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Research/Publications


published in print 03/38/05        NJBiz online  www.njbiz.com

One Step Toward Budget Reality

by Ingrid Reed

In case you haven't been keeping track, it is now the end of the first month of the four-month state budget process. A budget must be adopted by June 30. Acting Governor Codey presented a no-increase proposal and declared New Jersey near bankruptcy because spending has been greater than tax revenues and the state Supreme Court has ruled out further borrowing to achieve the required balanced operating budget.

The legislature is ready to devote the month of April solely to budget matters. Assembly members will also be preoccupied with running for re-election. Although nearly all members reside in safe districts, fear of voter backlash about budget issues runs high.

Meanwhile, the seven contenders for the Republican nomination for governor each decry the budget predicament while offering varying degrees of specificity about what should be done to fix it. Senator Jon S. Corzine, the Democrat running for governor, released a set of proposals for refocusing fiscal and economic policies.

Simultaneously, the question remains as to whether a constitutional convention should address the fact that New Jerseyans pay the highest property taxes in the country for support of schools and local government.

So far the first month's discussion of the budget issues has been predictable-from demands to cut waste and political jobs to suggestions for restoring the $1.2 billion rebate program that last year was paid for with borrowed money. The focus has not been on Acting Governor Codey's challenge that lawmakers change his proposed budget only if they propose new sources of revenue or new cuts.

Here's a suggestion for helping Codey get the response he wants and to bring some structure to the budget discussion: Create a plastic card called "Budget Basics" for easy reference. There would be room on the back for a sponsor ad. The card would have two rows: "A" for Expenses and "B" for Revenues. In each column would be the four major components with a dollar figure and the percent of the total it represents.

This is what it would look like:
      

Not a lot of detail here, but the essentials are in place. This is where a constructive discussion for making realistic revisions should begin. For example, cu Al, state operations, by 10% to achieve a $400 million saving. This could be applied to A4, state aid-specifically to schools, which consume a little less than half o total state aid. Or, raise B2, sales tax, by 10% to provide a not-quite 8% increase in school aid. The idea is to b specific. Note that some of these components have part fixed by law or contract that can't be changed right now.

By the third and fourth month of budget deliberations the fairness issues, if they have not already come up, will need to be addressed. How should state aid b allocated and what state services should be supported? Equally important is how revenues are raised - who pays and how much.

Not satisfied with the handy-dandy Budget Basics card? Check out the "The Budget in Brief " on the state Website, nj.gov. Without the appendix, it is only 71 pages long but filled with fascinating and helpful details. Or, suggest another specific approach. Whatever is used, let's get real in the three months left to face and shape New Jersey's fiscal future.