Corzine announces more N.J. budget trimming

TRENTON | The recession has caused more problems for New Jersey finances.

With fewer than seven weeks until the close of the fiscal year, Gov. Jon S. Corzine announced Thursday weaker-than-expected revenue collections will require $1.2 billion in reductions in the current fiscal year state budget.

Another $2 billion in cuts will be needed in next year's $29.8 billion proposed spending plan. The administration plans to detail those next week.

Corzine said he will close the current budget gap by deferring $450 million in expenditures until next fiscal year, which begins July 1. The largest is $383 million in aid payments to school districts due in June. The remainder of the deferred expenditures is $70 million in job-creation incentive grants to businesses.

He will also scale back payments to the pension fund by $150 million, instead making a $100 million contribution, and use $450 million from the state's $700 million rainy day fund. Budget cuts to be released Friday will amount to $150 million.

"We have an honest, straightforward but unavoidable reality of having to deal with: making adjustments to the 2009 current fiscal year budget," Corzine said at a news conference in Trenton. "And quite obviously, since we're late in the fiscal year, the options are a little less than they might have been at other times."

$4.4B shortfall this year

Corzine has amended the current budget several times this year as a result of down revenues during the recession.

The latest shortfall resulted from income tax collections in April falling $747 million below projections and 38 percent lower than collections last year, according to state Treasurer David Rousseau, who said the trend is similar to that which is occurring in other states.

"The weakness in the April collections reopens a shortfall that we had closed three times previously this fiscal year, creating an additional $1.2 billion problem," Rousseau said. "Collectively, our shortfall for FY '09, discounting all solutions implemented or proposed to date, has now reached $4.4 billion.

"Closing a $1.2 billion shortfall with six weeks remaining in the fiscal year is daunting, and leaves New Jersey few choices -- none of which is pleasant or painless," he added.

GOP fears for future

Republicans criticized the Democratic governor's plan, saying he was only pushing the problem off until next year.

"It's 90 percent deferral until next year," said Assemblywoman Marcia Karrow, R-Warren/Hunterdon. "I am so concerned about what this is going to do to next fiscal year.

"This year's budget is going to look like nothing."

Assembly Republican Budget Officer Joseph Malone accused Corzine of perpetuating past failed policies of borrowing and deferring obligations "instead of dealing with the state's problems honestly and directly.

"We cannot keep pushing our problems into the future when our bills are past due."

Administration officials said the $150 million in cuts announced Thursday will be listed today on the state's Treasury Web site, nj.gov/treasury.

Corzine said solutions for next year's budget will be discussed when the state treasurer testifies before the budget committees next week.