Is N.J. budget a done deal?

June 17, 2008 6:12:41 PM PDT
The path ahead may not be smooth for the state budget agreed upon by Gov. Jon S. Corzine and legislative leaders. With a July 1 constitutional deadline looming, influential Democrats remained uncertain Tuesday about the $32.8 billion spending proposal that would cut funding for hospitals, towns and cities, property tax rebates and other services.

It would also extend a public utility tax and offer retirement incentives to state workers.

Legislators worked to find more money for Corzine's proposed cuts but didn't fully restore most amid state fiscal woes.

"We did some restorations but I'm not sure we did enough," said Sen. Ronald Rice, D-Essex, chairman of the New Jersey Legislative Black Caucus, which includes five Senate and 10 Assembly members, all Democrats. Democrats control the Senate 23-17 and the Assembly 48-32.

Senate Budget Chairwoman Barbara Buono said the agreement reached between Corzine and legislative leaders "is based upon myriad assumptions, some which remain unresolved."

She cited Corzine's plan to cut the state work force by offering retirement incentives to state workers. Corzine initially sought to get 3,000 workers to retire, with a minimum age of 50. That has been pared back to 2,000 workers who are at least 58 after legislators worried the retirements would boost taxpayer-paid retirement benefits.

Several legislators have proposed cuts in benefits for newly hired government workers.

Buono, D-Middlesex, said the bills would help pay for the increased retirement costs, but Corzine hasn't backed the bills and it's uncertain if the Legislature will pass them alongside the budget before month's end.

"That remains to be seen," said Senate President Richard J.

Codey, D-Essex.

But Buono said, "Their passage is crucial in the overall scheme of things."

The bills are opposed by public worker unions who have donated heavily to Democrats.

Assembly Budget Chairman Lou Greenwald, D-Camden, defended the budget plan when details were released late Tuesday, about 15 hours before a Wednesday public hearing on the plan.

"This budget reflects the people's demand for state government to cut spending and live within its means while ensuring the vitality of core programs that directly impact residents' lives," Greenwald said.

The budget would: - Eliminate property tax rebates for households that earn $150,000 to $250,000. They got $745 last year.

- Cut municipal aid by about 9.5 percent. Towns use the aid to control property taxes.

- Keep state parks open by using $9 million from a shore protection fund.

- Cut by about 9.5 percent aid to help hospitals treat the uninsured, as opposed to the 15 percent cut proposed by Corzine.

- Abolish the Department of Personnel and the state Commerce Commission.

- Provide $8 million as part of a plan by Sen. Joseph Vitale, D-Middlesex, to expand a health care program for the poor to more low-income parents and mandate that all children have health insurance.

- Provide money for oversight and audit by the state comptroller of a $145 million aid program for cities that was recently criticized by state auditors.

- Provide no money for the pet projects that typically have been added to the budget at the last minute by legislators.

Corzine's plans to charge Medicaid patients co-payments and impose a $100,000 family income limit on a county college scholarship program have been scrapped.

The budget is set for final approval Monday by the Legislature, allowing the state to meet the deadline and avoid a repeat of 2006's government shutdown.

Corzine's administration estimates extending the utility tax would cost the average household $10 per year. The tax was supposed to be phased out, but it would be frozen to raise $62 million for hospitals, nursing homes and Medicaid.

But Republicans noted the utility tax extension comes as some lose rebates and renters see rebates drop from as much as $350 to $80. New Jersey has the nation's highest property taxes, at $6,800 per homeowner.

"If this budget maintains cuts to property tax rebates and municipal aid, and extends the tax on utilities, it is nothing more than a shift in government costs to the taxpayers," said Assemblyman Joe Malone, R-Burlington.

Betsy Ryan, the New Jersey Hospital Association president-designee, noted seven hospitals closed in the past 18 months, while five filed for bankruptcy. Ryan said hospitals realize the fiscal difficulties but questioned the continued cut in aid.

"There simply isn't enough money in this budget to stop the bleeding," Ryan said.