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A Turning Point
for State Finances
State of New Jersey Seal
By Jon S. Corzine
Governor, New Jersey
Governor Corzine speaking about the porposed State of NJ budget. He is standing at a posium.

Let there be no mistake: New Jersey is in the midst of a financial crisis.

We did not get there overnight, and certainly it was a collective effort that got us here. Decades upon decades of ill-advised borrowing, spending, and the accumulation of a crushing debt was a bipartisan effort, and as such will take a bipartisan effort to get us out.

The challenge before us clearly impacts every level of government and citizens all across the state. We will all need to be part of the solution.

Into the BLACK
Corzine budget reduces state government by $2.7 billion

Governor Jon S. Corzine announced a  budget in February that contains no new or increased taxes and protects the core responsibilities of government, including education, public safety and care for the most vulnerable.

In order to achieve the overall budget reduction of $500 million, the budget proposes spending reductions totaling approximately $2.7 billion to offset rising healthcare, energy and contractual costs. The budget does not address the state’s $32 billion debt.

This year’s budget continues the administration’s progress in cutting the size of the state workforce, which has already been reduced by nearly 2,000 employees since the Governor took office in January 2006. The new budget eliminates an additional 3,000 jobs through a combination of an early retirement program, attrition and layoffs.

To ensure that savings from these job reductions are permanent, funding for the positions will be eliminated. 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. These movements towards a smaller state government garner approximately $350 million in savings. Additional savings have been achieved elimination of all non contracted inflation adjusted spending, rendering savings of $800 million.

While austere, the FY2009 budget still dedicates more than 50 percent of all spending, $16.7 billion, to property tax relief. The budget preserves homestead rebates averaging $1,000 for 1.6 million homeowners. In all, 90 percent of homeowners will continue to receive rebates while 1.2 million homeowners, or 70 percent, will receive the same rebate amount they received last year.

The budget will also include a $190 million reduction in the level of aid to municipalities, a portion of which will be targeted towards municipalities with populations of less than 10,000. This group of towns will be given priority standing in the awarding of grants from a state fund that encourages consolidation of shared services.

Reductions to grant and aid funding have been apportioned across the board, from support of hospitals and higher education institutions to health care programs and funding for the arts. All in total, reductions in grant and aid funds garner approximately $1.35 billion in savings.

The Governor’s budget proposal asks for the second-largest cut in year-to-year spending of any budget in state history and is only the fourth budget since 1951 with a year-to-year spending reduction. Furthermore, this budget does not take into account any financial benefits that would be gained from a monetization proposal. Additionally, the FY10 budget is already facing a $1.7 billion structural deficit.

The Governor’s budget message and a summary of the budget are available online at: www.nj.gov/governor

Mayors, elected leaders and other local officials know too well the challenges of building and maintaining an effective and efficient governmental infrastructure that adequately addresses the needs of its citizens at a reasonable cost. In state government, we face many of the same challenges as we delve into the process of restructuring New Jersey’s finances and reducing the debt burden.

The key here is efficiency—efficiency in administration, efficiency in delivery of services, and efficiency in the allocation of resources. These are elements that were reflected when I delivered the budget address in February, which included the elimination of three state departments, reducing the number of employees by an additional 3,000 positions, and cutting the budget of every executive department.

Total state spending will be cut by $2.7 billion. It is certainly not a budget designed to please, but it is a prudent blueprint to meet difficult economic circumstances. As public officials, I am sure you can empathize with the tough choices ahead.

Many municipal leaders have already expressed concern regarding reductions in municipal aid, which is completely understandable, as critical public services must be maintained. However, with regard to local aid, hospitals, higher education and health care, we sought to minimize, retarget, and share the burdens of cuts as responsibly as possible.

One example is that while all categories of municipal aid will be reduced, communities with populations of less than 10,000 will receive less direct support. However, these communities will receive priority consideration for $32 million in grants to develop shared services or consolidation agreements.

Shared services and consolidation are two areas where we can certainly realize greater economies of scale, thus achieving greater value for taxpayers. Considering that New Jersey has more municipalities per capita than any other state, it is an option well worth considering. We are certainly eager to work with each and every municipality who wants to investigate the possibility of reducing the burden on taxpayers through consolidation and shared services, just as I have proposed reducing the size of state government to achieve greater efficiency.

Today, taxpayers live in a world where commitments and failures of the past crowd out the resources for services our people deserve today. It is our shared responsibility to see that end.

As I said in February, this is a turning point—not the end point. Cuts alone will not solve all of our fiscal woes. They cannot. It will require a consolidated, concerted effort to achieve the deeper changes we need.

So let us agree that something must be done, sooner rather than later. Now let us stake out our common ground to build a legacy of leadership, responsibility, and prosperity rather than continuing to add to our mountain of debt.

House on pile of money

 

 

 

Today, taxpayers live in a world where commitments
and failures of the past crowd out the resources for
services our people deserve today.

 

 

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