TOPICS > Politics

New Jersey Governor, Legislature Reach Budget Deal

July 6, 2006 at 6:25 PM EDT

PROTESTERS: Do your job! Do your job!

JEFFREY BROWN: There was pressure on Democratic lawmakers all day long to make a deal and end New Jersey’s six-day-long government shutdown. State workers rallied in front of the capitol in Trenton, today, sending their elected officials a message.

ROBERT MCDEVITT, Local Union President: We demand that the leaders in the Democratic assembly stop playing games with our lives, put us back to work, and vote on a damn budget!

JEFFREY BROWN: About 45,000 of the state’s employees have been out of work since the government shut down early Saturday morning, after lawmakers missed the deadline to approve Governor Jon Corzine’s $31 billion budget.

With a $4.5 billion shortfall and no money to pay the bills, Corzine closed non-essential government services. Earlier today, the governor urged those Democratic colleagues who opposed his plan to raise the sales tax a percentage point to come up with their own solution.

JON CORZINE: Let’s put New Jerseyans back to work and let them go on about their everyday lives. Let’s stop digging the whole deeper. Pass a budget. Let me sign a budget. Let me repeat. Pass a budget. Let me sign a budget. Thank you.

JEFFREY BROWN: The most visible signs of the shutdown were in Atlantic City, where the normally clattering casinos were closed yesterday, for the first time since gambling was legalized 28 years ago.

JOSEPH CORBO, President, Casino Association of New Jersey: We’re losing millions of dollars a day, without getting into exact numbers, but our employees are also losing, in the aggregate, millions of dollars a day.

JEFFREY BROWN: The gambling inspectors, all government employees, were furloughed. And, as a result, 36,000 casino employees were put out of work as well. So were state employees at the Department of Motor Vehicles, inspection stations and courthouses. Those actions took New Jersey residents by surprise.

MAN: I had no clue. I thought they were bluffing. I really did. The casinos, Motor Vehicle, I just thought they were bluffing.

JEFFREY BROWN: At the announcement of the budget deal late this afternoon, Assembly Speaker Joseph Roberts acknowledged the problems the people of New Jersey encountered as a result of the shutdown.

JOSEPH ROBERTS JR. (D), New Jersey State Assembly Speaker: But we do owe the people of this state an apology. We have disrupted their lives. We have caused hardship. This — this shutdown, the budget impasse has had an awful consequence for the people in our state.

Compromise over sales tax

JEFFREY BROWN: Officials said the shutdown would end in 24 to 36 hours.

And, for more, I'm joined by Fred Tuccillo, assistant managing editor for The Courier News in Bridgewater, New Jersey.

So, who in the end blinked, and what was agreed to?

FRED TUCCILLO, Assistant Managing Editor, The Courier News: Well, it appears that both sides blinked halfway.

This compromise sits midway between what the governor wanted, which was a straight 1 percent increase in the sales tax, without any terms imposed on -- on him; and what the assembly speaker wanted, which was to have all of the revenue from a sales tax increase immediately applied to property tax relief.

And the Senate majority leader came in with a solution that split the difference, so that half the revenue in year one will be applied to property tax relief, and then all of it somehow will be applied to property tax relief after the first year.

JEFFREY BROWN: Now, many states, of course, have budget problems. How unusual was it there in New Jersey to actually get to this point of a government shutdown?

FRED TUCCILLO: Well, this is unusual even for New Jersey. The state budget, as -- as the governor pointed out this morning, was submitted -- proposed budget was submitted in March. There hasn't been any mystery all along about the size of the budget gap that had to be closed.

So, I think New Jerseyans expected that, one way or the other, the legislature would work its way to a -- to a solution that would probably patch up some of the deficit, but probably not result in any -- anything good for them as taxpayers.

Shutdown snuck up on people

JEFFREY BROWN: So, give us some -- some flavor for what it was like there once the shutdown happened. First, who was most affected and how?

FRED TUCCILLO: Well, it -- it snuck up on people, in a sense, partly because it was a holiday weekend for the Fourth of July.

And, in Bridgewater, for example, in the center of our coverage area, the nearest Motor Vehicle office, on Monday, we thought we would send someone out there and find that no one would show up. And, in fact, we found people coming up to the Motor Vehicle office expecting that they would be able to renew their licenses or registration.

Several of them were stunned that the office was closed, and were even surprised that there was a -- that there was a government shutdown. It's only really in the -- in the last 24 hours that people have become more aware of -- of the shutdown, and more angry about it, because, in general, people don't understand why the -- the governor and the legislature couldn't simply go about their business and meet the deadline.

Gambling is big business

JEFFREY BROWN: Of course, a lot of attention nationally came to the shutdown of the casinos in Atlantic City. I just saw a late AP wire story that led with, "Let the dice roll." So, of course, there's a funny side to that, but gambling there in New Jersey is big business as well, right?

FRED TUCCILLO: Oh, absolutely.

And -- and there was quite a bit of -- of analysis here in the state, which suggested that that really would be the -- the hammer that would force a solution, that, if this thing ran on into next weekend, it would take a heavy toll, not only on direct casino revenue, but all the spin-off revenue from businesses that work in the tourism field in and around Atlantic City, and all of the workers for those businesses, many of whom are going to lose income that is not going to be recovered.

Unlike the state workers in the casinos, the monitors that the state employs, these folks who work for private companies are not going to be recovering back pay. And, certainly, those who rely on tips are not going to able to recoup the money that -- that they lost, even in the day or two of closure.

JEFFREY BROWN: Help those of us outside understand the political fight here. You have one big Democrat, the governor, seemingly fighting against his own party over raising taxes in this case, right?

FRED TUCCILLO: That's correct, although, in New Jersey, because you have an overwhelming Democratic majority, and -- and it controls both houses of the legislature, this would inevitably be a battle between -- between Democrats.

There are several layers to this. One is the history of past tax increases designed to close budget gaps, and the bad effect that had on the reelection hopes of both gubernatorial candidates and legislative candidates, and the assembly Democrats, who are very mindful of that and spoke openly of that in their resistance to Corzine's proposal.

You have the state public employees, who represent a -- a powerful lobby in the state, who were determined to draw a line against any structural reform, such as introducing a second tier, less-expensive pension system for new state employees, to begin to -- to address some of the -- some of the fundamental reasons for the -- the degree of debt in -- in New Jersey.

And, then, you had the usual intramural disputes and personalities conflicts between various portions of the -- of the state Democratic apparatus. And -- and, in that respect, the governor and the assembly speaker could be viewed as having been playing on two different teams.

The assembly speaker comes from -- from South Jersey. The -- the South Jersey Democrats have -- and the leader in particular have not been on the best of terms with -- with -- with Corzine, or he with them.

And there's some thought that that also played into the intransigence that -- that resulted in this stalemate.

Blame was placed across the board

JEFFREY BROWN: Was there any sense, either from your reporters on the street, talking to people, or perhaps through polls, of who was being held responsible for all this by the average person in New Jersey?

FRED TUCCILLO: Well, it's interesting. Although we do get some comment from people who are clearly viewing this from one partisan perspective or another, most of the people our reporters encountered were just -- just upset with everybody.

FRED TUCCILLO: They placed blame across the board.

JEFFREY BROWN: A pox on -- a pox on all their houses, right?


They viewed this very much as a -- as a job that was supposed to be done in collaboration between the governor and the legislature and between one political party and the other political party, to the extent that applied.

And their view was, why can't these folks just settle down and do their jobs?

JEFFREY BROWN: And is there any sense -- you were talking about the budget problems that have been there before. Does this -- is this one small step, and there will be more fights to come, or does this look like it really settles things?

FRED TUCCILLO: Well, it's hard to know without more explanation of this -- of this proposal.

For one thing, it appears to take money out of one revenue pocket, the -- the sales tax, and then put it in another revenue pocket, which is the property tax. And that implies that somehow less revenue is going to be taken from the property tax. So, it's hard to see how that addresses even an immediate budget gap, let along alone a long-term one.

And when you talk to people on the streets, there's -- there's great skepticism that -- that anything that was likely to be accomplished this week was going to end the cycle of budget crisis after budget crisis, and tax increase upon tax increase.

JEFFREY BROWN: All right, Fred Tuccillo, thanks a lot. And good luck.