N.J. plans more big budget cuts

The Corzine administration released a list of $812 million in spending cuts yesterday, including major cuts in education funding to towns and state contributions to government workers' pensions.

State Treasurer David Rousseau called the mid-fiscal-year budget trims unprecedented, saying every line of the budget was reviewed for potential savings in a process that began in August. Rousseau said the state closed numerous accounts with unspent funds in an effort to find cash, including one account with just 46 cents.

"Anything that wasn't nailed down . . . we've taken it," Rousseau said.

The budget cuts are part of a larger plan by Gov. Corzine to close a $2.1 billion budget gap that has emerged from the $32.9 billion budget adopted in June.

The fiscal year runs from July 1 to June 30, and the state constitution requires a balanced budget. Revenues have come in well below projections because of the economic downturn. Corzine has said he does not intend to raise taxes for the current fiscal year, which means that spending cuts are needed to balance the budget.

In addition to the $812 million in mid-year cuts, Corzine is calling for state workers to accept an 18-month wage freeze, which would require negotiations with the unions.

The governor also wants to use $275 million from the state's rainy-day fund; to spend $500 million that had been intended to reduce long-term debt, and to apply $208 million in unspent funds from the previous year, among other financial maneuvers. He is also counting on at least $300 million in federal bailout money from the incoming Obama administration, which has talked about a $500 billion bailout package for all the states.

Corzine started the year by shrinking the state budget by $600 million from the previous year. The cuts detailed yesterday come in addition to that reduction.

Among the biggest items are $75 million less funding to towns for K-12 schools. To make up for that loss, towns would be permitted to contribute less to employees' pensions. The measure would require legislative approval and is stalled in the Senate, where a handful of Democrats have joined all the Republicans in opposition.

Another big cut is $115.6 million less in contributions to state employees' pensions, leaving the state's contribution at $1 billion, about

half of what the state should be paying for the year, according to actuarial calculations.

Many of the cuts went to programs that had more money than they needed, including $45 million in unused property-tax relief.

Included in those categories is a $14 million surplus in aid for community health centers, according to Treasury, and $2.8 million in loans for school districts. No districts had yet applied, according to Treasury spokesman Tom Bell.

Other cuts include $24,000 in subscriptions, including fees for legal and investigative search engines, in the Office of the Inspector General. The state will save $240,000 by suspending a program encouraging car pooling. A reduction of the number of doctors at psychiatric hospitals is expected to save $670,000 and other cuts at the facilities are being counted on to preserve an additional $1.8 million.

The cuts also include $37.5 million in "miscellaneous accounts."

Response to the governor's proposal was quick from workers' unions, which bristled at the prospect of either wage freezes or furloughs and layoffs.

"We have a contract; we're not going to reopen the contract," said Hetty Rosenstein, New Jersey area director for the Communication Workers of America, which represents thousands of state workers. The current contract ends June 30, 2011.

Rosenstein said furloughs and layoffs would also be a mistake.

"Without question, you start laying people off during a recession, you make things worse and not better and you're laying off people who actually make things better," she said.

Corzine was the first governor in several administrations to force the state to contribute anything to employees' pensions after Gov. Christie Whitman declared a "pension holiday" - a break from making the required contributions - for both the state and towns. Corzine has said that if the unions don't agree to wage freezes, furloughs and layoffs may be necessary.

Corzine has also proposed wage freezes for nonunion workers, which the governor can enact unilaterally.

Republican lawmakers have been calling on the Corzine administration to detail what steps it is taking to balance the budget, going as far as filing a lawsuit last month to see a list of accounts that have been frozen.

Rousseau said yesterday that while further spending cuts may be necessary, all of the accounts that have been frozen have now been made public.

Assemblymen Scott Rumana and David Russo, both Republicans from northern New Jersey, said yesterday that Corzine should have been more proactive in taking steps to get the budget under control.

"Had this administration heeded our warnings, we could have begun the process of getting this state back on track to fiscal health," Rumana and Russo said in a joint statement. "Instead, Gov. Corzine continued to play reactive politics resulting in much pain to our middle-class families and those most in need."

Corzine has said he will delay his budget address, normally delivered in February, until March, in part because the state should have a better idea by then of what the federal bailout package will be.

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