Senate Republican Leader Tom Kean has sent the following letter urging Governor Jon Corzine to freeze spending now to prepare for an expected steep drop in tax and fee collections over the next 20 months:
October 24, 2008
Honorable Jon S. Corzine
Governor of New Jersey
Office of the Governor
PO Box 001
Trenton, New Jersey, 08625
Dear Governor Corzine:
I am writing to urge that you immediately freeze non-essential spending and impound any money saved to help soften the expected blow that plunging revenue collections and increased demand for state services will have on the fiscal 2009 and 2010 budgets.
Based on the most-recent estimates provided by your administration, the revenue shortfall for this year will be $400 million – or an estimated $550 million if the spending for your economic recovery program is approved by lawmakers.
The Legislature has bills under consideration that may further boost spending, increasing the size of the shortfall. The accelerated borrowing for schools and transportation that you have proposed will require higher debt service expenses. The state also can expect growing costs for unemployment compensation and social service programs that provide emergency housing, food and medical assistance.
Your current estimate of the deficit for fiscal 2009-2010 is $4 billion, up from the $1.7 billion you estimated in the first months of this year. I urge you to find savings in the budget now to build a surplus that will soften the impact that closing that $4 billion budget gap next year will have on schools, counties, cities and towns.
The fiscal 2008-2009 budget assumes the state would have a $600 million surplus in June that could be used in fiscal 2009-2010. Now we can expect little or no surplus heading into next year unless you freeze and impound non-essential spending today. You’ve stated that you’ve instructed Cabinet members and agency heads to come up with savings amounting to 5 percent of the budget. Implementing those proposals now, and then asking your staff to find more savings that be used to build a surplus this year, is the only prudent way to prepare for what could be one of the worst recessions in New Jersey history.
In closing, the Senate Republicans offer a hand of bipartisan cooperation as you make the swift and decisive choices needed during this difficult period. We are sure you agree that at a time when the state is expecting a $4 billion budget deficit, it would be imprudent to consider new spending without finding savings to pay for it. We look forward to working with you to develop fiscally sound solutions to New Jersey’s economic problems.
Very truly yours,
Thomas H. Kean
Senate Republican Leader
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