NJBIA believes that spending cuts are the only way to get rid of the State’s structural budget deficit.  In testimony prepared for today’s Assembly Budget Committee hearing, NJBIA First Vice President Art Maurice said reducing overall spending is a necessary first step in breaking the cycle of ongoing budget shortfalls and financial instability that have plagued New Jersey for the past 15 years.

Maurice praised the goals of the budget proposed in February by Governor Jon Corzine because it tackles the State’s structural budget deficit (the difference between recurring tax revenues and ongoing expenses) by cutting spending. 

"While Governors have come and gone, the one constant in Trenton has been the annual hunt for new money to fund State spending that we simply could not afford," Maurice told the committee. "So Governors have resorted to annual gimmicks to balance the budget, such as diverting nearly $5 billion in unemployment insurance trust funds, issuing $14 billion in long-term debt, and raising business, income and sales taxes."

"Despite these extraordinary efforts, our structural deficit today is little changed," Maurice said.  "A new approach is needed."

"Reducing overall spending, as the Governor proposes, is a necessary first step in breaking the cycle of structural deficits," Maurice said.  "While reasonable people can question individual budget cuts, and certainly this Committee will make budget changes, we urge you to retain the Governor’s goal of a budget that reduces overall spending below current levels.  Restored cuts need to be replaced with other cuts."

Maurice said legislators should be concerned about the impact a new benefits program like paid family leave would have on the State’s finances.  If the current economic downturn continues and unemployment continues to rise, New Jersey’s unemployment and temporary disability trust funds could come under financial pressure.  Paid family leave would expand the temporary disability insurance program, requiring a loan of $25 million from temporary disability funds to cover startup costs, and $5 million to $7 million a year in administrative costs.

"I think we can all agree that given our State’s budget crisis and our economic recession, the last think we need to do is to enact a new mandate requiring dozens of new government employees," Maurice said.