Voting largely along party lines, the state Assembly and Senate on Monday passed the 2008-2009 Appropriations Act, authorizing a $32.86 billion budget—$600 million smaller than the current year state budget.
Several Republican lawmakers opposed the spending pact—worked out between Gov. Jon Corzine and the legislative leadership. They criticized its reduction in state aid to small municipalities which, they said, would increase property taxes; its continuation of funding levels for Abbott school districts; and a “sidebar” agreement to pass a separate bill authorizing the state’s Schools Development Authority to borrow $3.9 billion for school construction without voter approval.
Education Aid in Place The budget essentially leaves in place the $532 million increase in state aid to public education, called for by the School Funding Reform Act of 2008. Proposed by Corzine and supported by NJSBA, the new funding system brought an end to nearly six years of flat state aid to school districts.
The Appropriations Act (A-2800/S-2009) now goes to Corzine, who is expected to sign it by the July 1 constitutional deadline.
Drama over this year’s budget deliberations focused on two main issues:
- School Construction Funding Although not related directly to the 2008-2009 Appropriations Act, a separate proposal to authorize state borrowing of $3.9 billion for school construction entered directly into the budget negotiations.
Representatives of urban communities made their support of the budget contingent on passage of the construction bill.
The construction proposal, A-2873, passed both houses on Monday. (See separate article.) It would provide $2.9 billion to help fulfill the New Jersey Supreme Court’s dictate that the state fully fund new school construction in the Abbott districts. A-2873 would also provide $1 billion to re-start a grant program for non-Abbott school construction. The non-Abbott grant program was a largely successful aspect of the state’s previous school construction initiative. The grants helped reduce the amount of local borrowing and, consequently, the property taxes needed to build, renovate and expand schools in non-Abbott communities.
On Monday, several Republican Senators and Assembly representatives contended that new state borrowing for construction should be placed before the voters. They cited another proposal, ACR-151/SCR-39—also approved on Monday—that will place a constitutional amendment on the November ballot requiring voter approval of all future state borrowing.
- Early Retirement/Pension Reform Corzine’s original budget proposal depended partly on reducing the state payroll through early retirement incentives. Key Democratic lawmakers, however, balked at the long-term cost of the plan. In response, they proposed a series of public employee pension system reforms to produce savings to fund the early retirement incentives.
The final budget reflects trimmed-down pension reforms to be established under separate legislation (A-2818/S-1962), also passed Monday, and a trimmed-back early retirement program (A-2802/S-2044), which Corzine signed into law on Tuesday.
The early retirement plan would apply only to state government employees. Pension changes, however, would affect school district employees, along with state, county and municipal workers. The changes would raise the retirement age by two years, to 62, and preclude part-time workers from receiving pension credit for years during which they earn below $7,500.
The budget will also downsize state government by eliminating the Department of Personnel and the Commerce Commission. The budget does not eliminate the Department of Agriculture, as the governor had originally proposed.
NJSBA staff is continuing to analyze the Appropriations Act. Further developments will appear in the electronic version of School Board Notes.