Corzine's budget relies on one-time fixes

A year ago, Gov. Corzine said New Jersey had a government it couldn't afford. This year, Democrats promised "pain on every page" as they planned to pare spending in the face of an economic crisis.

A close look at the governor's budget, however, shows the largest proposed cuts are temporary reductions that wouldn't slash long-term costs. Unlike last year, when Corzine closed two small departments and sliced payroll, his new budget does not include broad strokes to reshape government.

Instead, with the weak economy crippling revenue, Corzine has resorted to some of the one-time fixes he has criticized as "gimmicks" that let previous administrations duck tough decisions and add to the state's fiscal mess.

This budget chips away at costs with hundreds of small cuts, but some of Corzine's largest plans to save money would add to long-term expenses, even as he claims credit for drastically reducing spending.

Corzine touts a $29.8 billion bottom line, $3 billion less than the budget he signed last year. But the spending total doesn't include $2.2 billion in federal stimulus money that will sustain key parts of government off the state's books.

When the federal aid is counted, Corzine's reductions look far less dramatic. And when the money dries up in 2010, the state again could be left with a gaping deficit.

Consider:

The biggest proposed cut is an $895 million reduction in contributions to the state's pension system. That would widen the shortfall in the state's retirement plans, placing even larger burdens on taxpayers in future years.

Corzine calls for trimming $361 million in debt payments by refinancing. This would reduce expenses for now, but it could add long-term costs.

Other "savings" exist only on paper, since the projected spending items are routinely ignored.

The largest cut that could make a lasting mark would strike taxpayers, not government. Corzine has proposed axing $517 million in property-tax rebates for homeowners and renters.

The largest savings in government expenses would be $417 million from a salary freeze, furloughs, and other steps to ease labor costs. The savings would last only one year.

Some of the biggest chunks of state spending have barely been touched. Aid for hospitals and towns, sharply cut last year, faces only minor reductions. Education funding, already the state's top expense, would rise, thanks to federal aid and a push to expand preschool.

"I don't think it's a major restructuring of government," said James Hughes, a Rutgers University economist. "This is more stay the course."

Corzine had to craft a budget not only in the face of a recession but also while preparing to run for reelection against a hungry Republican Party. In trying to balance those two challenges, he took some steps that show a willingness to risk his popularity, such as cutting rebates, while other moves play to his base. Increasing school aid, for example, won praise from the influential teachers' union.

In defending his cost-cutting credentials, Corzine points to steps he has taken in his first three years in office. He has sliced the executive-branch payroll by about 4,000, down to 66,500. Last year he cut $600 million in spending, one of the largest reductions in state history. And despite underfunding pensions, Corzine has put more into the system than governors had in the previous 15 years combined.

"We are living within our means. . . . We are making the tough choices to do the right thing," Corzine said in his March 10 budget speech.

Treasurer David Rousseau said this year's budget would cut 850 line items by 2 percent to 25 percent. The cost of state overhead would drop by $184 million, or roughly 7 percent.

About $400 million more would be pared in ways big and small. Executive-branch "efficiencies" would save $40 million. Better procurement would net $25 million. The car fleet would shrink by 400.

Cutting more decisively into core areas would take political capital and the fortitude to do away with programs that truly help some.

For years Corzine and lawmakers in both parties have talked tough on spending, but then given ground in the face of objections. Already this year, a plan to impose co-payments on AIDS drugs has drawn criticism from advocates for the poor. Arts and tourism groups are riled by reductions in those areas. The green lobby says environmental protection would suffer from budget constraints.

Even Republicans, who have unceasingly called for smaller government, howled last year when Corzine proposed saving money by closing the Agriculture Department and making rural towns pay for state police aid.

Corzine said his largest cuts would hit pension funding, down 75 percent, and rebates, down 30 percent, because those were some of the biggest items in the budget.

"You have to go where the money is," he said.

The $400 million savings expected from the furlough and wage freeze would be about 13 percent of the state's $3 billion cost for salaries.

Corzine has said that his budget included a number of steps he would not normally take, such as the pension deferral, but that they were necessary in a crisis. Safety-net health programs and education, he has argued, must remain priorities, especially during difficult times. That is where much of the stimulus money is directed, and that is what that funding was intended to be used for, aides said.

Corzine said he had taken a "progressive" approach, trying to put the heaviest burdens, and taxes, on the most well-off. Increasing school funding and avoiding deep municipal-aid cuts, he said, would help control property taxes across the state.

Corzine boosted education aid by $300 million, thanks to the help of $1.1 billion in stimulus money.

But while taking credit for the increase, he has not counted the federal dollars that made it possible in his spending total.

An additional $1.1 billion of stimulus for Medicaid also isn't added to the bottom line. Rousseau defended the accounting, saying that every year there was federal aid that wasn't tallied in the budget. Rarely, however, has there been such a large addition.

Next year New Jersey taxpayers will have to resume paying for those services, likely prompting new shortfalls. In the past, Corzine's budget documents included projections of forthcoming gaps. Those figures are not included in similar documents released so far this year.

Asked about the potential gap, Corzine predicted better economic times - or more federal help.

"We will either get a growth in the economy or there will be additional efforts to stimulate economic stability," he said.

The choices on fixing any shortfalls resulting from this budget won't be faced until after November's election.

Republicans, hoping they control the next budget, have assailed Corzine for proposing more than $1 billion in tax increases, saying he hasn't truly cut government.

Assemblyman Jon M. Bramnick (R., Union) said plans to expand school construction and preschool undercut Corzine's claims to fiscal restraint.

"It's too little, too late," he said.

Corzine has challenged critics to offer a viable, comprehensive alternative. It is early in the debate, but so far no one has.

Richard Keevey, a former state budget director who teaches at Princeton University, said the governor had few attractive options.

"The budget has difficult choices," Keevey said, adding that if critics don't like Corzine's choices, he asks: "What would you have done?"

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