Corzine releases details on $812 million in cuts to fiscal year 2009 budget

TRENTON | Gov. Jon S. Corzine's administration released details Monday of $812 million in proposed spending cuts to the current state budget to help plug a $2.1 billion hole resulting from the recession.

Aid to towns and school districts, as well as money for cancer research, state police equipment and psychiatric hospital staff are part of the reductions. Corzine is also relying on an 18-month wage freeze for state employees.

"New Jersey is now experiencing the compounding fiscal effects of the national economic crisis," Corzine said. "These are painful cuts, but they are necessary to help fulfill our obligation to maintain a balanced budget."

The mid-year reductions resulted from a drop in state revenue, down $456 million in the first five months of the fiscal year that began July 1. The administration also points to foreclosure assistance and money for food pantries, meant to soften the blow of the economic meltdown, for the $2.1 billion shortfall.

Besides spending cuts, the administration has proposed using $483 million of the state's surplus and rainy-day accounts, $500 million from a $650 million fund that was proposed to pay down state debt and $300 million from an anticipated federal stimulus package, mainly for Medicaid.

Some of the proposals require Legislative approval, and the salary freeze for state workers will need agreement from unions who have said they are opposed to the idea.

'Equitable and fair' cuts

State Treasurer David Rousseau said the administration tried to make the cuts in the "most equitable and fair manner" possible.

A pension-deferral bill would help to offset a $15 million cut to municipal aid and $75 million reduction in education funding to public schools, Rousseau said. That bill has stalled in the state Senate.

Other reductions include $47 million for rental assistance, $7 million for cancer research, $1.4 million for homeland security grants and $670,000 for physicians at psychiatric hospitals where staffing levels are above the national average, according to administration officials.

Democratic legislative leaders were briefed last week on Corzine's proposed reductions. Assembly Budget Chairman Lou Greenwald endorsed the plan, saying everyone needs to pitch in.

"We're living through historic events, and we need everyone to rally together and share the pain," said Greenwald, D-Camden. "It's about riding out this storm."

More could have been done, Republicans say

Republicans, who last week sued the administration to get details on the planned budget reductions, said Corzine should have done more to prepare for the shortfall.

"Like bank executives did with investors' money, Corzine rolled the dice and bet that good times would last forever," Senate Minority Leader Tom Kean Jr. and Assembly Minority Leader Alex DeCroce said in a statement. "Just like his friends on Wall Street, Corzine is looking to middle-class taxpayers to pay the price for fiscal mismanagement."

Rousseau said Monday the administration began cutting the budget last February, when Corzine introduced a budget that was less than the prior year.

Corzine went on to cut $600 million to get to the current spending plan, even before any of the reductions announced Monday.

In the current round of cuts, Rousseau said, the administration reviewed each department's budget, emptying miscellaneous funds and taking unspent dollars such as money left over from state contracts that had not been officially closed out.

"We scraped the bottom of the barrel," Rousseau said. "There were accounts that we found that had 99 cents in them, and we pulled it from them."

Rousseau said the administration is prepared to make further cuts if revenues continue to decline.

"We have to," he said. "We have to meet our constitutional mandate."