Corzine Q&A

Today's paper carries my story about an interview Governor Corzine gave yesterday about his upcoming budget speech. Extended excerpts of the interview are below.

Q: How many layoffs will there be in the budget?

A: We unfortunately have to deal with a gathering recession which is hurting our revenues. And as I talk around here at the National Governors Association, we're not the only ones. This will be a fairly stark, sobering budget. I would expect that through various kinds of personnel actions we'll reduce the overall workforce significantly.
Some of it is to be determined by how individuals will react to the kinds of programs we offer.

Q: So you're talking about an early retirement offer?
A: As a part of the process. There'll be a whole series of things. We’ve had a very hard freeze on for the period of time I've been in office. While we had to hire just right at 1,000 people to fulfill obligations in the federal settlement on child welfare, we're down, depends on which day you measure it, almost 2,000 employees since I've been there. And we will look for ways to extend that well beyond those numbers, well beyond those numbers. ... We've already reduced the governors office, what is it, 60 out of 120 people.

Q: What about some of the numbers that are in the press today, $100 million from municipal aid, cuts to hospital charity care?
A: I'm not going to get into the specifics of it, and some of that is still speculative. There will be necessarily required cuts in our grants and aid programs since it's 75 percent of what we do. You can't ignore that. And the other 25 percent carries corrections, our developmentally disabled institutions and a whole host of things that I think don't make sense for the kinds of cuts that would be necessary, if cuts are sensible at all.

Q: What about higher education?
A: Again, it's one of those things where you have grants in aid and it's certainly on the table as are the other elements of what we do, and that's the bulk of our expenditures.

Q: Pull back for a minute. Why do we have to do this?
A: Because we don't have the revenues to support the expenditures we're making. We have both a constitutional mandate and what I believe is a financial responsibility to have recurring revenues match recurring expenditures. ... And what we have done, historically, is to do that by borrowing. Borrowing against the unemployment trust funds, multiple trust funds, whether it's borrowing against pension obligations that we're committed to, or post-retirement medical obligations, or outright borrowing in financial markets. It has been a consistent series of avoidance of the fact that we're growing expenditures over the past 15-20 years at a 7 percent rate and underlying growth in revenues is 3 percent. And that has been filled occasionally by tax increases and aggravated by tax cuts and it has left us with a heavy, heavy debt burden by comparison to almost every other states.

Q: What about property tax rebates?
A: It's one of those grants in aid programs. You have to look at each of those and try to find the right balance that protects our educational system, protects public safety, protects the most vulnerable, continues to provide affordable property tax relief as much as possible to the middle class, and then  you have to stay within that kind of construct, how do you go about choosing where cuts will be.
And that's what we've been trying to think about. That’s why we've been very disciplined with each of the departments, asking what do they do.... We tried to challenge each of the activities of government to protect those priorities and still accomplish the end.

Q: We saw in 2002, a McGreevey gloom and doom budget, then cuts went away when the $1 billion increase in corporate taxes, he called it a restructuring, was passed. Is that going to happen this year?
A: I've already shrunk the workforce. I negotiated a contract where the first time in 25 years, we took benefits away from public employees. I'm serious about getting our fiscal house in order. I'm not using it as a bludgeon to get either my toll plan or any additional revenues. What I'm saying is we have to reset our spending and we're going to reset our spending.

Q: You were recently quoted as saying you didn't have 21 and 41 [votes in the Senate and Assembly] for your toll plan. Will you have 21 and 41 for this? Should people book rooms now in the Trenton Marriott for a budget stalemate at the end of June?
A: Since I haven't announced it yet, I don't know if I have 21 and 41 for it.

Q: It's been almost a year since your accident. How have you been feeling? How's the leg feeling in the cold weather?
A: I'm actually in great physical shape. My physical condition is in good stead. My fiscal position is very stressed.

Q: Back to the budget. How do you sell this given reaction the toll plan. The public doesn't think that going to a state park on Sunday is really what's killing the state budget.
A: Everyone believes government should be more efficient. But nobody believes that the piece of the government that works to support their efforts is unimportant and we have this tension that the political process has to resolve. And for far too long we've resolved that by additional borrowing and additional taxes. And this period, I think, requires the discipline to deal with the spending side of the equation and will require cuts.

Q: Do we need to make these kinds of cuts if we do the toll plan?
A: Absolutely. The budget and the second two elements of the comprehensive plan I laid down, to limit spending to certifiable revenue growth, and a limitation on borrowing, are all elements of putting our financial house in order not just for one budget, but for a long period of time. And then addressing debt levels and our infrastructure.

Q: Aren't you committing political suicide here? Isn't this the beginning of your "I've decided not to run again in 2009" speech?
A: I've always found that trying to do the right thing within the best judgment you can make about tough issues ends up serving you. And while there is no question the public is not anxious for tolls or taxes, I think they will come to believe we're making a good faith effort to put our state into a responsible position that sustains educating our kids, sustains basic levels of protection of society and a commitment to the most vulnerable.
It think that is worth fighting for. And if that doesn't comport with political popularity for a moment or maybe even over a long period of time, I think it is a message I need to bring to the political debate in New Jersey and often some of the tougher decisions I've taken on in my life have ended up paying good dividends for the people I've either tried to work for or with.

Q: But at Goldman Sachs, they fired you.
A: It doesn't matter in the sense that I think the world would say the decisions that were taken allowed for great economic success and well being of an institution. It's hard to believe people today would have the same opinion about voting against the use of force in Iraq, and other tough decisions I've made in other situations. So you've got to do what you think is right and the chips will fall where they do.

Q: How do you convince legislators in swing districts to vote for this budget?
A: Unfortunately all of us who are present today have to live with the realities that there were lots of decisions taken over the last 15 or 20 years and the bill has come due. The reality is that we voted for a 9 percent increase, under Republican leadership and control of the legislature, for a 9 percent increase in pensions. Under Republican leadership, we borrowed against unemployment trust funds and in financial markets for purposes of easing the burdens at a given time and to finance tax cuts. ... This is a bipartisan problem that needs a bipartisan result. And doing the responsible thing is good for the public and I ask them to join with me and say we're no longer going to hide under the rug or kick the can down the road and actually deal with it and depend on the good judgment of the public to understand that's a better answer than answer than hiding the ball.

Q: Will your speech name names about who put the state in this situation? I'm thinking of Gov. McGreevey's first speech, in which he kicked Gov. Whitman up and down the block.
A: It is unproductive to spend a lot of time scapegoating history. I've tried to avoid it.
I get a little bit frustrated when I hear people who voted for most of this and I could more happily publish, you all could publish, who supported a lot of the elements that have put us into this situation that the current generation need to address to correct. But in my view it is better to try to come up with solutions that will work that will put us on a track that allows us to do the things that government needs to do but in a way that doesn't keep our hand in the public's pocket consistently. And that's what we've done.

Q: Is this what you signed up for? You seemed to have grander plans, that rather than repairing the past, you wanted to move forward.
A: It is always more attractive to be a builder. I've been a builder all my life, in my private life. And we've done some good things already. I think about the earned income tax credit, I think about the expansion of children's health opportunities for all the uninsured kids in the state. I think about the expansion of the rebate program, which we will sustain a high percentage of. ... I think about the issues with regard to the environment that we're leading all the states with regard to the steps we're taking. So it's not that we're not building at the same time. For me, I know other people, it's differences of view, but I think we had the historic step with regard to the death penalty. It's not that we're not doing positive things. We are not able to get at, because of lots of reasons, some of the things I'd love to be able to take on. Universal health care would be terrific. We haven't been able to do it because we don't have the resources.
We have made an unbelievably strong commitment to education. The new school funding formula and its long-term commitment to early childhood education I think is an enormous contribution to keeping New Jersey at the absolute top of the list among states about how we educate and give our children opportunities for the future.

Q: Are you going to be able to fund the formula?
A: Yes, we're going to be able to fund it, because it's going to be a priority. It's a priority like public safety is a priority, like protecting our most vulnerable is a priority. That does mean other things will have to bear the basis on which that gets funded. But that's what the political process between governors and legislators is all about. And I notice the Legislature gave support ... to the increased commitment to education and I think that reflects what the people in the state of New Jersey feel. And I'm not sad about that, I'm glad about that.
And ... your prototypical swing district legislator ... is going to have a very good platform to run on. Are you going to have things that are challenging within that? Of course. But if we've set our fiscal house back into a pattern that it's sustainable over a period of time, then that educational program, those efforts at protecting our vulnerable and protecting the public will be in place.

Q: If somebody were to bring you a tax increase this spring to help alleviate some of the pain, what would your position on it be?
A: I'd have to see which tax and whether I think it would be undermining the economic well-being of the state. There are a lot of taxes I just couldn’t support under any circumstances. I think New Jersey's pretty fully taxed.

Q: When I looked at the federal stimulus package--
A: You mean the one that has a $600 rebate and we have an $1,100 or $1,200 rebate and people think ours is useless?

Q: When I looked at tax data from your treasury department on the federal stimulus package, which phased out checks for people making more than $150,000, I found that 20 percent of couples filing jointly in Bergen County make more than $150,000. And based on what I read, you're also going to take away their property tax rebates.
A: I think there's the other 80 percent of the public you're talking about, right? 80-20 is not such a bad protection program if that were. If it were 80-20 or 90-10. We're not trying to hurt any particular segment of our society. What we're trying to do is protect educating those children that need to be educated, making sure we provide for public safety, making sure we protect the most vulnerable. A lot of those folks you would poke me in the eye with on that issue, I think they would say they'd prefer us to fulfill those kinds of commitments than pay that type of rebate. But wait until you see the program. There are other things we might compensate with.

Q: But I ask again about the reaction of the Legislature.
A: I'm sure there will be many people who say this budget is unacceptable and doesn't fly. In this particular case, they'll have to show me an alternative that fits within the numbers because we have the ability to use the constitutional authorities that are given to a governor to get it there. It may not be attractive, but we have the ability to do that.