June 28, 2007

Fiscal 2008 State Budget Signed by Governor Corzine

Guiding Principles for Asset Monetization Unveiled

Governor Corzine today signed the fiscal 2008 state budget. The final spending plan totaled $33.47 billion, which is $10 million less than the version members of the Legislature passed June 21 (S-3000). The Governor eliminated or reduced appropriations for items thought to be self-serving to legislators' individual districts. The completion of this year's budget process is in stark contrast to 2006 when a budget was not in place July 1 (the start of fiscal 2007) and the government was shut down over the Fourth of July holiday.

At today's press conference, the Governor stated that he will "never" sell or lease major state assets to a profit-making entity. He also outlined eight guiding principles for asset monetization. They included:

• New Jersey's roadways will not be sold; and they will not be leased to a for-profit or foreign operator.

• Allowable uses of proceeds (reducing State debt and capital investments) will be identified upfront and subject to public and / or legislative approval with safeguards against diversions for other uses.

• New Jersey citizens will retain ownership and the benefits from both initial proceeds and ongoing operations.

• Safety, maintenance and operating standards will be provided at current or improved levels.

• Sufficient funding to meet the long-term capital needs required to improve our roadways and reduce congestion will be provided.

• Terms and conditions of employment for current employees and contractors will remain unchanged with prevailing wage and competitive contracting procedures retained.

• Toll schedules will be open, predictable and available to the public.

• There will be a substantial, open and public discussion in advance of any transaction. The Administration will hold 21 town hall meetings in 21 counties.

The fiscal 2008 budget is an increase of 8.7 percent over the fiscal 2007 budget. State budget amounts have been rising steadily over the past decade - the 1998 spending plan was $16.4 billion. While we continue to be concerned about the rapid increase in state spending, chamber staff is pleased that there are no business tax hikes included. 

Some highlights of the fiscal 2008 plan include: 

• The budget is slightly higher than Corzine's original proposed $33.3 billion budget.
  

• The end of year surplus is projected to be at least $600 million.
  

• The budget includes no new taxes for the first time in six years.
  

• The budget completes the expiration of the Alternative Minimum Assessment and allows the corporate business tax on subchapter S-corporations to expire.
  

• It includes the elimination of the sales tax on health club memberships at nonprofit clubs.
  

• $1 billion of the spending plan will go towards the public employee pension plan - this is half of what is actually needed to meet the state's obligation. 
  

• 14 percent increase in property tax relief - roughly a 20 percent property tax cut to most homeowners.
  

• There are $275 million in business tax cuts and income tax cuts for 300,000 low-income families. 
  

• Eliminates proposed co-payments on Medicaid prescription drugs, hospital visits and medical day care.
  

• There is a 23 percent increase in state aid to help hospitals pay for treating uninsured patients, increasing total hospital aid to $776 million.
  

• There is a 3 percent state aid increase to most schools, representing the largest state aid increase since 2000.
  

• Two percent state aid increase for municipalities to assist with property tax relief and $10 million to help counties with creating a back-up paper system for electronic voting.
  

• The plan includes $10 million to pay for moving state’s presidential primary to Feb. 5.
  

• A $2.5 billion budget deficit is projected for the fiscal year starting July 1, 2008.

If you have any specific questions or comments, send them to Jim Leonard or Mary Ellen Peppard.