Corzine assesses effect of bailout

TRENTON - The federal stimulus package could provide New Jersey $1 billion for its next budget, Gov. Corzine said yesterday, but deep spending cuts still will be needed because of rapidly falling revenues.

Corzine said he is expecting around $28.5 billion in state revenues for the budget year that begins July 1. He said the federal support would give the state about $29.5 billion to spend in the new fiscal year - $3.4 billion less than the plan he signed in June.

That would be equal to a 10 percent year-to-year cut unless taxes were raised to add revenue.

Corzine has already worked on trimming the budget, cutting $1.3 billion in the current year as revenues have fallen. He is scheduled to unveil plans for the next fiscal year on March 10.

In addition to the $1 billion in federal aid expected for the new budget, Corzine is counting on $850 million to help balance the current plan, which has been rocked by falling revenues.

The aid for next year's budget is part of a complex package of stimulus support that will arrive in New Jersey in a variety of forms for government agencies, community groups, transportation projects, and individuals, who could see the help in the form of tax cuts, increased unemployment benefits, and additional aid for college.

Estimates of how much money will flow to New Jersey over the next two-plus years remain fluid and depend on what is counted. There is, however, broad agreement among the analyses about how the major portions of the plan will affect New Jersey.

Estimates from the U.S. Senate Democratic Policy Committee and Federal Funds Information for States, which analyzes the federal policy's state-level impact, put the take for New Jersey government, public-works projects and other broad public causes at around $6.2 billion to $6.4 billion over two years. An additional $207 million is expected for the state's unemployment fund, according to the New Jersey Department of Labor, putting the rough total for the government portion in the range of $6.4 billion to $6.6 billion.

The largest chunks, which the analyses broadly agree on, include about $2 billion for Medicaid; $1.33 billion for the state budget and general education aid; around $250 million for low-income students; about $380 million for special education; $297 million for food stamps; $652 million for highways; and $524 million for other transportation projects. (The two estimates differ by slight amounts in some categories.) Not all of the amounts would go directly into the budget.

Corzine, however, has cited much larger figures from the liberal Center for American Progress, which estimates the benefit to New Jersey about $17.5 billion.

Much of the $11 billion difference comes because the center includes $10.2 billion of benefits New Jerseyans will see from tax breaks, expanded unemployment benefits, and increased college aid. Some of the rest of the difference comes because the center estimates larger benefits in some categories than the other analyses.

The center, for example, says New Jersey could see $2.6 billion in Medicaid support, while the other estimates predict $2 billion to $2.2 billion.

A portion of the Medicaid assistance, $15 billion, is expected to go out to states tomorrow.

Corzine has put his chief of staff, Ed McBride, and the state comptroller, Matthew Boxer, in charge of overseeing the funds that arrive in New Jersey. Corzine said President Obama, with whom he met yesterday along with other governors, gave the state leaders two charges:

"Make sure we put money into the economy swiftly, but also make sure that dollars are spent efficiently and openly and transparently to the public."

As Corzine spoke from Washington, U.S. Sen. Frank Lautenberg (D., N.J.) was in Newark promoting the infrastructure benefits of the federal program.

"New Jersey's economy depends on transportation, and this new law provides sorely needed funding for our state to create good-paying jobs, expand our railways, repair our roads, and break ground on major public-works projects," Lautenberg said.

Corzine said he had "no interest" in moving to Washington as commerce secretary in the Obama administration.