New Jersey Governor Jon Corzine released his proposed 2010 budget today in a speech before the legislature. The budget is $3.4 billion below last year’s adjusted appropriation and $1 billion below Governor Corzine’s first budget in 2006.
So where did the savings come from? A quick analysis shows that $380 million was cut from government budgets and another
$420 million comes from salary freezes and workforce furloughs.
But the bulk of New Jersey’s budget fixes come from one-time fiscal maneuvering: propping up a budget suffering from perennial instability. The $2.2 billion in federal stimulus dollars and $1 billion in “revenue solutions,” including a one-time tax hike for those earning over $500,000 and increased taxes on cigarettes and alcohol, don’t get at the underlying problems that have plagued the state for years.
Particularly troubling is that the federal stimulus funds are not merely subsidizing the state out of its present trouble, but helping the state expand spending on education in the form of a $25 million increase on pre-K education and $300 million in direct aid for schools.
The bottom line: New Jersey’s budget fixes don’t bode well for long-term fiscal recovery, and may permanently expand spending and taxes while shifting the cost of pensions to the future.