New Jersey budget aims to cut up to 3,500 jobs

By Jon Hurdle

TRENTON (Reuters) - New Jersey Gov. Jon Corzine wants to cut a massive $3.2 billion from the state budget and eliminate thousands of jobs in the coming year in an effort to restore financial health, officials said on Monday.

In a speech on Tuesday announcing his proposed fiscal 2009 budget, Corzine will say the state needs to cut 3,000 to 3,500 workers, or about 5 percent of the overall state work force, while closing some departments and imposing cutbacks throughout state government.

"It's going to have a real impact on the level of services," Acting Treasurer David Rousseau said at a briefing for reporters after discussing the proposed budget with lawmakers. "There will clearly be things the government will not be doing in the future."

Rousseau declined to state the overall size of the budget -- which will be disclosed when Corzine delivers his speech to lawmakers starting at 11:30 a.m. EST on Tuesday -- but said revenue for the year beginning on July 1 is projected to be $32.5 billion.

The proposed budget is $3.2 billion below the amount that would have been spent, assuming automatic growth in various state programs. The cutbacks consist of an unprecedented $1.7 billion reduction in spending and $1.5 billion in deferred growth such as less spending on state pension contributions.

The budget will reduce the number of nonrecurring revenues, consistent with Corzine's policy of returning New Jersey's finances to a sustainable footing after what he says has been years of mismanagement by politicians seeking to curry favor with voters at the expense of the state's long-term financial health.

Most of the reduction in state payrolls will be achieved through early retirement although there will be some layoffs, Rousseau said.

Although revenue was in line with official forecasts in the first half of the current fiscal year, it began to decline in December and January as receipts fell from income and sales taxes, officials said.

While cuts will be felt throughout state operations, the smallest impact will be in education, public safety and welfare services. In addition, property tax relief, a key priority of Corzine's, will continue with a slight increase. Payments on the state's $32 billion in bonded debt will go up by $100 million.

Rousseau declined to identify departments scheduled for closure.

The budget follows the publication in January of Corzine's plan to pay down half the state's debt and pay for road and bridge repairs by handing the management of the state's toll roads to a public benefit corporation that would issue bonds backed by sharply increased tolls.

The plan to raise tolls has stirred a storm of criticism among lawmakers and the public. An opinion poll by Fairleigh Dickinson University published on Monday found that a third of commuters who use the New Jersey Turnpike or the Garden State Parkway -- two of the roads where the planned toll hikes would hit -- described Corzine's performance as "poor," as opposed to 23 percent who used other roads.

Only 25 percent of voters believe the state is headed in the right direction, the lowest percentage since before the Democratic governor was elected in November 2005.

(Editing by Gary Hill)