From the Star Ledger:
The state today said it is facing a $1 billion hole in this year’s budget — a shortfall five times bigger than previously disclosed — and will cut funding for schools, municipalities, higher education, hospitals and pension plans to help close the gap.
A Treasury spokesman said the state collected $412 million less in taxes than expected through October.
“It is going to be a gut-wrenching experience,” said Bill Dressel, executive director of the New Jersey League of Municipalities.
The crunch has already led to a disagreement with Gov.-elect Chris Christie, who has called for spending freezes. On Tuesday, Corzine and Christie clashed over emergency funding for food banks and soup kitchens.
That revelation is the latest budget problem facing New Jersey as it grapples with fallout from the deepest economic downturn since the Great Depression. Two days after he lost the election, Gov. Jon Corzine said the state needed to find $400 million in savings to cover shortfalls that included $190 million in anticipated taxes that did not materialize.
In addition, the state already will start off next fiscal year’s budgeting process with an $8 billion hole, according to a report from a nonpartisan legislative office.
The depth of the state’s current $1 billion shortfall was not revealed until today, when it was included in a required statement sent to Wall Street bond investors. It means officials now have to tell people who were expecting money they will not be getting it.
It is the second straight year the state has been forced to make mid-year budget adjustments to deal with revenue shortfalls in the billions.
From the APP:
New Jersey’s budget problem worsened in October, with a $222 million shortfall that exceeded its deficit in tax collections from July, August and September combined.
In a prospectus sent Wednesday to prospective bondholders, the state says its deficit could be $1 billion. It said that could be closed in part through “up to $400 million actions affecting major cost centers, including: school aid, municipal aid, higher education, hospitals and the state contribution to the pension plans.”
However, the 5.1 percent, $412.7 million year-to-date tax shortfall would, if maintained over the course of the next eight months, leave collections almost $1.5 billion behind budget.
Odds are it won’t, as tax collections fluctuate. Sales tax revenues are greatly influenced by the Christmas shopping season; income taxes could see a bump from Wall Street bonuses, but that won’t be known until April and May.
From New Jersey Newsroom:
With the deficit for the current 2010-11 state budget growing toward $1 billion, the outgoing Corzine administration could be forced to cut aid to cities, towns, schools, and hospitals as well as state contributions to public employee pension plans.
The grim outlook became public Wednesday in a state report sent to Wall street bond investors.
“Largely due to continuing revenue shortfalls and the need for supplemental appropriations, the projected deficit by the close of the current fiscal year (June 30) is now estimated at $1 billion,’’ said Sen. Barbara Buono, chairman of the Senate Budget and Appropriations Committee. “Obviously, many worthy and deserving programs that are in need of state funding will have to make do without it. We have no choice – there simply isn’t enough money to sustain our current state budget, let alone any additional spending proposals.’’