Democrats Propose New Budget Plan

Posted: June 25, 1991

TRENTON — Democratic leaders in the General Assembly yesterday proposed a state budget that would dramatically reduce layoffs of state workers and protect employees from Gov. Florio's demand for contract concessions.

The plan offered by Assembly Speaker Joseph V. Doria Jr. of Hudson County clearly undercut the governor's attempt to get the upper hand with state unions. It came as the state entered its final week before its annual June 30 deadline to adopt a budget.

The Doria proposal also would restore $65 million in aid to the state's colleges and provide more money for social services and the New Jersey Network. And it would rescind the so-called toilet-paper tax, the extension of the sales tax to paper products.

Not surprisingly, Doria's effort to help state employees was praised by union leaders. Florio was more guarded in his response to Doria's budget, but both he and the chairman of the state Senate's finance committee pointedly suggested that the plan might be built upon overly optimistic revenue estimates.

Still, if Doria's budget becomes law, it would spell a decidedly undramatic end to months of warnings from Florio that sweeping layoffs and deep contract givebacks were needed to balance the state's next spending plan.

Doria did not call for any new tax increases. Instead, his plan would close a $1.5 billion hole in the next budget by a series of budgetary ploys, including a plan to collect an extra $214 million in federal Medicaid funds. A bureaucrat in Massachusetts recently won national attention when she recommended this tactic of tapping Medicaid money to help her state out of its budget predicament.

In sum, the Assembly Democratic plan would have New Jersey government spend $14.7 billion next fiscal year. That is a 18.5 percent increase over state spending this year - among the biggest increases in state history.

Doria's plan actually would spend $300 million more than even Florio had proposed spending when the governor presented his initial spending plan in January.

The Assembly plan, formally introduced yesterday in a 277-page bill, is simply one act in an elaborate play that will unfold this week. Democrats in the state Senate - clearly irritated at the failure of Doria to consult them before he presented the Assembly program - are expected to present their own budget proposal Thursday.

Under the state constitution, the two chambers must agree on a spending plan - and Florio must sign one - by Sunday at midnight. Florio has line-item veto power to cut specific expenditures from the budget sent to him; he may also lower or raise revenue estimates.

Among other things, the Doria plan would:

* Provide enough money to ensure that state workers get pay raises on July 1, as mandated by their contract, despite Florio's efforts to delay them. Nor would they have to begin paying a greater share of their pension and health costs, as Florio has demanded.

* Reduce projected layoffs from as many as 5,000 employees to fewer than 1,000. There are 70,000 state employees, not including those on the higher- education payroll.

* Repeal the state's so-called toilet paper tax. The tax on paper products was only a small part of the $2.8 billion tax package approved last year by Florio and the legislative Democrats, but opponents of all the taxes had made it a symbol of their protest.

* Provide $65 million more in aid to the state's colleges. This would restore aid that Florio had proposed to cut. But it would still effectively freeze state assistance to the state's universities and colleges at this year's levels. Doria and his fellow Assembly Democrats also pledged yesterday that they would tie the new aid to a rule that colleges receiving it could not increase tuition more than 5 percent.

* Provide extra money for the New Jersey Network, for the Johnstone Center for the retarded in Bordentown and for AIDS prevention.

In other respects, the Doria proposal is much like Florio's original spending plan.

It reaffirms Democratic support for the governor's ambitious proposal to spend more than $1 billion next fiscal year in school aid and property tax relief.

The Democrats now propose increasing school funding by more than $800 million, as well as funding a greatly expanded Homestead Rebate at more than $700 million; a $280 million increase in aid to county governments, and a $360 million new municipal assistance program.

The Democrats also did not challenge Florio's decision not to provide the state's 400,000 welfare recipients with a larger grant, which would mean they would go a fourth year without an increase.

Even after pushing through a massive $2.8 billion tax increase last year - at the price of his popularity - Florio has found himself in a budget hole again this year.

Unwilling to abandon his ambitious school and property tax-relief agenda and yet forced to cope with falling revenues, Florio elected to instead cut back on certain services offered directly by the state - and to go after state unions.

Doria said bluntly yesterday that the Florio approach had not been his. ''We believe we had a moral and legal right to fund the contract, and we have done this," he said.

Robert Pursell, leader of the Communications Workers of America, the state's largest union, said the Assembly plan appeared to minimize the need for additional layoffs, as well as providing full funding for workers' raises and health benefits.

"It seems to be the kind of budget we can support," he said.

Pursell predicted the state would see much bigger-than-expected savings

from a newly sweetened early-retirement plan and a rebound in tax revenues as the economy improves.

"I think you're going to find the state sitting very well off by the end of this fiscal year," Pursell said. "That's why we have to urge the governor that it's time now for him to support this budget and put his attempt to extract layoffs and concessions behind him."

If nothing else, the Doria spending plan shows how rapidly state officials can close an enormous budget gap - at least on paper.

Doria incorporated in his spending plan proposals originally put together by Florio to pick up a one-time shot of $400 million by selling a stretch of Interstate 95 to the New Jersey Turnpike Authority and to collect about $600 million by manipulating the date utilities pay their taxes.

On top of these, however, Doria also proposed that the state seek the extra welfare money.

He also called for it to budget $63 million as an end-of-the-year surplus. And he concluded that Florio had been too pessimistic in his estimates for revenue for several major taxes, including the sales tax. Doria's figures would increase the state's haul by $90 million.

ASSEMBLY DEMOCRATS' PROPOSED BUDGET

Highlights include:

* $14.7 billion in spending, $300 million more than Gov. Florio proposed in January.

* An 18.5 percent increase in spending.

* No new taxes. Instead, budget gimmicks and Florio's first-term tax increases would balance the budget.

* No further mass layoffs of state workers.

* Pay raises for state employees.

* Repeal of the tax on paper products, including toilet paper.

* More money to colleges, the New Jersey Network and AIDS prevention.

* More than $1 billion in new school aid and property-tax relief.

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