It's Greece in the lead! No, New Jersey pulls ahead!

This is statewide - not just JC.

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Gov. Chris Christie fires the first shot....

...Most of the education savings will be attained by forcing school boards to use up surpluses in their budgets. When Democrats have tried this trick in the past, the Republicans charged that it was a property tax increase in disguise. Those surpluses should be used to reduce the next year?s tax bill, they said...

From the Princeton Packet:

STATE: Gov. Christie imposes emergency fiscal measures
Education aid, pension contributions are curtailed

Friday, February 12, 2010
By Fred Tuccillo

TRENTON -- Declaring New Jersey in "a state of financial crisis" and its budget in "a shambles", Gov. Chris Christie Thursday invoked executive authority to freeze funds for education aid, forcing school districts to spend down current surpluses and face potential property tax increases next year.

To close the state's $2.2 billion budget gap, the governor also revoked state subsidies for higher education, NJ Transit and hospitals and eliminated the Department of Public Advocate and said was making cuts in 375 state programs.

The unprecedented actions were announced in an address to the state legislature, in which Gov. Christie condemned New Jersey's current budget and past fiscal practices.

"For the current fiscal year 2010, which has only four and one-half months left to go, the budget we have inherited has a two billion dollar gap," he said. "The budget passed less than eight months ago, in June of last year, contained all of the same worn out tricks of the trade that have become common place in Trenton, that have driven our citizens to anger and frustration and our wonderful state to the edge of bankruptcy."

The governor added: "Today, we come to terms with the fact that we cannot spend money on everything we want."
Noting that the state constitution requires a balanced budget, Gov. Christie outlined his emergency measures:

-- freezing $550 million in "unspent technical balances" including state funding aimed at assisting local government consolidation planning and energy system upgrades;

-- terminating various state subsidies ranging from the $50 million job creation program known as "InvestNJ" to the municipal aid program currently running a $3.2 million balance previously intended to help local governments with "overhead costs;"

-- delaying capital improvements to state prisons, parks and other facilities to save $90 million during the current fiscal year;

-- accelerating revenue collection practices including resolution of disputed tax settlements and repayment by urban enterprise zones of state subsidies used to grant property tax relief.

Declaring that state government must "shrink" rather than raise taxes, the governor made his clear that his fiscal strategy will be designed to force other New Jersey governmental units -- principally municipalities, school districts and authorities -- to choose between deep cuts or increased property taxes and service fees.

"For example, the state cannot continue to subsidize New Jersey transit to the extent it does," Gov. Christie said. "So I am cutting that subsidy. New Jersey transit will have to improve the efficiency of its operations, revisit its rich union contracts, end the patronage hiring that has typified its past, and may also have to consider service reductions or fare increases."

He praised recently-announced legislative initiatives to reform public employee pensions, saying the state cannot afford to spend "another $100 million" contributing to the pension system this year and citing specific cases to illustrate pension excesses:

"One state retiree, 49 years old, paid, over the course of his entire career, a total of $124,000 towards his retirement pension and health benefits. What will we pay him? $3.3 million in pension payments over his life and nearly $500,000 for health care benefits -- a total of $3.8m on a $120,000 investment," the governor said. "Is that fair?"

"A retired teacher paid $62,000 towards her pension and nothing, yes nothing, for full family medical, dental and vision coverage over her entire career," he continued. "What will we pay her? $1.4 million in pension benefits and another $215,000 in health care benefit premiums over her lifetime. Is it 'fair' for all of us and our children to have to pay for this excess?"

The governor devoted much of his address to education aid, acknowledging that it will be both the "biggest" and "most controversial" category of his reductions. He added, however, that his solution would "not take one penny from an approved school instructional budget. Not one dime out of the classroom. Not one text book left unbought. Not one teacher laid off. Not one child?s education compromised for one minute. Not one dollar of new property taxes will be needed."

Instead, he said, the cuts would come from $475 million in reductions from "so called reserve surpluses" to insure that individual school districts do not have state aid withheld in amounts greater than their current reserve accounts. He acknowledged, however, that "more than 500 school districts will be affected, and more than 100 districts will lose all state aid for the remainder of the year."

"Make no mistake: our priorities are to reduce and reform New Jersey?s habit of excessive government spending, to reduce taxes, to encourage job creation, to shrink our bloated government, and to fund our responsibilities on a pay-as-you-go basis and not leave them for future generations," Gov. Christie said. "In short, to make new jersey a home for growth instead of a fiscal basket case. "

The governor's speech quickly drew a mix of criticism and praise, some of it along party lines.
Senator Shirley K. Turner (D-Mercer), a member of the Senate Budget and Appropriations Committee, said the governor's solutions "would disproportionately impact low and middle-income taxpayers, our children, and students struggling to afford the costs of higher education" and place "an upward pressure on property taxes at the local level."

However, state GOP chairman Jay Webber, praised the Republican governor's actions, calling them "tough, responsible decisions to balance the budget without raising taxes."

Webber said, "Gov. Christie correctly diagnosed New Jersey?s budget condition as being in a ?state of fiscal emergency,? and put forth a plan to address it that is both creative and necessary."

As the governor himself predicted, the sharpest attacks were aimed at this school aid cuts.

Barbara Keshishian, president of the New Jersey Education Assocation said the cuts in education aid and pension fund freeze "could have serious unintended consequences for the future of our public schools."

While Gov. Christie's reduction of surplus funds would not affect current school district budgets, Ms. Keshishian said, "Many school districts use the excess surplus funds from one budget year as revenue to support programs or property tax reductions the following year."

She said that a further state failure to contribute to the pension system would be "outrageous" and a continuation of "the fiscally irresponsible practices" of prior administrations.

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And unfortunately, the current administration is ill-suited to bring about meaningful change as it relates to unions. The mayor, his council team and the HCDO took close to $1 million dollars in contributions from unions (of all flavors) in the May '09 and November '09 election cycles.

I would argue that our system more closely resembles that of EASTERN Europe, pre-1989. Sure, the unions have power but the politicians enable it and then the unions reciprocate. It is a well-crafted, almost self-perpetuating closed loop that siphons our money into their machine, all designed for their self-betterment and little else. Really.

Jersey City and New Jersey reminds me more and more of any Western European country where the unions have accumulated so much power that no change is possible.

The proposed solution of terminating seasonal employees is also a convenient solution that further marginalizes a lot of people, but it does not touch the problems stemming from patronage and entrenchment, which are the cause of most of the problems here.

The stats someone mentioned a few days (week) ago, on the relationship between the number of fireman and captains in Jersey City relative to New York City show that real fiscal change will not happen unless the public service unions (fireman, police, and teachers) see their power severely curtailed.

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But the biggest draining of taxpayers dollars happens in the schools and police and fire departments. You could cut at least $50 million out of the $630 million school budget before you touch a teacher. The bloat in the police and fire departments related to overly generous compensation, obscene accumulated sick and vacation pay windfalls and top-heavy management makes cuts in those areas no brainers.

Here's one for you: 280 people will lose their jobs as a result of these layoffs, saving the city about $4.3 million over a full year. The top 180 people in the fire department make ~ $24 million. I'm not suggesting you get rid of the top 180 people in the fire department, but certainly the compensation needs to be addressed over the long-term and promotion policies need to be examined (initiated?) Saving $4.3 million is real and it helps. But it's hard to take the layoffs seriously when the fire budget is not going down one penny in the proposed budget.

Gov. Chris Christie fires the first shot in what will be a long war

By Paul Mulshine/The Star Ledger
February 12, 2010, 5:31AM

AMANDA BROWN/THE STAR-LEDGER
State education commissioner Bret Schundler, Gov. Chris Christie and Lt. Gov. Kim Guadagno at a press conference in Trenton.

They used to call singer Mel Torme "the Velvet Fog." But after yesterday, I?m ready to hand that nickname to Bret Schundler.

The former Jersey City mayor and unsuccessful 2001 Republican gubernatorial nominee is the new state education commissioner. In that role he was left to explain away $560 million in school-aid cuts after Gov. Chris Christie had finished telling a joint session of the Legislature that the state faces a fiscal emergency.

Most of the education savings will be attained by forcing school boards to use up surpluses in their budgets. When Democrats have tried this trick in the past, the Republicans charged that it was a property tax increase in disguise. Those surpluses should be used to reduce the next year?s tax bill, they said.

That was a good argument back then. So how did Schundler defend against it when the Democrats were pushing the exact same line of reasoning?

"We?ll give them tools to avoid tax hikes," Schundler said of the school boards. It sounded nice, like a trip to Home Depot. But you can buy a screwdriver in one aisle and a chainsaw a few aisles over. Schundler didn?t say which tool he was recommending. And with Schundler, the press doesn?t want to get him started anyway. Ask a question and you get a dissertation.

That?s not a bad way to handle the critics the administration will meet in the long battle that began with yesterday?s skirmish. The teachers? unions don?t want to confront the unpleasant reality that there simply is no more revenue available for their endless "breathing bonuses."

That unflattering term for longevity pay comes from the leader of the loyal opposition, Senate President Steve Sweeney. The Democrat from South Jersey enraged the public employee unions a few years ago when he employed that term during Jon Corzine?s failed effort to deal with property taxes.

Yesterday, Christie alluded to the climax of that battle when he told the legislators, "unlike in the past when you stood up and did what was right, this governor will not pull the rug out from under you." It was an obvious reference to Corzine?s infamous letter to legislative leaders in 2007 informing them that he was going to ignore the reforms they had worked on for months.

But the Democratic leaders made it obvious after the speech that they felt Christie had pulled the rug out from under them this time around. The Dems complained about getting little or no notice of many of the cuts before the speech.
They also made it clear there?s not a whole lot they can do about the cuts ? for this year?s budget anyway. But the battle is just beginning. Next month, Christie will be unveiling the Fiscal 2011 budget, which covers the year beginning July 1. And that?s when the real fun begins.
The public expects Christie to deliver the property-tax reform that Corzine failed to produce. In fact, Christie never promised much in the way of property tax reform, focusing instead on cutting the income tax. If he does want to finally reform property taxes, he?ll have to come up with that funding formula for education which has eluded every Legislature since the income tax was introduced in 1976. And that would mean a conflict with the state Supreme Court, which has ruled that most of the funding must go to a handful of urban districts.

Christie took a chainsaw-sized chunk out of one of one of those district?s budgets yesterday. The Hudson County town of Union City ? notorious for a contract that paid bus drivers overtime for recharging their cell phones ? had its state aid cut by an astounding $29.3 million. That exceeds the cuts for all of the school districts in Christie?s own Morris County combined.

Some Democrats saw the Union City cut as perhaps the first shot in a battle against the Abbott funding system. Christie himself gave few hints. And whether the new governor will be serious about producing property tax relief remains an open question. But if he chooses to do so, he can count on Schundler to leave the opponents in a fog.

Whether our city leaders are Democrats or not, they are, more to the point, crooks. Does Healy care about Democratic ideals? All he cares about is keeping his job so he can enrich himself and his friends.

Can't expect the same from our city government, they're strong democrats, wont cut spending. I like how Christie said "Now is the time when we all must resist the traditional selfish call to protect your own terf at the cost of our entire state." Same could apply at the city level. Now lets just see if people listen.

Demand the Mayor and City Council to cut some of these wasteful jobs in Jersey City??

They always go after the Teachers, Police Officers, and Firefighters. How about they go after all these political positions that are just draining the taxpayers here in Jersey City!

They are talking about cuts in the Fire Dept. Man, how I wish Bloomberg was our mayor...

WOW.

How come we're not hearing about any cuts from the Mayor or City Council with regards to the Jersey City budget?

Instead of cutting, they just keep raising taxes. And once we loose state funding, they will just raise taxes yet again.

EVERYBODY NEEDS TO CUT THE WASTEFUL SPENDING IN GOVERNMENT.

FG

I am wondering what this will lead to ....

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Christie Declares Fiscal Emergency as Deficits Loom (Update2)
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By Terrence Dopp

Feb. 11 (Bloomberg) -- New Jersey Governor Chris Christie declared a fiscal emergency and said he will withhold $475 million in school aid to help close a $2.2 billion budget deficit with less than five months remaining in the fiscal year.

Christie, 47, a Republican who took office Jan. 19, also said he will reduce funding for hospitals and colleges, delay capital projects, cut subsidies for New Jersey Transit and eliminate state programs that ?sounded good in theory but failed in practice.?

?The cuts I have outlined may sound dramatic. And they are,? Christie said in a speech today to a joint session of the Democrat-controlled Legislature. ?Some sound painful. And they will be. I am not happy, but I am not afraid to make these decisions, either. It is what the people sent me here to do.?

Christie scheduled the address after he said he discovered the deficit in New Jersey?s spending plan was twice as big as his predecessor, Democrat Jon Corzine, had projected. The new governor has vowed not to raise taxes to cope with declining revenue and increased costs for services including Medicaid, the health-care program for the poor.

The governor next month must present his plans for closing a gap between projected revenue and spending in the coming year. That deficit is more than $11 billion, the largest per taxpayer of any state in the country ?by far,? Christie said today.

Executive Order

Christie said he signed an executive order before the speech that gives him the right to freeze spending to balance the budget. Democratic lawmakers said they didn?t receive a copy of the fiat until an hour prior to the address and said it was an attempt to circumvent legislative opposition.

?To govern by executive order isn?t going to be accepted here,? Senate President Stephen Sweeney, a Democrat from West Deptford, told reporters. ?We?ll work with him but we are not going to function like this.?

Sweeney said lawyers for both legislative houses are examining whether the executive order goes beyond Christie?s legal powers and how it can be blocked. The governor?s plan would raise local property taxes, Sweeney and Assembly Speaker Sheila Oliver said. Both said they want Christie to use the state?s $500 million surplus before making the cuts.

Property Taxes

School systems in New Jersey on average receive about 40 percent of their funding from the state, according to the New Jersey School Boards Association. The remainder is financed primarily through local property taxes, which at an annual average of $7,045 are the nation?s highest.

Aid to public schools accounts for $11.1 billion, or 38 percent, of the $29 billion budget Corzine and the Legislature approved in June. The state has yet to pay about $3.5 billion of that aid, making it the largest account that can be accessed this late in the fiscal year, said Assemblyman Joe Malone, a Republican on the budget committee.

Corzine in May cut aid to schools by $67 million and delayed $383 million in payments to the current fiscal year to cope with a $1.2 billion revenue shortage for the previous 12- month period. In December, he proposed saving $260 million by freezing school aid and forcing districts to use surpluses.

Scalpel, Not Axe

Christie said more than 500 school districts will be affected by his decision to withhold $475 million, and more than 100 districts will lose all state aid for the rest of the year.

?We have not reduced school aid with an axe -- we have done it with a scalpel and with great care,? he said.

Frank Belluscio, a spokesman for the school boards association, said districts may have to cut programs to deal with the lost aid.

?It could be disruptive and we?re very concerned.? Belluscio said prior to the speech.

The new governor also told lawmakers he plans to move forward with Corzine?s proposal to forgo a $100 million pension payment this fiscal year. He said he will push for ?substantial pension reforms? that will help reduce the system?s $34.4 billion unfunded liability.

Earlier this week, Sweeney introduced a package of bills that would shift future part-time workers into a so-called defined contribution plan that doesn?t promise specific benefits, instead of a pension system that guarantees monthly payments. It also would require teachers and local government workers, some of whom have never made contributions, to pay 1.5 percent of annual compensation toward health care.

Pension Changes

Christie urged lawmakers to pass the pension bills before he presents his budget address next month.

?Until that reform is enacted, we cannot in good conscience fund a system that is out of control, bankrupting our state and its people, and making promises it cannot meet in the long term,? he said.

Nationwide, state tax collections dropped the most in 46 years in the first nine months of 2009, Albany, New York-based Nelson A. Rockefeller Institute of Government reported. The worst economic slump since the Great Depression has forced states to cut spending, raise taxes and shift costs to local governments as they seek to keep spending plans aligned.

New Jersey?s revenue slid 12 percent in fiscal 2009, the worst year in modern history, David Rosen, chief budget analyst for the nonpartisan Office of Legislative Services, told lawmakers Feb. 4. Sales-tax collections fell 9 percent last fiscal year and are down 6 percent so far this fiscal year.

?Even Deeper?

The state?s budget deficit for the fiscal year that ends June 30 rose from $924 million predicted by Corzine before he left office. The hole will grow next year as temporary tax increases expire and federal aid declines, Rosen said.

?The challenge next year will be even greater,? Christie said. ?The cuts likely will be even deeper. The reforms will, of necessity, be even more dramatic.?

At the end of January, the state had $14 billion of unspent money remaining for the fiscal year, Christie said. Of that amount, $8 billion was dedicated to such things as employee contracts, maintenance of money to keep federal funding, debt service and constitutional mandates. That left $6 billion from which Christie had to find the $2 billion of savings, he said.

Christie?s proposal would save $115 million by delaying programs and capital projects. Hospital charity care will be reduced by $12.6 million, or 4.2 percent, while aid to colleges and universities will be cut by $62.1 million, Christie said.

Jobs Program

The governor said he cut spending in 375 different programs. That included termination of Corzine?s InvestNJ program, which gave businesses $3,000 for every new hire, to save $50 million. Christie said InvestNJ has ?a large unspent balance and a failed record in actually creating new jobs.?

Christie said he also froze the spending of ?unspent technical balances? across programs, which includes everything from funds to upgrade energy systems in state facilities to those aimed at assisting local governments in plans to consolidate. The governor is discontinuing funding for the Office of the Public Advocate and folding its functions into other parts of government.

?Our priorities are to reduce and reform New Jersey?s habit of excessive government spending, to reduce taxes, to encourage job creation, to shrink our bloated government, and to fund our responsibilities on a pay-as-you-go basis and not leave them for future generations,? Christie said.

To contact the reporter on this story: Terrence Dopp in Trenton, New Jersey, at tdopp@bloomberg.net.

Last Updated: February 11, 2010 13:38 EST
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