factors that prompted
many difficult choices
Gov. delivers
budget news
to students
McGreevey discusses
factors that prompted
many difficult choices
By dave benjamin
Staff Writer
DAVE BENJAMIN Gov. James McGreevey discusses the decisions he had to make when developing New Jersey’s 2003 budget as he speaks to a group of advanced placement government and economics students at Manalapan High School.
MANALAPAN — Decisions by the governor to tighten the state’s budget belt were the main topic of conversation when Gov. James McGreevey spoke with advanced placement government and economics students at Manalapan High School last week.
"Today I will talk to you about why we are where we are," McGreevey said.
The governor explained that the nation is on the cusp of a recession and that the stock market has been going in one direction, down. He told the students how the state’s economy has been affected by these trends.
"In New Jersey, the income tax revenues are down 13 percent," said the governor. "That isn’t good. We are moving in the wrong direction."
McGreevey also noted that capital gains are down 65 percent. Additionally, the state has been impacted by the events of 9/11 and sales tax revenues are down slightly.
Adding to that list, the governor said there is no partnership with the federal government at the present time.
Meanwhile, Medicaid expenditures have gone up by 13.2 percent, he said.
"That’s $100 million plus, I haven’t gotten a dime for it," said McGreevey. "The president’s stimulus package [has] no money for schools, no money for roads, no money for a short-term stimulus package."
The governor said there is a definite need for a short-term economic stimulus, job creation, job growth. In terms of the federal government, there are no jobs, McGreevey said.
He said the events of 9/11 have left the state with security-related expenses for which New Jersey has not received additional funds.
"We have received no dollars," McGreevey said. "Every time we go to [national security level] code orange [we have to put] the National Guard at bridges, the National Guard at tunnels, we have to activate the state police, the Office of Emergency Management, the National Guard, no money. We haven’t gotten dime one for first responders. So how do you think this budget is going to look?"
Using a series of charts, the governor explained that he had walked into office and found, after six months, there was a shortfall.
"There was a $2.9 billion shortfall for the last six months of the year," said McGreevey. "They were going to spend $23.3 [billion, but there was] one problem, we only took in $20.4 [billion]. You can’t spend what you don’t have."
The governor told the students New Jersey was spending at twice the rate compared to the rate of the national average, as if the economy were on an upward trend.
He then pointed to managing not only the state budget, but also the long-term debt. The governor noted the appropriations data, the Consumer Price Index [CPI] and the expenditures for the period 1999 to 2002. McGreevey explained that spending was not adjusted when the CPI leveled off, corrected in 2001 and then took a dive in 2002.
"We completely ignore the reality," the governor said. "We did not correct the spending patterns. [Instead,] we increased [spending] over the previous year. Our long-term debt [also] went from $4.8 billion that we borrowed to over $18 billion. We more than tripled our debt during eight years of the strongest economic growth in the nation’s history."
McGreevey said that at the same time the state increased its operational deficit.
"This year in my operational budget $1.5 billion for debt service, and in two years, it will be $2 billion for debt service," he said.
In an effort to cut back on expenses, other states, he noted, are releasing prison inmates early, closing schools for one day a week or eliminating aid to towns and counties.
"We said we cut $3.6 billion from the budget, devastating," said McGreevey. "We’ve cut programs that I strongly support, but we preserved state aid to school districts and municipalities. Actually, we increased school district aid by $200 million, municipalities by $8 million and we increased funding for the Division of Youth and Family Services, and also Medicaid, $100 million. When you have a budget deficit of $5 billion, you have to close that gap. I have to balance the budget. I have no choice."
Responding to one student who asked if there were alternatives, the governor said the only alternative is to increase taxes.
"The economy is not doing well," said McGreevey. "We have to be responsive to the economic forecast and to the loss in capital gains … Now we have to pay the price."
The governor said it may take a decade to make up the debt and said that somewhere down the line the difference has to be made up.
"I [am] making it up [by] cutting state government operations and also by cutting 107 grant programs," said McGreevey. "We didn’t cut school aid. There is no easy answer."
Responding to questions from the students, the governor spoke briefly about a variety of topics including literacy and education; the use of computers; war and the economy; college preparation for teaching; and state aid to education for construction projects.
Teacher Dave Milboer said McGreevey wanted to speak with the students in his classes and said he and the students felt honored by the governor’s request.
"The advanced placement government curriculum doesn’t cover state and local politics," said Milboer, "but it does come up in conversation and the budget process comes up, obviously, in economics."
Milboer said his students are concerned with the recent cuts in program funding, particularly with programs in the arts. Another concern is college and the increase in tuition.
"The kids bring in whatever they want to talk about," said the teacher. "The AP kids are highly motivated to talk about these things."