THE FY2011 BUDGET REPORT CARD: GOV. CHRISTIE, LEGISLATURE GET AN ‘F’

The $29.4 billion FY 2011 budget fails to provide for the working families of this state on every measurable level. To close a multi-billion gap, the budget relies almost entirely on deep cuts to programming and on $1.2 billion in one-shot federal stimulus funds unlikely to be repeated. Even worse, the budget leaves over $1 billion on the table by failing to renew the FY 2010 budget’s tax on residents making over $400,000 per year. By failing to fairly spread the burden of this recession, many of the costs of these cuts will be shifted to working families in the form of reduced services or higher taxes and fees. Below is a summary of the Better Choices for new Jersey Campaign’s findings.

Cuts to Services: F

The FY 2011 budget makes billions in cuts to vital services and aid for our schools and communities. Many of these reductions come at the expense of programs that provide aid to lower- and middle-income families and will result in higher costs for working families.

Protecting Jobs & Working Families
 
Earned Income Tax Credit: $45 million
 
New Jersey supplements the Federal Earned Income Tax Credit (EITC) for low to moderate income working families. The FY2011 budget will reduce the EITC credit for New Jersey residents from 25% of the federal EITC award to 20%, effectively raising taxes on 485,000 households and violating a key campaign pledge by the Governor.
 

Center for Hispanic Policy, Research and Development: $2.2 million

The Center for Hispanic Policy, Research and Development is part of the Department of Community Affairs, and provides grants to approximately 40 groups that assist low-income communities through job training, after-school care, legal services and direct assistance. Originally eliminated by the Governor’s proposed budget, a last minute deal restored $1.4 million in funding to the department.
 
Hispanic Women’s Resource Centers: $760,000
 
New Jersey’s three Hispanic Women’s Resource Centers provide outreach and offer language and computer classes as well as computer training, literacy, and career information and job training. All state funding will be eliminated.
 
Job Training Centers for Urban Women: $540,000
 
New Jersey’s three Job Training Centers for Urban Women offer job readiness and life training skills, computer literacy, counseling, work placement and referral services. All state funding will be eliminated.
 
Adult Education: $10 million

All funding for adult high schools will be eliminated. Funding from the state allows thirty-five adult high schools to offer 8,346 students a second chance at a high school diploma and better career prospects. Many of these programs will either cease operation or severely reduce enrollment.

Protecting Seniors and Persons with Disabilities

Medicaid reimbursement for nursing homes: $56.6 million

Nursing homes will receive no cost of living increase for FY 2011, placing a significant burden on the 359 nursing homes serving approximately 29,000 Medicaid patients in the state. Approximately 85% of nursing home patients on Medicaid are over 75 years of age. 

Medical Day Care: $19 million
 
The FY 2011 budget sharply reduces reimbursement rates for medical day care facilities that minimize costly institutionalization of seniors and the disabled. Adult day care staff help clients with medication, errands, and basic tasks like dressing and preparing meals. Approximately 12,000 New Jerseyans use adult day care.
 
Personal Care: $5.2 million

The Personal Care Assistance program offers assistance to Medicaid patients who need a personal care assistant to help them with basic functions like dressing and bathing. Personal care is instrumental in avoiding costly institutionalization and allowing enrollees to maintain their quality of life. The Governor’s budget proposed a $14.8 million cut, but the final appropriations bill restored $9.6 million.
 
Kinship Care: $1.8 million
 
The FY 2011 cut to Kinship Care would reduce grants to elderly, disabled, or working residents who are caring for the child of a family member. Under the FY2010 budget Kinship Care Wraparound grants provided up to $1,000 to pay for one-time expenses or short term help with bills. The grant amount will be reduced by half to $500.
 

Protecting Kids, from Pre-K Through College

School aid: $820 million
 
The FY 2011 budget makes devastating cuts to school districts on top of over $470 million in mid-year cuts that were enacted for FY 2010. Impact will vary widely by district, but the 7% cut to school aid will invariably result in reductions to after-school programs, tutoring, clubs, sports, arts, and busing and transportation. It will also lead to an immediate spike in property taxes for many working families. The future impact of the cut to school aid will be heightened by a recently passed 2% cap on property tax revenue.
 
New Jersey After 3: $7.4 million

New Jersey After 3 is a public/private after-school program for children up to age 13. It serves approximately 12,000 children from predominantly lower- and middle-income families, keeping children off the streets and allowing parents to work more hours. Originally slated for cancellation in the Governor’s proposed budget, the final budget restored $3 million – one third of last year’s funding.
 
After-School and Summer Child Care: $5.2 million
 
Due to a $5.2 million cut to the Division of Families and Children, more low-income and working families will be forced to pay co-pays for after-school or summer care starting this September.

School Lunch & Breakfast programs: $5.4 million
 
The FY 2011 budget reduces funding for school lunch and breakfast programs to the minimum needed to retain any federal funding. The reduction in state aid will be exacerbated by a loss in federal matching funds and lead to lower quality, less healthy meals for participating students and higher prices for school lunch and breakfast for nonparticipating students.
 
Higher Education: $173 million

Higher education has been consistently underfunded in New Jersey over the last decade, and this budget only exacerbates the trend. A 15% cut in grants to funding for Rutgers University and the nine other public colleges and universities around the state will result in cuts to staff and programming as well as higher tuition and fees for students. On July 15, the President of Rutgers University announced a 4% tuition increase and a 5.1% spike in room and board costs for on campus students in the coming year.
 
Tuition Aid Grants (TAG): $9.2 million

TAG awards go to needy New Jersey students that attend state institutions of higher education. The original budget completely eliminated funding for new TAG awards in the coming school year, but a budget deal restored $1.7 million funding.
 
Educational Opportunity Fund: $2.3 million
 
Educational Opportunity Fund scholarships are awarded to students from financially and academically challenged backgrounds and enable them to attend state institutions. The Governor’s proposed budget requested a $3.6 million decrease, but the final appropriations bill restored $1.3 million in funding.
 
 
Protecting Our Most Vulnerable
 
Legal Services for New Jersey: $9.7 million
 
Legal Services for New Jersey is the primary provider of free legal assistance to New Jersey’s poor, many of whom use the agency in the event of foreclosure and eviction. The 33% reduction will lead to layoffs and force the organization to turn away 11,000 people seeking assistance.
 

New Jersey Universal Service Fund (USF): $5.1 million
 
The Universal Service Fund helps low and fixed income residents (175% of the poverty level and below) pay for electric and natural gas service. Currently under USF, households pay no more than 6% of their annual income for their natural gas and electric service.
 
General Assistance: $17.7 million

The Governor’s proposed budget called for a $39.6 million cut to General Assistance, a cash assistance program that provides $140 per month to adults without dependent children. Often enrollees cannot qualify for other safety net programs or have exhausted their Unemployment Insurance. The final budget restored $21.9 million of the proposed cuts.
 
State Prison System: $66.1 million
 
Cuts to the penal system will result in more inmates confined in prisons instead of county jails, reducing educational and vocational training classes and double-bunking.
 
 
Protecting Public Health
 
New Jersey FamilyCare Enrollment: $24.6 million
 
New Jersey FamilyCare provides quality, affordable health care to uninsured children and their parents if they do not qualify for Medicaid. Late year cuts in the FY2010 budget have reduced enrollment eligibility from 200% of the poverty level to 133%.  About 39,000 parents will be denied health insurance and the state will lose $45.7 million in federal matching dollars as a result of the cut.
 
New Jersey FamilyCare for documented immigrants: $29.8 million
 
About 9,700 legal immigrant adults living in the state for less than five years have already been terminated from NJ FamilyCare and another 2,000 are planned to be terminated next fiscal year. 
 
Early Intervention Program: $12 million

The Early Intervention Program provides early detection, treatment, and care to children born with disabilities. The FY 2011 budget’s $12 million cut may force low-income families making under 350% of the poverty level to either pay for part of the cost of treatment or withdraw from the program.
 
Anti-smoking initiatives: $7.5 million
 
The budget completely eliminates funding for programs that prevent smoking and help smokers quit. Over 10,000 people last year used the state’s smoking hotline, online counseling services and clinics last year. Funding will also be cut for 170 high school and 119 middle-school anti-tobacco groups.
 
Family Planning: $7.4 million
 
All funding for 58 reproductive medical clinics will cease. It is estimated that the centers will have to turn away over 40,000 low income women as a result of staff cuts. The state will also lose $9 in federal matching dollars for every $1 cut.
 
Psychiatric Centers: $3.2 million
 
Two state psychiatric facilities will close as a result of the FY 2011 budget: the Woodbridge Child Diagnostic and Treatment Center and the Vineland Development Center. The cuts will compromise care for over 130 patients.

Protecting Our Communities, Homeowners and Tenants

Municipal aid for property tax relief: $445 million.

In a year when revenues are down across the board, municipalities are struggling to balance their own budgets. State aid to municipalities plays a critical role in preserving funding for vital services like sanitation and public safety while mitigating the property tax burden for working families. The impact of the cut to local aid will vary by municipality, but many have already been forced to reduce services, lay off police officers and firefighters, and raise property taxes as a result. The recently passed 2% property tax cap that will go into effect next year will make the fiscal situation for local governments even more bleak and could force even deeper cuts to services.
 
Senior Freeze Program: $26 million
 
The Senior Freeze Program protects 160,000 senior homeowners and persons with disabilities from rising property taxes by refunding the annual increase in the event of a property tax spike. New applicants will not receive reimbursement payments this year and payments to those currently in the program will be frozen at last year’s level.
 
Homestead Rebates for Homeowners: $848.2 million
 
No New Jersey resident will receive a property tax rebate this year. Homestead Rebates have been the state’s primary vehicle for offsetting the burden on homeowners from the heavy reliance of local governments on property taxes. The FY 2011 budget ‘defers’ property tax relief until next year, turns the rebate into a tax credit, and cuts the amount of relief by 75%.

Homestead Rebates for Tenants: $71.5 million

Property tax rebates for tenants will be completely eliminated. Rebates for tenants cover the cost of property taxes passed on by landlords into rent and help tenants pay for basic needs like food, clothing, and covering the costs of heat and utilities. The average check was $600.
 
Libraries: $5.8 million
 
In the Governor’s original budget libraries faced a devastating 74% decrease in program funding from the state. The cuts would have eliminated inter-library loan and database. While $4.6 of the original $10.4 million cut has been restored, New Jersey’s libraries are still very much in danger. Because libraries rely on both municipal and state aid, they are likely to be further impacted by deep cuts to municipal aid this year and the 2.0% property tax cap on municipalities passed in June.
 
New Jersey Statewide Heating Assistance and Referral for Energy Services (NJ SHARES): $5 million
 
The NJ SHARES funnels grants through community organizations to help residents who are experiencing short term financial difficulties and either have had or are going to have their service cut pay utility and heating bills. All state funding for the program has been eliminated.
 
New Jersey Affordable Housing Trust Fund: $15 million
 
The New Jersey Affordable Housing Trust Fund provides dedicated funding for the construction of new affordable housing. The Housing and Community Development Network of New Jersey estimates that raiding of the fund will cost 1,100 one-time construction jobs, 200 permanent jobs, and $82 million in income.
 

Protecting the Environment
 
Parks Management: $6.9 million
 
Last year more than 18.4 million people visited New Jersey’s 56 state parks. However, in this year’s budget, park management and operations will see its budget cut from $26.7 million to $19.8 million. Funding goes to pay park rangers and keep parks in good repair. The park ranger force is down to 80 from last year’s 96 as a result of the cuts, sometimes leaving parks without adequate supervision.
 
Regional Greenhouse Gas Initiative: $68 million
 
The Regional Greenhouse Gas Initiative (RGGI) is a compact between Northeastern states to create programs that reduce greenhouse gases and stimulate green jobs. RGI funded programs help pay for clean energy initiatives that both clean our air and create new jobs.
 
Clean Energy Fund: $52 million
 
The Clean Energy Fund goes to reimbursements for residents and small businesses for solar installations and high efficiency appliances. The FY 2011 reduction comes on top of a $152 million mid-year cut for FY 2010.
 
Retail Margin Fund: $13.9 million

The Retail Margin Fund provides incentives to businesses to cogenerate and combine heat and power sources with other nearby businesses, as well as provide for the construction of power plants and the production of electricity from natural gas. The fund was cut by $128 million in FY 2010 and has been effectively eliminated this year.
 

CUTS PARTIALLY RESTORED: E FOR EFFORT

As is often the case in the state budget process, several initially proposed cuts were restored through negotiation between legislators and the Governor. Analysis by New Jersey Policy Perspective finds $89.9 million in restorations for safety net programs, a mere .03% of total spending in this year’s budget. Nevertheless, Better Choices for New Jersey applauds the restoration of the following cuts:

Restoring $39.7 million to PAAD/Senior Gold

Pharmaceutical Assistance to the Aged and Disabled (PAAD) and Senior Gold programs offer assistance for prescription drugs to senior citizens and persons with disabilities.  The proposed cut would have imposed a $310 annual deductible on those enrolled.

Restoring $3 million in cuts to Vocational Rehabilitation

The Governor’s proposed budget suggested a 10% cut of $3.5 million in funding to independent service providers that offer job training and other employment services to persons with disabilities. The final FY2011 budget cut grants in aid by $500,000.

Restoring $10.5 million in funding to Supplemental Security Income

New Jersey augments the federal Supplemental Security Income (SSI) payments to the aged, blind, and disabled living below the federal poverty level. SSI offers financial support, incentive to work, and access to medical care for eligible enrollees. The entire $10.5 million cut to the program was restored.

Restoring $1 million to NJ Stars Program
 
The NJ Stars scholarship program pays the full cost of community college tuition and fees to New Jersey high school students who graduate in the top 15% of their class. The FY 2011 budget as originally proposed would have eliminated any scholarships for the incoming freshman class, but the final appropriations bill restored partial funding and opened the program to new applicants in the coming year.
 
Restoring $3.5 million for the State Commission of Investigation
 
Governor Christie’s original budget proposed a 75% reduction to the State Commission of Investigation, an independent watchdog organization formed to fight the influence of organized crime in the state government. The full $3.5 million cut was restored.
 

SPREADING THE BURDEN OF THIS RECESSION: F

Last year, Governor Corzine and the legislature faced a comparable budget deficit and responded with a combination of spending reductions and over $1.3 billion in revenue measures that helped the state avoid further cuts to vital services. While still an austere budget, our elected officials took a step towards a more balanced approach by asking those who could afford it to pay their fair share and restoring funding for FamilyCare, HIV drug distribution programs, and Adult Education.
 
This year is by any measure a step backwards. The FY 2011 budget contains no significant sources of new revenue, and actually leaves $1 billion in funding on the table that could have restored any of the cuts above. A renewal of last year’s common sense rate increase on residents making over $400,000 per year could have generated approximately $1 billion in funding. Even worse, the FY 2011 budget also allows the 4% surcharge on corporations to lapse, forgoing another $80 million in funds.

The end result of this ideologically rigid approach is a massive tax cut for the wealthy and corporations and devastating cuts to programs and services across the board. New Jersey deserves better than this budget, which is why Better Choices for New Jersey proposed the following common sense, environmentally responsible revenue measures to maintain $3 billion in critically needed funding and restore many of the cuts above:
 

Reinstate the following income tax rates from the FY 2010 Budget. ($1 billion)
 

    * 8% on incomes between $400,001 and $500,000.
    * 10.25% on incomes between $500,001 and $1 million.
    * 10.75% on incomes above $1 million.

 
Curb business tax breaks and loopholes.
     

• Extend the surcharge on corporate business tax liabilities into FY 2011 and increase it from 4% to 8%. ($160 million)
• Reinstate the throwout rule and regular place of business rule eliminated in 2008, which were used to determine a corporation’s tax liability in New Jersey. ($149 million)
• Require combine reporting, which prevents corporations from evading the corporate business tax by transferring profits to certain kinds of subsidiaries. ($100 million)
• Suspend the Business Employment Incentive Program (BEIP), a tax giveaway to corporations. ($201 million)
   

  Raise registration fees for gas-guzzlers that pollute our environment.
   

Triple fees on all SUVs and other gas-guzzlers weighing over 5,000 lbs. ($140 million)

o   From $84 to $252 for cars less than 2 years old

o   From $71.50 to $214.50 more than 2 years old

Some examples: Dodge Durango, Jeep Aspen, Land Rover, GMC Yukon, Chevy Suburban, Hummer H2
 

Bring gas revenues in line with surrounding states

• Option 1: Increase the gas tax from 14.5 cents per gallon to 24.5 cents per gallon. ($450 million)
• Option 2: Institute a 7% sales tax on gas. ($900 million)

The solution to getting out of this fiscal crisis and weathering the recession is not short-sighted cuts, but investing in areas that make New Jersey a good place to live and do business. It's the better choice for our state and our future.