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Corzine: No easy fix to N.J.'s financial woes in '09

PRINCETON - Gov. Corzine will start 2009 focused on the same issues that consumed much of 2008: solving New Jersey's budget problems and weathering the national financial crisis.

Gov. Corzine saw more bad times ahead.
Gov. Corzine saw more bad times ahead.Read more

PRINCETON - Gov. Corzine will start 2009 focused on the same issues that consumed much of 2008: solving New Jersey's budget problems and weathering the national financial crisis.

Corzine said yesterday that he expected to detail hundreds of millions of dollars in additional spending cuts shortly after the new year to help the state cover a projected $1.2 billion shortfall in the budget that runs through June 30.

Standing before an ornate fireplace at Drumthwacket, the official governor's residence, Corzine talked with reporters about 2009, a year in which he faces reelection, and 2008, a year that began and ended with major policy setbacks but had a number of fiscal accomplishments in between.

"It has been a challenging year by anybody's standards," Corzine said. "All aspects of people's lives, I suspect, have been colored by the nature of the economic circumstances."

For New Jersey, it meant plummeting revenues and restrictions on hiring.

In November, Corzine announced $400 million in budget savings. Yesterday, he said his administration had identified "almost that much again" and would detail the cuts after Jan. 1.

Republicans have criticized Corzine for failing to publicly lay out his plans in the face of a growing deficit.

"The people of New Jersey want to know what Gov. Corzine is doing to make sure our government lives within its means and avoid further tax increases," Senate Minority Leader Thomas H. Kean Jr. (R., Union) said in a recent news release.

Corzine said he was in a good position to close the current budget gap by June 30, the end of the fiscal year. But the 2009-10 budget he will introduce in February faces a more daunting shortfall, projected as high as $5 billion.

Corzine said he is considering wage freezes, furloughs and layoffs to cut labor costs in the next budget.

"I prefer to save jobs, but that means I need cooperation from [people] who have contracts," Corzine said, referring to labor unions.

At several points yesterday, he said his plans would have to mesh with a desired federal stimulus, which governors expect to assist struggling states.

This year began with hopes to remedy past fiscal problems.

After narrowly securing the passage of a new school-aid plan in the first days of 2008, Corzine turned his attention to a much-anticipated proposal to steeply raise tolls to halve state debt and fund decades of transportation projects.

Lawmakers and the public balked at the cost and crushed the plan.

Asked what he might do differently, Corzine joked, "I probably wouldn't have had so many town hall meetings," at which he pitched the plan but also absorbed a barrage of criticism.

But those meetings spurred other changes. Corzine pushed through limits on state borrowing and cut the state budget by $600 million, months before the worst of the economic problems hit.

Corzine said he wished he had recognized the depth of the economic crisis sooner, but the June budget reductions made the current shortfall more manageable.

Saying the economy has been his "Number One, Two and Three priorities" the last few months, Corzine pointed to recently approved economic stimulus plans, which include tax breaks and incentives for businesses, money to spark lending to small companies, and aid for home-heating bills and homeowners facing foreclosure.

But Corzine acknowledged that his last major proposal, which would have let towns defer $1.3 billion in pension payments to deal with falling revenues, is not one he would usually embrace.

"Under normal circumstances, I would never have proposed the pension deferral. I think it's bad long-term fiscal policy," Corzine said. "I think it's good fiscal policy when the only alternative is to see either significant layoffs or a hike in property taxes for the public."

The plan is stalled in the Senate.

Corzine noted other accomplishments, including sending funding to long-starved school districts and taking steps to reduce greenhouse gas emissions. The state also won praise for progress in changing its child-welfare system.

Corzine said he hoped that the economy would begin to turn around within nine months, but that "there's a lot of choppy waters between here and there."

Looking back, Corzine said, "It's not a year anyone should be drinking champagne on."