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Economy Watch: Revenues Low

The legislative majority is wasting no time in responding to Gov. Jon Corzine’s call for an economic recovery package, with the Assembly Budget Committee scheduled to address five new pieces of legislation related to the plan Oct. 23.

Corzine unveiled his program to a special session of the state Legislature Oct. 16. It includes assistance to citizens in danger of losing their homes or unable to pay their utility and food bills, as well as acceleration of existing infrastructure plans, including school construction.

Even before the current economic “collapse,” however, a slowing economy was affecting state tax revenues, which fell $77 million short of projections for September, according to a state Treasurer’s report described in the Newark Star-Ledger last Friday.

The September shortfalls extended to income and sales tax returns, as well as to casino revenues.

State Treasurer David Rousseau predicted a $400 million deficit in the current-year state budget. Corzine has called on every department of state government to cancel equipment purchases and professional contracts. The Star-Ledger indicated that the revenue decline could limit the governors’ plan to pay down $650 million in long-term state debt using funds already set aside in the state’s current budget.

Immediate Goals On Oct. 23, the Assembly Budget Committee was scheduled to hear five bills that would meet the immediate goals of Corzine’s economic recovery plan: foreclosure prevention, assistance with heating/energy costs and food purchases, expansion of the Homestead Property Tax Reimbursement Program for senior citizens, and investment of $500 million in state-managed cash funds and pension funds in interest-bearing instruments in New Jersey community banks. The investment in state-chartered banks would spur small business lending, according to the governor.

In addition, Corzine’s plan would expedite infrastructure projects that are currently on the drawing board, including public school construction and renovation, Turnpike and Parkway expansion, and a new trans-Hudson mass transit tunnel. Corzine said he directed the heads of appropriate state agencies, including the New Jersey Schools Development Authority, to accelerate the projects where feasible.

“It is my expectation that without compromising appropriate controls or competitive requirements, we can move forward through these agencies, in the next six months, $4 billion to $5 billion of projects,” said the governor. “The American Society of Engineers suggests each $1 billion of infrastructure spending creates [approximately] 30,000 jobs. Rutgers’ Heldrich Center [for Workforce Development] uses a smaller metric of between 10,000 to 15,000 jobs.”

Green Future In his Oct. 16 economic address to both houses of the Legislature, Corzine also outlined long-term plans that would include changes in state tax policy to encourage business investment and the growth of “green” industries, such as off-shore wind energy, solar energy and projects focused on renewable resources.