Lawmakers warned of a big deficit in '08 budget

TRENTON - Amid widespread optimism among lawmakers about Gov. Corzine's proposed $33 billion spending plan are dire warnings about 2008.

Treasurer Bradley Abelow and David Rosen, the Legislature's budget analyst, have told legislators to be prepared for tough times next year, even if this year's budget, with no tax increase and plenty of property-tax help, appears set for easy approval in the coming weeks.

Abelow said the administration already projected a $2.5 billion budget deficit for the fiscal year that will start July 1, 2008.

"The structural deficit is a problem going forward," Abelow said.

Rosen told the Senate budget committee yesterday that modest economic growth in New Jersey means the problem won't go away on its own.

"It's very unlikely revenue growth is going to do that by itself," Rosen said. Next year's budget is "certainly going to be difficult."

Sen. Paul Sarlo (D., Bergen) suggested that spending cuts loomed.

No lawmakers have suggested increasing taxes next year, though Republicans wonder whether the forthcoming struggle will make it difficult for Democrats to continue to fund their $2.3 billion property tax relief plan included in this year's budget proposal. That plan is to deliver checks averaging $1,051 to most homeowners.

"New Jersey's economy continues to sputter under the burden of the tax increases imposed on the state's businesses and residents during the past five years," said Senate Minority Leader Leonard Lance (R., Hunterdon).

Democrats contend their plan is sustainable.

Abelow said the deficit stems from spending decisions made largely before Corzine took office in January 2006.

"We continue to face growth in appropriation pressure that exceeds projected growth in revenue over time," Abelow said. "That is based on the coming of fruition of lots of spending decisions, primarily decisions that we inherited."

This year's undisputed budget comes after Corzine and legislative Democrats squabbled over tax increases last year to close a $4.5 billion gap, missing the July 1 constitutional deadline to adopt a budget and closing state government services for a week.