The flames of the global financial crisis were first ignited on Wall Street but are now raging through the real economy. Families all across New Jersey are sitting at their kitchen tables wondering how to deal with skyrocketing property taxes, vanishing 401Ks, an uncertain job market and the all too real fear that they or a neighbor might end up in foreclosure.
Sadly, they are the fortunate ones. Others have already hit rock bottom. They are unemployed and unsure if they’ll even have the basics in the near future.
This deepening recession requires a strong response from all levels of government. Recognizing that the best solutions are those crafted in partnership with local and federal officials, we in Trenton are doing all we can to deal comprehensively with the grim financial news. While a single governor or mayor cannot reverse the tide of the global economic tsunami, together we can significantly moderate the impact of the downward economic slide and prepare to benefit more quickly from a national recovery.
Groundbreaking Economic Stimulus It is from this perspective that in October I called a joint session of the state Legislature to urge lawmakers to pass my Economic Assistance and Recovery Plan. Working with legislators, the business community and mayors; we became the first state in the nation to put together a comprehensive state legislative response to the economic downturn. We have been out in front of this crisis from the start, and we must stay there.
Let me review what we’ve initiated:
Immediate Help for the Most Vulnerable Helping families in need of basics such as food and home heating was a top priority. No one in this state should go hungry. In December, I signed legislation authorizing $22.5 million for food, energy and legal assistance for New Jersey families.
With a 40 percent increase in the number of families and individuals relying on food pantries, the shelves at many food banks were literally bare. We appropriated $3 million to be distributed to the six regional emergency feeding operation centers.
We also didn’t want families to have to choose between paying their heating bills and other essentials. So, we changed the income eligibility rules for the Low Income Home Energy Assistance Program (LIHEAP) from 175 percent of the poverty level to 225 percent. The increase means 50,000 more households will be eligible for assistance, bringing to 245,000 the number of households eligible for a one-time grant averaging $1,000.
Foreclosure Prevention We then turned our attention to the housing market. The unvarnished truth is that the money Congress gave to Wall Street banks has not trickled down to Main Street. In the face of that reality, we could not stand by idly. In December I signed into law legislation establishing two programs in the New Jersey Housing and Mortgage Finance Agency to help slow or prevent foreclosures.
The Mortgage Stabilization Program allocates $25 million to help people who are close to losing their homes. Under this program, homeowners who meet certain income requirements will be able to obtain loans of up to $25,000 to be used while they seek to refinance their primary loans.
The Housing Assistance and Recovery Program will provide help to nonprofits and public entities so they can enter into lease-purchase agreements with homeowners facing foreclosure. This program allows homeowners to stay in their houses, while paying affordable rent, until they are able to buy back the property. Some $15 million will be used for this program.
In addition, we gave $9.5 million to Legal Services Corp. to provide legal help to families facing foreclosure, eviction or bankruptcy. Working with the Administrative Office of the Courts, we now have lawyers serving as volunteer mediators with lenders, negotiating agreements so families can stay in their homes. With a 46 percent jump in the number of foreclosure filings, this program is not simply humane but practical.
Putting People Back To Work We want to get as many shovels in the ground as soon as possible. Over the next year, the state will accelerate $2.8 billion in road, bridge and mass transit projects. That’s in addition to $1.9 billion in school construction. These are projects that were on the drawing board. We put them on the fast track to help revive the slumping economy, but they have the added benefit of helping to hold down property taxes because, in some cases, the state is picking up costs that municipalities would have incurred.
Controlling Property Taxes Reining in property taxes is more imperative now than ever. To that end, we are preparing two measures: expanding the eligibility for the Senior Freeze program, and allowing municipalities to temporarily defer 50 percent of their pension payment obligations.
Last year, senior citizens with an income of $53,000 or less were eligible for the Senior Freeze program. This year, seniors with income of up to $60,000 will be eligible to have their property taxes frozen. The threshold will climb to a maximum of $80,000 in three years. Our concern was that elderly homeowners, living on fixed incomes, would be unable to keep pace with property tax increases. This gives them relief, which grows if tax increases continue.
On a broader front, I have proposed allowing municipalities to contribute less than 100 percent of their pension obligations in 2009, thus reducing pressure on municipal budgets. This is a bridge over troubled waters. Contributions still must be made. And instead of 100 percent, for this year, towns will be allowed to contribute as little as 50 percent of their obligation. That figure will gradually go back up to 100 percent by 2012.
Some towns have said they don’t want to defer pension contributions. That’s fine. This is merely an option to avoid double-digit increases in property taxes pressed by reduced state aid or lower revenue collections.
Shared Municipal Services Given the harsh economic realities our nation is facing, municipalities have to rethink the way they do business. That includes seriously considering shared municipal services. That doesn’t mean giving up a town’s identity. It means streamlining the process by which they purchase goods and services.
Many communities are already doing just that, but we want to encourage more. The Department of Community Affairs will offer grants to study the feasibility of towns or counties merging services. The grants may also be used to pay transition costs when communities decide to merge services.
Communities that are unsure about the best route to take will get some help this year from the Local Unit Alignment Reorganization and Consolidation Commission. Working with researchers at Rutgers University, the Commission will issue a report this month on how municipalities can use “best practices’’ to be more efficient.
Improving the Business Environment The downturn in the economy also gives us the opportunity to improve the business environment. One reason so many families are falling into foreclosure is that the national economy is in a virtual free fall. We want to reverse that trend by giving businesses new reasons to stay and grow right here in New Jersey. We certainly want to be on the cutting edge of any recovery.
To accomplish these goals, I signed into law a measure that will give companies $3,000 for every new worker hired, provided the worker stays in the job for at least one year.
We also appropriated $50 million to the Main Street Business Assistance Program to make sure loans are available to nonprofits and small and mid-size companies that have been affected by the failure of national credit markets.
Corporations will be given more time to write off losses under another bill signed into law. Instead of the seven years previously allowed, the new law extends the write-off time to 20 years. The goal is not simply to improve the business climate, but to send the message that New Jersey is business friendly.
Federal Assistance Finally, beyond our efforts in New Jersey, we will continue working with President Barack Obama and Congress to bring federal dollars to New Jersey. Our congressional delegation has been especially proactive in this area. A federal stimulus package allocating $1 trillion for ready-to-go infrastructure projects, safety net programs, education and middle-class tax cuts would provide a tremendous boost to the state’s economy.
I will also press the President and Congress to fully fund mandated federal programs and expand or revive old ones. For instance, the federal government is committed to funding 40 percent of special education through the IDEA program but currently provides only 17 percent of that sum for New Jersey schools. The federal government has also under-funded No Child Left Behind in New Jersey by $1.2 billion.
A full partnership with the federal government would go a long way in helping us bridge our budget gap. We are already seeing encouraging signs. For example, the new administration is considering reviving the Community Oriented Policing Services program, more commonly known as the COPS program.
Conclusion These are tough times. Not since the Great Depression have we seen such a gloomy economic outlook. As a consequence of the national economic meltdown our state is facing one of the biggest fiscal crises in its history. Because of declining revenues, the budget I’ll introduce to the Legislature this year will require more than $2 billion in additional cuts for the second year in a row. We have had to cut the state budget by $4 billion in just two years, a 12 percent reduction.
Cutting was not what I wanted to do; that’s not why I entered government. But it is the only responsible thing to do. We simply cannot spend more than we take in.
Yet, with cooperation and collaboration we can weather this economic storm and emerge stronger and better.