Chamber Staff Studying Proposed State Spending Plan
Budget Includes Massive Cuts; Includes Reform Measures Advocated for by Chamber 

Chamber staff has been studying every facet of the fiscal 2009 budget unveiled by Governor Jon S. Corzine in February. As predicted, the budget proposal was smaller than the fiscal 2008 budget, it shrinks the size of state government, and calls for no new taxes. In addition, the Governor seeks several legislative initiatives designed to reform the budgeting process so the state can begin fixing its perpetual fiscal problems.

“We are pleased that some of the fiscal reform measures the Chamber Board called for have made their way into this budget proposal,” said State Chamber President Joan Verplanck. “Curtailing out-of-control spending, reducing the immense size of state government, and postponing or eliminating programs we can’t afford are measures that have been called for by most New Jerseyans for quite some time. They are certainly measures the employer community will support.”

The $32.9 billion budget includes $500 million less in spending than the fiscal 2008 budget. It calls for the elimination of three state departments – Agriculture, Commerce, and Personnel – and the reduction of state government by roughly 4,000 jobs. In addition, this budget proposes cost cutting measures long advocated by the State Chamber.

The proposal has been turned over to members of the Legislature, who have been holding hearings and listening to the concerns of constituent groups impacted by the deep cuts. During the next three months, the employer community must apply pressure on legislators, encouraging them to pass a fiscally responsible budget in the true spirit of the one introduced by the Governor.

Below are some highlights of Governor Corzine’s third budget proposal:

Expenditures and Budget Cuts

• The $32.9 billion budget cuts spending $500 million below the $33.5 billion budget signed last year. This is the second-largest cut in spending year-to-year in New Jersey.
• The budget reduces the use of one time revenue sources by 90%, moving the state ever closer to a philosophy of only spending recurring revenue.
• Property tax rebates will be eliminated for those making over $150,000. The current ceiling is at $250,000.
• The Departments of Agriculture, Commerce, and Personnel will be eliminated.
• The state workforce will be trimmed by roughly 3,000 through layoffs and an early retirement program. In addition, to maximize the savings, the Administration will allow only 10% of the vacated positions to be backfilled.
• The budget proposes a $1.1 billion contribution to the state pension fund, roughly 70% of the total obligation.
• The proposal lowers aid to higher education.
• Charity care aid is cut in the range of $100 million. 
• Aid to towns and cities are cut by about $100 million. The Governor proposes cutting a $75 million inflationary adjustment that municipal representatives say they deserve under state law.
• The hour of operations of state parks will be reduced.
• A new school funding formula passed by the Legislature in January calls for direct aid to go up by more than $500 million to $7.8 billion in the new budget year, which starts July 1.

Future Steps Being Proposed

• Property Tax Reform: The Governor called on the legislature to address items identified by the special legislative session on tax relief last year which will lower property taxes. Specifically, the Governor said the elimination of a defined benefit pension for part time workers should happen in order to help lower property taxes and reduce the burgeoning debt load.
  
• Future Debt: The Governor called on the Legislature to pass a Constitutional Amendment to limit state borrowing. 

Chamber staff will continue to analyze the budget proposal and work with the members of the Legislature to make sure your voice is heard during the four-month debate on the budget.

Click here for more information on the fiscal 2009 state budget.

Please contact Jim Leonard at (609) 989-7888 with any questions.

February 26, 2008