For Senate Majority Leader Stephen Sweeney and Assembly Deputy Majority Leader Joseph Cryan, the proposed fiscal year 2010 budget treats business well considering how deeply revenues have plunged in New Jersey.

For Senate Republican Leader Tom Kean and Assembly Republican Leader Alex DeCroce, the State could do a lot better.

That was the assessment of Governor Jon Corzine’s spending plan presented April 17 at NJBIA’s Meet the Decision Makers. Corzine proposed his Fiscal 2010 budget in March, and the two legislative budget committees are holding hearings on it before crafting their own budget proposal the July 1 deadline.

Cryan noted that the economic crisis was driving the main policy decisions, as plunging tax revenues force legislators to look at how to plug a two-year budget hole that could be as much as $7 billion. While cuts and tax increases are not what legislators want, circumstances have forced their hands, he said. “Nobody likes to deliver bad news,” Cryan said.

“I don’t like it, especially in an election year. But the fact is, we are in very sobering times, very difficult times.” While both spending cuts and tax increases are necessary, he said, the Legislature is leaning more heavily toward cost cutting. So far, the budget calls for $4 billion in spending reductions, and $1 billion in higher taxes.

Businesses are facing a 20 percent increase in payroll taxes (about $90 per employee) to replenish the Unemployment Insurance (UI) fund. The Governor has also proposed a one-year income tax increase on incomes over $500,000 a year and extending for one year a temporary surcharge on the Corporation Business Tax that was supposed to end this year.

On a positive note, Sweeney said the economic crisis would force legislators to cut spending and look for ways of running government better. “The positive is that the government is spending less,” he said.

One way to run government better is to protect payroll-tax revenues from budget raids. The UI fund is running out of money because past governors and Legislatures diverted $4.7 billion in payroll taxes intended for the Unemployment Insurance fund. Sweeney is sponsoring legislation with Kean to constitutionally dedicate payroll taxes so they cannot be diverted.

Kean agreed that the State should do a better job of protecting UI funds. “People who pay these taxes expect to have these funds available to them in their time of need,” he said.

Kean said the State also needs to do a better job with its economic development programs, adding, “Often, they are an impediment rather than a help.” He said a first step should be to consolidate and streamline those programs.

DeCroce argued that all of the talk of reform and spending cuts are a little misleading. He said the State budget was really $45 billion, not $33 billion, once all of the federal funding and off-budget items are added to the total, and that number has been increasing exponentially.

“The budget process in this State is really strange,” DeCroce said. “I’d like to know what happened to that money.”