Gov. Details $26.2 Billion Budget

Despite boasts of a better economy, New Jersey still needs to raise taxes, increase fees and borrow money to pay its bills, Gov. James E. McGreevey told legislators Tuesday.

McGreevey detailed a $26.2 billion state budget that promises more money for schools, senior citizens, the arts, veterans and health care.

The sales and income taxes will not be raised, but dozens of other taxes and fees will go up.

Smokers will pay more, adding another 45 cents to the nation's highest tobacco tax. So, too, will bad drivers, through higher fines and fees.

Buying a house will cost more. McGreevey proposed a new 1 percent fee on sales of houses costing more than $1 million. People who buy houses for more than $150,000 would pay higher fees.

New car buyers will be forced to pay up front four years of registration fees, bringing in $90 million a year.

Another new tax -- this one on cell phone towers for $33 million -- will pay to hire 200 more state troopers.

Petroleum products could cost more, as McGreevey wants to raise $150 million by increasing fees. How that would affect gasoline prices was not immediately clear.

And as the money from cigarettes and driving fines comes in, McGreevey wants the state to borrow against it, taking out a 20-year loan to cover the costs of state government this year.

Overall, the budget is nearly $3 billion more than what McGreevey asked for last year, and about $2 billion more than the one approved in July.

"I am proud that we are investing more money in our schools, in municipal aid to keep property taxes down, in health care for seniors and women and homeland security to keep our families safe," McGreevey said.

"And for those who want to argue that there is too much spending, show me the specific reductions you want to make in aid to school districts or senior property tax relief or veterans care or DYFS reform."

The most ambitious program creates the nation's first publicly funded research center to investigate medical uses for human embryonic stem cells.

McGreevey wants the state to lead in finding cures for diseases such as Parkinson's and Alzheimer's. The price tag for the effort is $6.5 million.

The largest new expense is $125 million to improve the Division of Youth and Family Services, a commitment made when the state settled a lawsuit with a children's advocacy group that pushed for reforms.

New Jersey's county colleges would see a windfall, with more money to build job training programs. Students who finish in the top 20 percent of their high school class would be guaranteed a free education at a county college, McGreevey said.

Already under a Supreme Court order to improve preschool offerings in the state's poorest schools, McGreevey said he would expand services throughout the state at a cost of $30 million.

Most of McGreevey's proposals carry modest price tags.

He wants to spend $5.4 million and allow poor and uninsured people access to mammograms and other cancer screenings.

Another $5 million would go to school districts to help defray costs of rising enrollments. Local governments that keep expenses down would share in a $5 million program.

McGreevey raised aid to school districts and local , after two years of no increases.

Schools will get $200 million more, but half of that money will go to schools in the state's 30 poorest communities. The remaining $100 million will be shared by more than 600 districts.

In theory, that state subsidy helps reduce property taxes, but local rates have risen steadily.

McGreevey also wants more money to keep rebate checks flowing to senior citizens, another program the governor labels property tax relief.

"These investments in jobs, in education and in health care for our citizens reflect the priorities of our government. They are all things that will build a better state and will keep New Jersey moving on the right track," McGreevey said.

Republicans dismissed McGreevey's portrait of a recovering economy, and said his budget will cost residents more in property taxes, fees and interest on a growing debt.

"My concern is we are manufacturing prosperity on the backs of the middle class under the guise of taking care of them," said Assemblyman Guy Gregg, R-Morris.

"I've never seen a budget in the state where every new program is being paid for by borrowing," said Sen. Diane Allen, R-Burlington.

The improved budget outlook is due to tough decisions his administration made in his first two years in office, McGreevey said. Rewriting the corporate tax code has brought in millions more than expected, and the state has cut back on expenses.

Most of the increase in overall spending is a result of rising costs such as insurance and health care coverage, he said.

Both the Senate and Assembly must approve the budget, and any needed tax increases, by July 1.

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Author: NBC10/AP