Buono Statement On Revenue Estimates And Budget Overview Hearing

Committee Meeting Underscores Dire State Of New Jersey Economy

TRENTON – Senator Barbara Buono, D-Middlesex, Chairwoman of the Senate Budget and Appropriations Committee, issued the following remarks today at the Committee’s hearing on Office of Legislative Services (OLS) revenue estimates and Treasurer David Rousseau’s overview of the FY 2010 Budget:

“Welcome to the first of a series of budget hearings this Committee will conduct to carefully scrutinize the details of Governor Corzine’s proposed budget for FY 2010. As with every budget proposal, it is a ‘work in progress’ and there are elements that elicit praise and others criticism. But I think it is accurate to say that not one of us has ever been asked to consider a budget under such dire conditions.

“And so, this year we embark upon a review process unlike any other, under circumstances as extraordinary as they are historic. I can say, without equivocation, that we are facing the deepest, most life-altering recession of our generation.

“It is our job, as Budget Committee members, to face these enormous fiscal challenges and to find solid footing amidst upheaval in virtually every sector of our economy.

“Wall Street is being re-constructed.

“The credit crisis is paralyzing businesses.

“Working men and women watch in disbelief as their assets erode. Home values plummet and retirement accounts all but evaporate.

“The unemployment rate has gone from bad to worse each month.

“And no one is immune. Not surprisingly, New Jersey’s tax revenues which began to head south last year went into a tailspin later in the year.

“All three major revenue streams – the income tax, the sales tax and the corporate business tax – are significantly down compared to the previous year.

“Making tough choices is not new to this proposed budget. We started taking action in response to outside economic forces and structural budget issues nearly a year ago as we crafted the FY 09 Budget.

“This is the first time in New Jersey history that a Governor has proposed two consecutive budgets that reduce spending year to year.

“Last year was a turning point in many ways. We reduced overall spending by $600 million from the previous year’s spending levels and completely eliminated the practice of Christmas tree legislative add-ons.

“In the process, we renewed credibility and legitimacy in the budget process – unlike our sister state, New York, whose newly proposed budget continues undiminished pork barrel spending.

“I want to thank and commend the Committee members for engaging in a meaningful questioning of cabinet officials while conducting themselves in a serious, dignified manner befitting the office we hold. I will expect nothing less this year.

“Admittedly, keeping the current budget in balance has been a struggle. The Governor and the Treasurer identified an additional $1.3 billion in spending cuts just to keep the current FY 2009 budget in balance. That’s nearly $2 billion in spending cuts overall.

“Now, we look to the future for the new fiscal year. While battening down that hatches of a $3.6 billion gap in the FY 09 budget, the Governor had to grapple with a FY 2010 deficit of $7.2 billion, twice the size of the current year’s shortfall.

“The reason? I think it would surprise most people to learn that this year’s budget must be balanced on total revenue collections slightly less than FY 06 revenues – of four fiscal years ago.

“If nothing else, this should hit home the message that we are facing an enormous fiscal crisis.

“Mandatory spending on things like debt service, Medicaid and other caseload-driven programs, school enrollment and the new funding formula, and basic inflationary forces don’t conveniently vanish when revenues don’t come in to support them.

“So how is this budget balanced? It is balanced by favoring spending cuts over tax increases. While the lion’s share of solving the $7.2 billion gap comes from spending cuts ($4 billion, or 57%), federal stimulus ($2 billion, or 29%) and new tax revenues ($1 billion, or 14%), make up the balance of our budget solutions.

“Make no mistake about it, there is pain in this budget. It reflects scores of tough, sometimes impossible choices that we all will not agree upon.

“If there is a silver lining on all of this its that the proposed budget maintains and in some cases increases funding for our core priorities: education, health care, protecting our senior citizens and our most vulnerable and property tax relief. Even with all the cuts, this budget still devotes more than half of total spending to property tax relief.

“Though inevitably there will be some changes made to the Governor’s proposal, this budget represents a rational plan for surviving this economic crisis and positions us on a path to recovery as the economy stabilizes and begins to grow, as it inevitably will.

“Now let’s have a healthy debate about the proposal before us.”