Showdown or Shutdown?

With just days to go until a new state budget must be approved, Gov. Jon S. Corzine and the Legislature this week remained in a deadlock over the governor’s one-cent sales tax increase proposal and where spending cuts should be made.

The governor began meeting last week one on one with legislative leaders to gain support for his $30.8-billion spending plan for fiscal year 2007-2008. The administration proposal would close a revenue gap through the sales tax increase, fee increases, and spending cuts. Unlike virtually all other budgetary areas, aid to public education would not suffer any cuts.

“We need to remain on guard for eleventh-hour proposals that would decrease school aid,” said Edwina M. Lee, NJSBA executive director.

“At this juncture, cuts in aid would mean cuts in school programs in most communities—and the greater a district’s reliance on state aid, the greater the impact.  We don’t believe that is what Governor Corzine or the Legislature want.”

Speaker Adamant On Monday, Assembly Speaker Joe Roberts announced that the Assembly Budget Committee would meet on June 28 to release a budget bill that does not include the one-cent sales tax increase.
“We are determined to meet the constitutionally mandated June 30 deadline for enacting a balanced budget,” said Roberts.

While Roberts opposes hiking the sales tax to fund the state budget, he is not against a sales-tax increase that would direct money toward property tax relief. On Monday, he introduced a separate piece of legislation (A-4710) that, he said, “would…ensure that any such increase is used specifically for purposes of providing property tax reform.”

“I will not post this bill – or any other bill to increase the sales tax one penny – for purposes of balancing the state budget,” said Roberts.

Identifying Cuts Meanwhile, administration actions continue to stress that, without a sales tax increase, vital programs—such as school and municipal aid—would suffer.

In an internal memo picked up by the press last Friday, state Treasurer Bradley Abelow ordered state department heads to identify further reductions in spending—including state aid—in the “unlikely” event that the state budget does not come with adequate revenue. The memos directed cabinet heads to identify cuts of $500 million in education aid, $300 million in municipal aid, and $60 million in hospital charity care, according to newspaper accounts.

GOP Weighs In The Assembly minority last week proposed a plan that would avoid the one-cent sales tax increase by slicing $2.2 billion from Corzine’s proposed budget.

Under the proposal, aid to the 31 Abbott districts would be cut by $420 million, or about 10 percent of the $4 billion Corzine proposed. The remainder of the savings would come through pension reform, as well as the  elimination of 800 gubernatorial appointees and the departments of state, personnel and the public advocate. The Republicans also want to end an annual subsidy for New Jersey Network and implement a salary freeze for state employees who make more than $60,000 annually.

Shut-Down The Administration began preparations for a possible long-term government shut-down should lawmakers fail to enact a new budget by July 1.

Plans for a shutdown include blocking road construction projects, closing Atlantic City casinos (which require monitoring by state regulators), and shutting down state parks and historic sites. The contingency plan would ensure that prison employees, emergency workers and the State Police remain on the job.

Last year, the Legislature did not approve the state budget until July 2. State government remained in operation.