McGreevey Receives Revenue Figures

(TRENTON)-Tuesday, Governor James E. McGreevey received confirmation from Acting Treasurer John McCormac that New Jersey's budget shortfall amounts to $2.9 billion-a problem which he plans to formally address at a joint session of the legislature on Monday, February 11th.

At his first cabinet meeting less than two weeks ago, McGreevey asked McCormac to proceed with the recertification of revenues and to have the numbers ready by today. The figures announced today can be attributed to a significant revenue decline of $2.5 billion in FY2002 and a number of unanticipated expenses adding up to $460 million that were approved after the budget was adopted for programs such as NJ Saver, PAAD and FamilyCare which were not adequately funded at that time.

"Based on the Treasurer's recertification figures, I can tell you that our projections regarding the budget crisis have been confirmed," said McGreevey. "At $2.9 billion, New Jersey's budgetary shortfall is the largest in the nation. When other states saw their revenues slipping and deficits growing, it raised a red flag. But the previous administration took no action at all and instead exacerbated our fiscal problems with increased spending measures."

Contributing to the revenue decline is the fact that gross income tax revenues are projected to be $1.407 billion below original estimates, sales tax revenues are projected to be $307 million below original estimates and corporate business taxes are expected to be $618 million below original estimates. Additionally, the tragic events of September 11th and a slowing economy despite expectation of a seven percent revenue growth added to the severity of the revenue decline.

McGreevey also announced that on Monday, February 11th, he will formally address a joint session of the legislature during which he will propose ways to close the budget gap and will stress the need for all stakeholders-including the legislature-to work together to solve the state's fiscal problem.

"Let me be clear-the address I will give to the legislature shall set forth a plan of action," said McGreevey. "But I respectfully request the need for all stakeholders, including the legislature, to work with my administration so as to ensure that state government does not spend money it does not have."

Since taking the Oath of Office, McGreevey has taken numerous actions to address the state's fiscal situation. He instructed cabinet members to cut operational costs in their departments and agencies by five percent and to freeze all discretionary spending while his office examines the merits of legislation that was enacted in recent weeks. He also met with higher education leaders and informed them that they would need to reduce their budgets by five percent as well.

Additionally, McGreevey established the BEST (Budget Efficiency Savings Team) Commission, which was charged with identifying waste and mismanagement throughout state government, finding efficiencies to maximize services and minimize costs and recommending solutions. For example, the BEST Commission last week identified 10,000 square-feet of unused office space that the state has spent nearly $500,000 to renovate and furnish even though it did not need the space.

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Author: Office of the Governor