Corzine Leaves $8 Billion Gap as N.j. Governor Readies Exit
The one-term Democrat is leaving with tax revenue down 12 percent since taking office in 2006, local property levies up 9 percent to the highest-in-the-nation average of $7,045 and his Republican successor, former U.S. prosecutor Christopher Christie, proposing state-aid reductions that may force towns to fire teachers, close libraries and stop maintaining parks.
Corzine, 63, the former chairman of Goldman, Sachs & Co., vowed to use his Wall Street experience to repair the states finances after his election. After winning increases in taxes and proposing to raise highway tolls 800 percent, he faced mounting voter disapproval as the global recession that started in 2007 pushed New Jerseys unemployment rate to a 32-year high.
The governors inability to erase chronic deficits and the economic slump have left chaos for his successor, said John Mousseau, who helps oversee $1.4 billion at Cumberland Advisors Inc. in Vineland, New Jersey.
“Governor-elect Christie has a hell of a problem ahead of him,” Mousseau said. “Were the expectations higher for Governor Corzine? Obviously.”
Great Hope
The governor “was unwilling to make the tough decisions he needed to make,” said Senator Kevin OToole, a Republican member of the Senate Budget Committee from Wayne. “There was this great hope that hed be an imaginative, aggressive Wall Street genius who was going to fix state finances in New Jersey. Governor Corzine was ill-equipped to deal with Trenton and with state politics.”
Corzine told reporters Jan. 5 his State of the State address to lawmakers would highlight goals he was able to reach even as tax collections slid, such as trimming spending while expanding health insurance for children and investing in preschool education. He declined to reveal what hell do after leaving office and said he hasnt held any discussions about future employment.
The former investment banker was the only incumbent governor up for re-election in November amid the worst economic slump since the Great Depression. State tax collections nationwide fell the most in 46 years in the first three quarters of 2009, according to the Nelson A. Rockefeller Institute of Government in Albany, New York. In New Jersey, revenue from income, sales and corporate levies declined 22 percent in the period, Office of Legislative Services data show.
$193 Billion
Governors are confronting $193 billion of combined deficits in the current fiscal year, and the gap is likely to grow in the following 12 months as income shrinks again, the Washington, D.C.-based Center on Budget and Policy Priorities said in December.
New Jersey residents per-capita personal income of $51,358 in 2008 was exceeded only by that for Connecticut, according to the U.S. Commerce Departments Bureau of Economic Analysis.
Christie, 47, takes office Jan. 19 as New Jersey faces an $8 billion deficit in the fiscal year beginning July 1, more than a quarter of the budget and its biggest shortfall ever, according to the nonpartisan Office of Legislative Services. To narrow the gap, he asked state department heads to prepare scenarios for cuts of 15 percent to 25 percent.
Less Aid
The spending pullback will likely affect state aid to school districts, towns and cities, which represent almost $12 billion, or more than 40 percent of the $29 billion budget signed by Corzine for the fiscal year ending June 30.
Christie is the first Republican elected to statewide office in New Jersey since 1997. The only other sitting New Jersey governor to lose his seat in a November election since the current state constitution was adopted in 1947 was Democrat James Florio, who was defeated by Republican Christine Todd Whitman in 1993 after an unpopular sales-tax increase.
Corzine headed Goldmans fixed income group from 1985 to 1994 after joining the New York-based firm as a bond trader in 1975. He left Goldman in 1999 and was elected to the U.S. Senate the following year.
During his first year as governor, he raised the states sales tax to help erase a $4.5 billion deficit. That proposal caused an impasse with Democratic lawmakers that shut down the government for a week until a compromise was reached.
Approval Decline