The budget cuts proposed yesterday by Gov. Corzine will hurt but are necessary, after years of lavish government spending and borrowing too much.

The challenge now is for the Legislature to limit the damage for those New Jersey residents who are the most vulnerable.

It's unprecedented for a New Jersey governor to propose actually

cutting

the size of government, instead of merely reducing annual spending increases.

Corzine wants to trim the current budget of $33.5 billion by $500 million. That's a pimple on an elephant. But when mandatory spending increases are taken into account, Corzine would reduce spending by $2.7 billion in fiscal 2009. Virtually every agency would be cut, three departments would be closed, and about 3,000 jobs would be eliminated. All of this would help close a $3.5 billion deficit.

The governor heard loud and clear from residents at town-hall meetings where he was promoting his plan to raise tolls. Taxpayers, angry about rising property taxes and worried about a recession, first want Trenton to reduce its spending. "The public understands the state has a fiscal crisis," Corzine told legislators in his annual budget address. "But they want us to understand they have one of their own."

Whether New Jerseyans are prepared for the consequences of Trenton's downsizing is another question. State budget cuts have a way of showing up as increased costs somewhere else.

Corzine proposes less aid to colleges and universities, which could result in steeper tuition increases and higher student loans. The governor intends to cut state aid to municipalities, which could force local governments to raise property taxes. Cuts in charity care to hospitals could have consequences for health-care institutions that by law can't turn away uninsured patients.

Senate President Richard Codey (D., Essex) was correct yesterday when he said it's the Legislature's duty to make sure the proposed budget is "both lean and humane."

What's truly sobering is that this budget, by itself, does not solve Trenton's fiscal problems. As Corzine said, it's merely one step toward a solution.

New Jersey's budget crisis has been building for so long that, even with these proposed cuts, Corzine's team projects a deficit of about $1.7 billion in fiscal 2010.

The new spending blueprint doesn't do anything to drain New Jersey's ocean of debt, now at $32 billion. Corzine wants to borrow against increased toll revenues to pay off debt, but the public has clearly rejected higher tolls. Just paying the debt service in this year's budget will eat up more than $2 billion of taxpayers' money, funds that can't be spent on health care, education or roads.

"We should be cutting debt service, not closing parks or raising co-pays," Corzine said.

There's another message in this proposed budget - it's time for New Jersey to get serious about municipal consolidation. Communities with fewer than 10,000 residents would receive less direct state aid in this budget, but would get priority for $32 million in grants to work out shared services or consolidation agreements.

More municipalities and school districts need to look into consolidation as a way to limit property-tax increases. But when State Sen. Stephen Sweeney (D., Gloucester) raised the idea in 2006 in Gloucester County, the howls could be heard from the Atlantic Ocean to the Delaware River.

Somehow, New Jerseyans must tame their concerns about the perceived evils of consolidation.

Very few people in New Jersey dispute the need for budget restraint in Trenton. But the challenge by July 1 is to cut with as much care as possible for the people who rely on state government the most.