Revenue Forecast: Grim New Jersey Treasurer Bradley Abelow announced last week that state income and corporate tax revenues are running half a billion dollars behind projections. For the Legislature and administration, the news means that they will have to find a way to close a new gap before finalizing the 2006-07 state budget. According to Abelow, Governor Corzine is firm: No additional tax increases.

Corzine’s proposed $30.9-billion budget, unveiled in March, already includes a one-cent sales tax increase, fee increases, short-term revenue raisers, as well as spending cuts—all designed to close a $4 billion to $5 billion shortfall. But these maneuvers will not be enough in the face of an additional $500-million gap. Abelow said he will provide a revenue update, along with strategies to close the shortfall, during a May 22 appearance before the Senate Budget and Appropriations Committee.

Under the administration’s proposed 2006-07 budget, pre-K through grade 12 public education is the only major area that did not experience actual cuts from current-year levels. Nonetheless, the proposed budget would represent the fifth consecutive year of flat funding for most school districts.

Abbott Aid Before Court  On Tuesday, the New Jersey Supreme Court ruled in favor of arguments presented by the state to essentially limit 2006-07 state aid to the Abbott school districts at current-year levels.

The court heard arguments last week concerning 2006-07 state funding for the 31 Abbott school districts.

Statewide, proposed Abbott district budgets had called for an additional $500 million from the state. (Budgets in 24 districts request additional state money; seven Abbott district budgets assume flat funding.)

Abbott aid levels are mandated by the state Supreme Court under a series of decisions in Abbott v. Burke. Therefore, the state must receive court permission to provide lower amounts of funding than that prescribed by the courts.

Arguing before the high court last week, New Jersey Attorney General Zulima Farber said that the governor’s proposed funding levels are necessary because of the state’s “dire” financial circumstances. She contended that the school districts could make cuts in areas such as administration and transportation.

Twenty-three of the Abbott districts opposed the administration’s plan in court. The Education Law Center and legal counsel for the districts contend that the administration’s proposed budget would force cuts in programs and staffing; threaten progress made possible by the Abbott decisions; and prevent them from seeking supplemental funding to pay for services required by the court.