New Jersey state budget (2008-2009)
From Sunshine Review
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New Jersey is facing a $3.6 billion budget gap for fiscal year 2009 and a projected $7.0 billion deficit for upcoming fiscal year 2010, according to the Center on Budget and Policy Priorities.[1] In January 2009, Gov. Jon Corzine said, "The economy and its harsh impact on our people remain our most significant challenges. That said, we have not turned our back on long-term strategic goals like reforming and restructuring our state finances, improving government ethics, enhancing public safety and education, and protecting the state’s most vulnerable citizens." The governor cut $1.4 billion from the current FY 2009 budget in order to reduce the state's budget shortfall and in May 2009 proposed suspending property-tax rebates in light of declining revenue.[2]
[edit] Impact of Budget Woes
- In April 2009, New Jersey's unemployment rate rose to 0.1 percent to 8.4 percent compared to a month prior. A total of 14,400 jobs are reported to have been lost in April alone. It marks the 15th consecutive month that New Jersey's unemployment rate continues to drop.[3]
- Gov. Corzine and New Jersey state employees' union, Communications Workers of America, reached an agreement in June 2009 that will delay scheduled raises for 18 months and require 10 unpaid furlough days. In return, employees are to be protected from layoffs through 2010 and will not face any more than 10 furlough days until June 2011. According to the governor, the agreement will save approximately $300 million to $400 million in the FY 2009 budget.[4]
- Due to declining state revenue, Gov. Corzine proposed suspending property-tax rebates to all but seniors. State Treasurer David Rousseau told lawmakers today that the state would save $940 million by eliminating homestead rebates.[5]
- The "Jersey Fresh Program," a program for local produce growers, was cut down to a budget of $150,000 for 2010. Over the past three years, the budget has dropped from $850,000 to $450,000 to this year’s $150,000.[6]
[edit] Budget background
New Jersey's fiscal year begins July 1 and ends June 30 of the following year. The governor reviews individual agency requests along with past and present expenditure and revenue data from November through mid-January. In February the makes his/her final decision and presents a budget recommendation to Legislature on or before the fourth Tuesday in February. The Legislature reviews the recommended budget through a series of hearings and makes any necessary changes to the document. Once both the Assembly and the Senate have approved the bill, it is signed by the governor before July 1, as stated in the state Constitution. The governor does have the power to use line-item veto before signing the bill into law.[7]
[edit] Budget figures
The following table provides a history of New Jersey's expenditures and gross domestic product (GDP).
| Fiscal Year | Expenditures (billions) | GDP (billions) |
|---|---|---|
| 2000 | $54.5 [8] | $344.8 [8] |
| 2001 | $59.4 [8] | $363.0 [8] |
| 2002 | $64.2 [8] | $372.8 [8] |
| 2003 | $68.4 [8] | $389.1 [8] |
| 2004 | $72.6 [8] | $410.1 [8] |
| 2005 | $79.8 [8] | $425.5 [8] |
| 2006 | $82.9 [8] | $448.4 [8] |
| 2007 | $85.6 [8] | $465.5 [8] |
| 2008 | $88.5 [8] | $480.9 [8] |
| 2009 | $91.5* [8] | $480.1* [8] |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
[edit] Ideas about why the crisis exists
- New Jersey has the highest property tax burden on residents as a share of income. Averaging 2005-2007, New Jersey residents are paying 7.1% of their income in property taxes. Median property taxes in the state are $6,082.
- According to the Tax Foundation, New Jersey's overall state/local tax burden percentage, estimated at 11.8% of income, is also the highest in the country, well above the national average of 9.7%. New Jersey taxpayers pay $6,610 per capita in state and local taxes.[9]
- Revenue collections are expected to be $3 billion short of planned spending in the for FY 2010, according to the budget officer of the Office of Legislative Services. April 2009 tax collections fell more than $1 billion less than in 2008 and lower than expected.[10]
[edit] Proposed actions
[edit] Governor Jon Corzine
In an effort to balance the state budget Gov. Corzine proposed making $812 million in spending cuts, some of which include $15 million cut in municipal aid and a $75 million reduction in public school aid. Corzine's budget relies on approximately $300 million in federal stimulus dollars, $275 million of the state's surplus and $208 million in savings at individual state agencies. "We've got a tsunami coming," Corzine said. "I'm confident we'll get through it." Corzine's budget proposal trims approximately $2 billion from the current state budget of $32.9 billion.[11] In May 2009, Gov. Corzine announced a third budget cut for FY 2009. The governor trimmed an additional $150 million from the state budget. The cuts include reducing pension-fund payments for government and school employees by $150 million, following a $500 million cut in March.[12]
[edit] Republicans
New Jersey Republican legislators proposed, in June 2009, a plan to cut $783.2 million in wasteful spending from Governor Corzine’s fiscal 2010 budget. Assembly Republican Leader Alex DeCroce said,"Governor Corzine has repeatedly told us that he has cut the budget to the bone and scrubbed every line. Yet his budget proposal is still bloated with fat and stained by years of irresponsible fiscal policy."[13] Due to declining state revenues, the governor proposed delaying property-tax rebates to all but seniors. Assemblyman Declan O’Scanlon said a rebate suspension will further burden New Jersey homeowners and create more problems than it is trying to solve. “Cuts in property tax relief are not spending cuts,” O’Scanlon said. “They are tax increases pure and simple.” [5] The Republicans' proposal includes: eliminating two-thirds of political patronage appointees in state government ($68 million); reducing unnecessary state-issued cell phones, wireless devices and vehicles ($4.5 million); eliminating compensation – including pension credit and health benefits – for members of boards and commissions ($4 million); and eliminating taxpayer-funded income paid to state prisoners ($1.5 million).[13]
[edit] Democrats
State Democrats said that they are defending the governor's budget because not only did Corzine make necessary budget cuts but it still includes a funding increase for education, preserves property tax rebates for the neediest residents and barely cuts aid to towns. Assembly Speaker Joseph Roberts Jr. said, "He's the first governor in 60 years in New Jersey to introduce in his fourth year in office a budget that is smaller than the budget in his first year, and that is an extraordinary achievement."[14] Of the governor's budget cuts to the FY 2009 budget, Assemblyman Louis Greenwald said the latest cuts are unavoidable and necessary because of the state's constitutional requirement to balance the budget. "It's something that we do in extraordinary circumstances and that's what we face," Greenwald said.[15]
[edit] Economic Stimulus Package
New Jersey is expected to receive $1.2 billion from the $787 billion dollar economic stimulus.[16] All told, the federal stimulus plan would create or save 100,000 jobs in New Jersey, based on White House estimates.[17]
For more information on how the federal stimulus funds are being used in the state of New Jersey, visit the state recovery website.
According to preliminary reports, New Jersey is expected to receive:
- $609 Million for Title 1 and IDEA (Individuals with Disabilities Education Act)[18]
- $6.8 Million towards health care services[19]
- $894 Million towards transportation projects[20]
- $73.6 Million for energy efficiency and renewable energy projects[21]
- $2.6 Million for senior nutrition programs[22]
[edit] Budget transparency
New Jersey currently has no statewide, official spending database online, despite recent attempts to pass legislation that would create a searchable spending database.
[edit] News
- 12/09/08: Yesterday witnessed a transparency press conference at which New Jersey Senators Tom Kean and Joe Pennacchio gathered to support S-445, the "Transparency in Government Act." They, joined by the New Jersey Taxpayers' Association, Grover Norquist, and others, spoke on the importance of transparency in state spending. If passed, S-445 would create a publicly available database containing information on New Jersey's revenues, expenditures, and bond indebtedness. To see a version of S-445, click here.
[edit] Legislation
[edit] Government tools
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
| State Database | Searchability | Grants | Contracts | Line Item Expenditures | Dept/Agency Budgets | Public Employee Salary | Exemption Level |
|---|---|---|---|---|---|---|---|
| None | n/a | n/a | n/a | n/a | n/a | n/a | n/a |
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[23]
- New Jersey will receive an estimated $4,248,900,457 [24]
- The economic recovery website to show how legislators and government officials in New Jersey are spending Federal funds is available here.
[edit] Public employee salaries
The Asbury Park Press provides employee data for New Jersey, and the Rutgers-Newark Observer has salary data for employees of Rutgers-Newark.
[edit] See Also
New Jersey taxpayer-funded lobbying
[edit] External links
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Center for Policy Research of New Jersey
- New Jersey Department of the Treasury, Office of Budget and Management
- Governor Corzine's 2009 Budget Address
- New Jersey Legislature
- New Jersey state site
- New Jersey Americans for Prosperity
- New Jersey Transparency in Government Act
[edit] Additional reading
- Gov. Corzine,"State of the State Address 2009," January 13,2009
- Gov. Corzine,"The FY 2010 Budget Address," March 10,2009
- State of New Jersey,"FY 2010 Budget," retrieved June 5,2009
- State of New Jersey,"FY 2010 Revenues, State budget update," May 19,2009
- Reuters,"NJ to use $2 bln credit line to avoid cash crunch," June 3,2009
- The Heartland Institute:Budget & Tax News,"New Jersey Budget Relies on Questionable Revenue, Cuts," June 2009
- Associated Pres,"N.J. Assembly Republicans to oppose Gov. Corzine's budget," May 21,2009
[edit] References
- ↑ Center on Budget and Policy Priorities,"State budget troubles worsen," May 18,2009
- ↑ Gov. Corzine,"State of the State Address 2009," January 13,2009
- ↑ Philadelphia Business Journal,"N.J. jobless rate hits 8.4%," May 21,2008
- ↑ Philadelphia Inquirer,"N.J. state workers agree to defer raises," June 5,2009
- ↑ 5.0 5.1 Bloomberg,"New Jersey Will Suspend Tax Rebates, Treasurer Says," May 19,2009
- ↑ The Packer,"Some in New Jersey worry about effects of state budget cuts," May 27,2009
- ↑ State of New Jersey,"The State Budget Process," retrieved June 5,2009
- ↑ 8.00 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08 8.09 8.10 8.11 8.12 8.13 8.14 8.15 8.16 8.17 8.18 8.19 US Government Spending,"New Jersey State and Local spending," retrieved June 3,2009
- ↑ New Jersey report by Tax Foundation
- ↑ NJ.com,"Worst year for N.J. tax collections, budget analyst says," May 19,2009
- ↑ The Star-Ledger,"Gov. Corzine plans to slash N.J. budget by $2.1 billion," January 3,2009
- ↑ Philadelphia Inquirer,"Corzine cuts $150 million more from budget," May 15,2009
- ↑ 13.0 13.1 New Jersey Assembly Republicans,"Assembly Republicans identified nearly $800 million in wasteful spending Gov. Corzine has not cut from budget proposal," June 4,2009
- ↑ Associated Press,"Dems defend Corzine's budget proposal," March 12,2009
- ↑ Reuters,"New Jersey Gov cuts $1.2 bln from current budget," May 14,2009
- ↑ NorthJersey.com,"Lawmakers get breakdown of where NJ stimulus money is going," March 12,2009
- ↑ American Recovery and Reinvestment Act,"Impact," retrieved June 3,2009
- ↑ Gov. Corzine,"Governor Corzine Announces $609 Million in American Recovery and Investment Act Funds for Title I and IDEA," April 16,2009
- ↑ Gov. Corzine,"Governor Announces New Jersey Health Centers To Receive $6.8 Million In Federal Funds," March 30,2009
- ↑ Gov. Corzine,"Governor Corzine Announces $894 Million In New Jersey Transportation Projects," March 5,2009
- ↑ Gov. Corzine,"Governor Corzine Announces $73.6 Million in U.S. Department of Energy Stimulus Funding," May 14,2009
- ↑ Gov. Corzine,"Commissioner Howard Highlights $2.6 Million in Recovery Funding for Senior Nutrition Programs," May 15,2009
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ Wall Street Journal,"Stimulus Spending by State", April 23,2009
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