RELATED LINK: Read Gov. Corzine's budget address.
The governor proposed eliminating property tax rebates for New Jerseyans earning more than $75,000 a year, which would save $500 million and still allow for rebates for senior citizens and the disabled. About a million homeowners and renters still would qualify.
The budget requires legislative approval. Slashing rebates could be a tough sell in an election year in a state that already has the nation's highest property taxes. All 80 seats in the Assembly are up in November and the governor is also up for re-election.
The Democrat hopes to save $400 million by furloughing state workers and freezing their wages. If he cannot win those concessions from public worker unions, Corzine said he would lay off up to 7,000 state workers. Labor leaders, however, have indicated a willingness to compromise.
Corzine had been considering ordering state workers to take 12 unpaid day off, one a month, starting in July. On Tuesday, he didn't mention a specific number of furlough days.
The governor has also said he needs union workers to forgo the negotiated 3.5 percent pay increase due them on July 1.
Corzine struck a sober tone in his fourth budget address, saying tough choices are necessary now to ensure New Jersey emerges strong when the global recession lifts. He also reminded the Legislature of reckless spending in the past, saying years of irresponsible spending contributed to the state's dire fiscal circumstances this year.
"You can't correct 15 or 20 years of bad decisions in 38 months," Corzine said. "The steps we've taken have put our state's finances on more solid ground."
Corzine said he would rely on $2 billion in federal stimulus money to help close a $7 billion budget gap this year. That money goes to Medicaid and to help the state balance its budget.
The budget imposes a new payroll tax on the state's 250,000 businesses to beef up the unemployment insurance fund. The Labor Department says the fund is paying $75 million a week in claims, nearly twice as many as last year.
Corzine pledged to pump $270 million into fund last month, but that won't be enough to stop an automatic tax increase. The tax increase is triggered when the unemployment fund dips below a certain threshold measured on March 31. The increase of $70 to $90 per employee per year is likely starting in July.
Corzine's budget also would reduce the state's contribution to the chronically underfunded public employee pension system.
Corzine proposes eliminating the property tax deduction on state income taxes for all but seniors to help fund rebates.
The plan would preserve funding for education, children's health care and financial rescue programs, such as food pantry funding and anti-foreclosure assistance. It appropriates $25 million to fund preschool education for 50,000 children, money Corzine calls "an important down payment" toward his commitment to universal preschool.
A balanced budget must be in place by July 1.
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