In a move he hoped would begin putting the state’s fiscal house in order, Gov Jon S. Corzine introduced at $32.9 billion 2008-2009 budget last week that would cut state spending by $500 million, yet would impose no new taxes.
Hearings will be held around the state including at Liberty State Park in Jersey City. Lawmakers may propose different cuts, before the state legislature gets to vote on it this June.
Critics of the proposed budget cuts complain that the state’s most vulnerable citizens would be most impacted.
“This is a Republican budget,” said former Assemblyman Louis Manzo, who lives in Jersey City. “This is the kind of budget Democrats used to complain about under President Ronald Reagan.”
While Corzine said his proposed budget would protect core areas of responsibility, including education, public safety, and care for the state’s most vulnerable, local officials said local government will be forced to bear a great portion of the burden to provide services.
These services will even include state-mandated programs, they said.
In order to achieve the overall budget reduction of $500 million, the budget proposes spending reductions totaling approximately $2.7 billion. These will offset rising costs in healthcare, energy, and other contractual costs.
The budget does not address the state’s $32 billion debt.
“I have heard firsthand the public’s frustration generated by too many years of overspending, borrowing and false rhetoric.” Corzine said. “In this budget, government takes the spending hits, not our hard-pressed taxpayers or the most vulnerable.”
Corzine proposed reducing the state workforce by 3,000 people, which he will do through early retirement, attrition, and layoffs.
To ensure that savings from these job reductions are permanent, funding for the positions will be eliminated, he said.
Eliminating three departments
In addition to reducing and limiting the size of the state workforce, the budget also reduces spending in every department of the executive branch and eliminates the departments of commerce, agriculture, and personnel. Additional savings have been achieved elimination of all non-contracted inflation-adjusted spending, rendering savings of $800 million.
“This budget is a turning point in our work to right our state’s finances, but it does not address New Jersey’s crushing debt load of $32 billion,” Gov. Corzine said. “Our debt payments will continue to consume an ever increasing percentage of the state budget, crowding out priorities such as education, municipal aid, and property tax relief.”
The budget, however, will preserve Homestead Rebates for this year.
The budget will include a $190 million reduction in the level of aid to municipalities.
In attempt to encourage some of the nearly 600 state municipalities to consolidate services, the state would give municipalities with a population of 10,000 or less additional grants.
The proposed budget would reduce other grants and aid covering hospitals, healthcare, arts and colleges.
Local impact
“This will likely mean that Hudson County Community College will have to raise tuitions,” said Freeholder Bill O’Dea, who expects the matter to come up before the freeholder board shortly.
Assemblywoman Joan Quigley called the budget impact devastating for Hudson County hospitals.
“Every hospital is at risk in this county,” she said. “If the state cuts charity care, every hospital will suffer.” (For more on how hospitals are coping with financial problems, see this week’s Progress Report insert.)
Manzo said that state will likely support particular hospitals in the state, but allow others to close.
State Sen. Brian Stack, who is a member of the state’s Budget and Appropriations Committee, said, “The governor’s proposed cuts in municipal aid and Charity Care aid for hospitals [reimbursements when hospitals treat the poor during emergencies] leave me concerned that essential local programs will be eliminated and more New Jersey hospitals will close.”
Quigley pointed out that requirements to increase the co-payments made by the poor would discourage people from seeking care early, and result in an increase in emergency room visits. This will increase the cost of care as well as put more people are risk of serious illnesses.
Many of the services cut by the state will put pressure on counties and municipalities to provide services.
“Some of these services are mandated by the state,” Manzo said. “So instead of eliminating the mandates first, the state will cut funding, forcing municipalities to cope with the fiscal impact.”
This means property taxes will go up, he said.
Urban education will take a hit
Programs such as the Star Program, which was introduced by Rep. Albio Sires when still a state assemblyman, may be a thing of the past. The program was designed to help with the cost of tuition for needy kids.
Colleges faced with cuts in aid typically cut services or increase fees.
“We don’t have the details on the budget cuts yet,” Quigley said. “But this budget is everything that Republicans have always wanted.”
Quigley is a member of the Assembly Budget Committee and will soon be doing public hearings. The first of these will be at the Liberty Science Center in Jersey City in early March.
She said she intends to sit down with the state commissioners to look at spending habits in an effort to find other cuts that might produce the same amount of savings.
“We’re at the beginning of the process,” she said. “There will be twice-a-week meetings of the budget committee through April, and then in May we’ll see a lot of behind-the-scenes moves.”
Manzo believes that the state needs to shift the burden of supporting schools from property taxes to income-tax payers, to reform the state’s managed healthcare program, and to restructure, rather than pay off, the state debt. “In this economy, this is the wrong time to be paying off the state debt,” he said. “We should be stretching it out until the economy improves, then focus on repaying it.”
Stack agreed. While commending the governor for trying to get the state’s fiscal house in order, he added, “State debt and our pension obligations loom over the budget process and dictate what we can and cannot do as a state.” State Sen. Nicholas Sacco called the budget “very austere.”
Sacco spokesperson Paul Swibinski said, “Obviously, this is a very difficult budget which raises many concerns. For Senator Sacco, the most important concerns are any provisions that would cause property taxes to increase.”