Corzine says bailout is no panacea

TRENTON - The federal stimulus package is expected to bring New Jersey more than $5 billion for education aid, infrastructure improvements, support for the state budget and Medicaid, according to estimates by U.S. Senate and House committees.

Hundreds of millions of additional dollars could come to the state from other areas as well. Most of the funding would arrive over two years.

Despite the infusion of federal money, Gov. Corzine is still grappling with budget problems. State revenues continued to plummet in January, and Corzine is preparing to cut even more from the current spending plan before getting to the looming deficit in the budget that begins July 1.

"This will help very much in making what will be additional cuts less than what they otherwise would have been," Corzine said yesterday. "This does not cover the hole that is occurring because of the recession."

Among the largest areas of federal aid to New Jersey are an estimated $1.33 billion aimed at education funding and the state budget, and a similar amount for infrastructure such as roads and bridges and water projects. The state is expected to receive an additional $2.2 billion in Medicaid support on top of the amounts it normally receives from the federal government.

Hundreds of millions could also arrive for special education, support for low-income students, and safety-net programs such as food stamps, child care and preventing homelessness, among other areas.

The $780 billion nationwide package includes tax cuts for 3.15 million New Jerseyans and a fix that will protect 1.7 million from paying the Alternative Minimum Tax, according to Democrats. About 136,400 New Jerseyans can expect additional aid through Pell grants for college, according to aides for U.S. Rep. Frank Pallone Jr. (D., N.J.).

The $1.33 billion marked for state "stabilization" aid is largely to support schools, and could help relieve state costs in an area that consumes roughly $1 of every $3 in the state budget. But Corzine will have a choice to make when it comes to a portion of the aid - about $240 million - that could be used for other programs or school renovations.

Corzine has touted the economic benefits of construction projects and worked to fast-track such spending to give the state an economic lift. But he also faces a dire budget picture that is growing worse, and he may need the money to help plug the gap.

Aides said he was still reviewing the details of the final-stimulus package yesterday afternoon. Many of the funding areas come with strings attached.

"There's going to be a lot of pressure on the governor to decide if he wants to balance the budget and use it for other things, or use it for capital construction," said Philip Beachem, president of the New Jersey Alliance for Action, which includes laborers, contractors and corporations.

Beachem said alliance members were pleased with the $651.7 million set aside for New Jersey roads and bridges.

Pallone's office said a total of $1.33 billion would come to New Jersey for infrastructure.

"By making significant investments in America's transportation and infrastructure, renewable energy, schools, broadband technology and health care, we are not only creating and saving good-paying jobs, but we are transforming our economy for the long-term," Pallone said in a statement.

U.S. Sen. Frank Lautenberg (D., N.J.), touted the $17 billion included nationwide for rail and transit projects.

"Not only will this package serve as an engine for job creation, but these investments will pay off in the years to come," Lautenberg said in a statement.

Education advocates praised a roughly $360 million infusion of special-education aid, an amount that would more than double New Jersey's 2008-09 federal funding in that area. Frank Belluscio, a spokesman for the New Jersey School Boards Association, said the federal government has typically short-changed New Jersey, leaving taxpayers to make up the difference.

The federal package was criticized by many Republicans for being bloated and including programs they argued were not related to sparking the economy.

Corzine, who presented a state grant to a Trenton health clinic yesterday morning, lashed out at critics.

He said items such as food stamps and unemployment insurance have big impacts in everyday life.

"I don't call that pork, and I don't call that just wasted money," Corzine said.