Corzine's Budget: Freezes, Furloughs or Layoffs

New Jersey Gov. Jon S. Corzine proposed an austere budget Tuesday that slices property tax rebates, calls for state worker furloughs and wage freezes to avoid layoffs, and imposes new taxes on businesses to prop up the unemployment insurance fund.

The governor's $29.8 billion budget proposal, which pares spending to 2006 levels, calls for sacrifice while preserving programs for children, senior citizens and the most vulnerable. It also would impose a one-time tax on New Jerseyans making more than $500,000, and would raise $30 million through new levies on liquor and cigarettes.

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.

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.

The governor 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 is running for re-election in November; the entire state Assembly is also up for re-election.


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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.

Corzine pledged to pump $270 million into fund last month, but that won't be enough to avoid triggering an automatic tax increase.

The tax is triggered when the unemployment fund dips below a certain threshold measured on March 31. A tax of $70 to $80 per employee per year is likely.

Corzine's budget also would reduce the state's contribution to the chronically underfunded public employee pension program.

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.

The budget requires legislative approval and would take effect on July 1.

Copyright AP - Associated Press
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