Fiscal emergency in New Jersey harbinger of state cuts

By Edward Harrison On Feb 11, 2010

New Jersey Governor Chris Christie declared a “fiscal emergency” for the state of New Jersey today, announcing massive cuts to schools and hospitals. The issue is less the budget for this year, which itself shows a deficit of $2.2 billion, but rather next year’s projected shortfall of some $11 billion. On a per capita basis this the largest shortfall in the nation by far. Fiscal year 2011 begins in July and cuts and/or tax hikes are coming.

Reuters reports:

Next year’s deficit is the largest per-capita budget shortfall of any U.S. state, said Christie who is scheduled to deliver his budget for the coming fiscal year on March 16.

Christie cut $2.203 billion from the current budget in a series of measures that include reducing aid to school districts and using unspent funds from some agencies.

In all, 375 budget lines are subject to cuts, efficiencies, and program eliminations. Cuts include $475 million in aid to school districts; $62 million in cuts to colleges, and $12 million in aid to hospitals. The cut in school-district funding will force them to use budget surpluses for the remainder of the fiscal year, Christie said.

Putting a gloss of fiscal responsibility on his statements, Christie said:

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. In short, to make new jersey a home for growth instead of a fiscal basket case.

Over the medium-term, however, I see little chance of tax cuts or job creation in such an environment. Retrenchment is retrenchment. Full stop.

Expect these austerity measures to be enacted at the state and local level around the country in time for the beginning of FY 2011, one reason I see economic weakness in the second half of this year.

Source

Full Text of Gov. Chris Christie’s speech on fiscal ‘state of emergency’ – Newark Star-Ledger