponents, said Corzine displayed strength and leadership in a fight he considered vital to his agenda.

"I give the governor tremendous credit for holding his ground and showing courage," said Senate Majority Leader Bernard Kenny Jr., D-Hudson. "He's become the governor during this crisis."

But other dubious Trenton traditions persisted, including broken campaign promises, late-night deal-making, a missed deadline, a few hundred million in grants tacked on for legislative priorities and a budget introduced and passed while most of the state slept.

Critical of process

After signing the budget Saturday night, Corzine described the process as broken.

"Are we prepared to make our judgments in the light of day, for public consideration, input and criticism, or do we work behind closed doors, with time constraints driving answers more than analysis? . . . Do we embrace transparency for public actions? Often transparency is said to be the most effective disinfectant to corruption," Corzine said.

He said late, quick decisions can have unforseen consequences. "If one lays down a budget in March, I don't think the negotiations, the serious negotiations, the give and take, should start on the 20th of June or the 22nd of June, assuming that it's all going to work out," Corzine said.

In a new twist, even for New Jersey, Corzine became the first governor in the state's history to close the government, costing the treasury millions of dollars a day in tax and lottery revenues, disrupting vacations and sending roughly 80,000 state and casino workers home. Members of both parties called it an embarrassment.

"I hope the people of New Jersey remember that the Democratic governor and the Democratic speaker and the Democratic Senate president all shut the state down, delivered a budget late, and when they did, they dumped on them one of the largest tax hikes in the history of the state of New Jersey," said Assemblyman Richard Merkt, R-Morris.

Democrats at odds

Corzine, a former Wall Street chief executive who sees fixing New Jersey's ongoing budget deficits as the foundation for his entire agenda, called for the tax hike roughly three months into his term. It was needed, he said, to repair years of fiscal mismanagement he repeatedly said has left the state "in a sea of red ink."

The plan faced opposition from fellow Democrats, led by Assembly Speaker Joseph J. Roberts Jr., D-Camden, a cagey Trenton veteran.

Corzine Chief of Staff Thomas Shea said the resulting showdown centered on principle, not power.

"He needed to stand strong because he introduced a budget that reflected what he really thought was right," Shea said.

Republicans who opposed the sales tax increase still praised Corzine for his honesty and transparency. They shuttled in and out of the governor's office throughout the final week of negotiations.

"He is coming out of this as a man of great resolve," said Assemblyman Kevin O'Toole, R-Essex. "If it's a test of wills, he clearly passed."

The dispute, however, led to an unprecedented government shutdown and an ugly intraparty feud that some observers believe could haunt Democrats.

"He will take it on the chin for the government shutdown," said Rider University political scientist David Rebovich.

Additions to budget

Many Republicans agreed with the need to balance the state's books, but said it should have come through reduced spending, not new taxes.

"The truth of the matter is we'll be right back in the same desperate situation again next year," said Sen. Joseph M. Kyrillos Jr., R-Monmouth. "We're not making the fundamental spending cuts and reform measures that are essential."

Many pointed to the hundreds of millions of dollars of spending Democrats added back into the budget for their pet projects during closed meetings late Friday night. Even a conservative estimate places the total at more than $145 million. A wider net puts the mark above $300 million.

Republicans begged Corzine to exercise his line-item veto to cut spending, which would mark another significant change in Trenton. In the four years since Democrats regained the governor's office, no spending has been trimmed from budgets that way. Saturday night, Corzine cut $51.3 million from the budget before signing it.

"For the Democrats to gorge themselves at an 11th hour pork roast adds insult to economic injury," Assembly Minority Leader Alex DeCroce, R-Morris, said.

"I just think this process really stinks," O'Toole said. "I remain cautiously optimistic that our governor will be very liberal with his red pen."

The budget also includes a significant change from one of Corzine's central campaign promises. Instead of boosting property tax relief for homeowners, the state's rebate program was cut. For households with incomes over $70,000, that means $100 less in rebates, even as lawmakers promised that property tax relief will be on the way after meetings this summer.

Corzine said real change will emerge from the summer's special session, and he appears willing to take the political heat in the interim.

"Leadership is not about telling the public what they necessarily want to hear. Leadership is standing up and telling the public how things really are," Corzine told lawmakers in a July 5 speech.

Recalling Florio

Democrats still vividly remember the last time a New Jersey governor increased the sales tax: Gov. James J. Florio was voted out of office and the party lost control of the Legislature following increases of the income and sales taxes in 1990.

But more recently, another former Wall Street executive-turned-politician, New York Mayor Michael Bloomberg, used tax increases early in his term to lay an economic foundation that paid off later. Bloomberg coasted to re-election last year.

"Any spending cut or any tax increase is politically risky," Corzine said in another speech last week. "But I also understand that taking a problem head on is better than hiding from it, even when it hurts."

Corzine also benefited from the help of three key allies: employee unions, Senate President Richard J. Codey, D-Essex, and Assemblyman Joseph Cryan, D-Union, chairman of the state Democratic Party.

Codey, a 32-year Trenton veteran who last year waged his own budget battle with Roberts, delivered Senate votes, laid the groundwork for the final compromise to end the stand-off and offered advice.

"I said to him, 'You've got to be stronger' in body language and speech during meetings," Codey said. "My advice about being more direct and specific and whatever, (his staff) saw a metamorphosis, which is good, more of a strong, vibrant leader."


Courier Post, Sunday 7-10-06Business as usual in N.J.

Governor signs budget; casinos open, other services gearing up

Gannett State


Gov. Jon S. Corzine signed the $30.8 billion state budget into law Saturday night -- 187 hours past the constitutional deadline, with pledges to reform both the budget process and the property tax burden in the year ahead.

About 12 hours earlier, Corzine signed an order lifting the state shutdown, allowing casinos, the state lottery and other state services to resume.

With approval of the budget, sales taxes will rise across the state on Saturday and property tax rebates will drop this autumn for many homeowners.

Before enacting the budget, Corzine did something that hadn't been done by a New Jersey governor since 2001 by using his line-item veto authority to trim $51.3 million in spending from the plan adopted by lawmakers early Saturday morning. Still, well over $100 million in so-called "Christmas tree" items survived.

Corzine said the budget begins the process of financial reform for a state facing recurring, massive deficits despite four years of national economic growth. He said the cost of public employee pensions and health benefits must be tamed, a harbinger of the policy and political battles ahead.

"We didn't get it all done. No one is claiming victory on straightening out the finances of the state of New Jersey. We took a good, solid step. We're on that pathway, and hopefully we can improve the results and make it even more obvious in (fiscal) 2008," said Corzine.

The centerpiece of the budget increases the sales tax from 6 to 7 percent, a move Corzine said was needed to fix years of financial shortfalls. That is projected to cost the average family roughly $275, though some legislators contend it will be twice that.

The sales tax was also expanded to cover new items, beginning Oct. 1, and fees for luxury cars, fur clothing and car rentals were among the nearly $2 billion in overall tax hikes. Corzine said another $400 million in taxes on business and casinos expired, making the net change about $1.6 billion.

At the same time, Democrats added hundreds of millions of dollars in spending for pet projects during closed-door meetings late Friday night into Saturday. The added spending was not revealed until after 11 p.m. Friday.

Republicans urged Corzine to aggressively trim back the added spending.

"The budget we are reviewing tonight is no different from past years: taxes and pork," said Assemblyman Joseph Malone III, R-Bordentown City. ". . . I hope the governor uses a red pen as big as a bingo marker."

Corzine cut $8.4 million added for hospitals and $500,000 from the Cherry Hill library.

"While we made inroads in negotiations with the Legislature on so-called Christmas tree spending, we did not end it," Corzine said. "While the final budget improves the end result, it does not eliminate the practice. It's better in this regard, but it is not perfect."

The Senate passed the budget around 4:50 a.m. It cleared the Assembly at 5:38 a.m., with Republicans still protesting the plan as the sun rose.

Democrats said the plan, including the tax increases, will restore financial stability to the state government.

"We as a state will no longer be living off of credit cards," said Sen. Wayne Bryant, D-Lawnside, chairman of the Senate Budget and Appropriations Committee. "Taxing our citizens is not something that is pleasurable, but not providing for their well-being would be even worse."

Republicans, however, called the government shutdown an embarrassing black mark on the state and called for more spending cuts instead of tax increases.

"It's appalling," said Senate Minority Leader Leonard Lance, R-Clinton Township, Hunterdon County. "We didn't need to raise the sales tax."

Michael Symons contributed to this report. Reach Jonathan Tamari at jtamari@gannett.com and Gregory J. Volpe at gvolpe@gannett.com
Published: July 09. 2006 3:10AM




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