Office of the Governor
Governor Declares Prosperity Dividend
During Annual Budget Address; Quality of
Life and $500 Million in Tax Cuts Top Agenda
Gov. Christie Whitman today unveiled her proposed FY 2001 budget including a record $10 billion in property tax relief, half of the state budget. The budget includes nearly $500 million in tax cuts, a plan to finance a $10 billion school construction program and a $1 billion commitment to the state's transportation needs. The Governor also continued her commitment to healthcare, earmarking two-thirds of the tobacco settlement money for healthcare initiatives.
"Two weeks ago I presented to you my vision for the year ahead," Gov. Whitman said, referring to her State of the State message, "a vision that builds on our work together and seeks to make New Jersey an even better place in which to live, work, and raise a family."
The Governor said that as a result of the policies and fiscal practices exercised by her administration, the state is prosperous and she wants to continue these efforts by returning more money to taxpayers, investing more in the people of the state, continuing to invest in the state's vital infrastructure and investing in the future.
"Our success in managing the state's fiscal affairs - and the unparalleled prosperity New Jersey now enjoys - gives us an unprecedented opportunity," said the Governor. "I call this opportunity New Jersey's `Prosperity Dividend.' Let's use this dividend, not just to build on what we've accomplished, but to do even more for our fellow New Jerseyans."
The proposed $21 billion budget includes nearly half-a-billion dollars in tax cuts, bringing the number of major tax cuts under Governor Whitman up to 40 in six years. Included in the tax cuts is an additional $200 million in direct property tax relief, a continuation of the Governor's NJ SAVER program. The new money will double the average check New Jerseyans receive from $120 last year to $240 this year.
"We must never forget that government revenues are taxpayers' dollars - dollars they earned through their own hard work and initiative," said the Governor. "Any time the government takes in more than it spends, our first obligation is to them."
The $500 million tax cut proposal also includes $130 million to eliminate the unemployment insurance contribution for all New Jersey workers for the next two years, and $130 million to lower the unemployment tax rate on employers for the same amount of time.
The Governor also proposed the creation of a New Jersey Earned Income Tax Credit (EITC). The EITC continues the Governor's efforts to ensure that all New Jerseyans share in the state's prosperity dividend. The program will be phased in over four years and will target families with incomes up to $20,000.
"Keeping more of what you earn is especially important to the working poor- the people who go to work every day but don't earn enough to make themselves economically self-sufficient," said the Governor. "The EITC reaffirms our commitment to the value of work. It will give over 200,000 hard-working New Jersey families a real hand up not just a hand out."
The Governor said it is also important to make an investment in the people of the state, providing a higher quality of life. The Governor noted that the tobacco settlement can help in the endeavor to meet the diverse needs of the people of New Jersey. In her address the Governor proposed using $200 million, two-thirds of what the state will receive annually, for healthcare, with the remaining $100 million dedicated to school construction from FY 2002 and beyond.
"To do justice to those who've lost their battles with tobacco it's clear we should use most of this money, once we receive it, to safeguard the health of our people," said the Governor. " I believe that the tobacco money we will invest in the health of our citizens meets our goal."
Of the $200 million in funds set aside for healthcare initiatives, the Governor proposed an ambitious program to address the growing number of uninsured adults in the state. The Governor said she wants to use $100 million annually, beginning in FY 2002, for Family Care, a program that will help 125,000 low-income adults obtain health insurance. It is expected that the $100 million state commitment will attract another $106 million in federal, state, employer and employee contributions. In FY 2001 $70 million will be used to begin the program. Coverage will include preventative services, doctors' visits, prescription drugs, and mental health services.
A $30 million, comprehensive tobacco control initiative is also part of the Governor's FY 2001 plan. Prevention, the Governor said, is the best cure to the most preventable cause of death and disease. The Governor said she also wants to use another $15 million of the settlement for supplemental charity care to ensure that nearly all New Jersey hospitals receive some assistance in caring for the uninsured. The state commitment will be matched by $15 million in federal funds.
Another health care proposal included in the Governor's budget address is $10 million for cancer research and treatment. The Governor said she wants to make sure that New Jerseyans can find the right care when fighting cancer, right here in New Jersey.
The Governor said the infrastructure of our schools is an integral part of ensuring a quality education for all of the state's students. She wants to use $100 million of the tobacco settlement money annually by FY 2002 for school construction. The Governor said the tobacco money combined with lottery and cigarette tax receipts will allow the state to begin an up to $10 billion school infrastructure effort this year.
"Lest anyone questions if this is enough, let me point out that ours will be the biggest school construction and modernization program in America; bigger than any other state; bigger than even the President's proposal for the entire nation," said the Governor.
In the address, the Governor announced she wants to help some of the state's most vulnerable residents, those with developmental disabilities. "With our prosperity dividend, there's so much more we can do -especially for those who have not enjoyed the full measure of New Jersey's success," said the Governor. "We want to make it easier for people with mental illnesses to be integrated parts of our communities."
Whitman announced that she wants to make an historic commitment of $72 million to help provide more housing assistance, job training and community support. The budget supports the fourth year of the Governor's ten year plan to eliminate the Community Services Waiting List for people with developmental disabilities.
The Governor said she also wants to help emotionally troubled young people get the help they need. She proposed an effort to reform the way services are delivered to these children. The "Children's System of Care" will offer a diverse range of treatment options to children and their families. The state currently spends $167 million a year on various services geared toward helping troubled youngsters. In FY 2001, $39 million new dollars will be earmarked for these purposes under the Governor's plan bringing this year's funding to $206 million. The program will receive $280 million by FY 2004.
- More than $19 million will be used to provide community living options for 500 people with developmental disabilities.
- Continued Medicaid coverage will be available to disabled New Jerseyans who go to work. New Jersey will be the first state in the nation to take this step.
- The plan will support a 3.6 percent salary increase for direct care workers in community programs.
The program will restructure the systems that serve troubled young people by pooling and expanding resources and tailoring them to individual children. New Jersey will be the first state to implement such a comprehensive program statewide.
In addition, the Governor announced the expansion of the School Based Youth Services program. Where the program has been implemented, there have been higher graduation rates with fewer incidents of violence, smoking, vandalism and teen pregnancy. The program provides mental health, substance abuse, employment and family counseling.
Continuing her dedication to the future of the state, the Governor said helping our young people obtain the education they will need to be successful is necessary and financial assistance can help expand opportunity to even more of the state's young people. The Governor pledged a $1.7 billion commitment to New Jersey's college students this year. This is a $109.7 million increase in higher ed funding from FY 2000. For the third year in a row, county colleges will be able to hold the line on tuition. The Governor announced an increase of more than $17 million for the county colleges along with a 2 « percent increase for public universities and colleges.
Keeping college accessible and affordable is a continuing commitment of the Governor's. The Governor proposed nearly $157.8 million in Tuition Aid Grants, a 5.6 percent increase, and $34.1 million in Educational Opportunity Fund Grants, a 4.6 percent increase. Whitman also said it is important to help parents save for the cost of their child's education. The Governor announced her plan to enhance and expand the New Jersey BEST college savings program. The proposal calls for the following:
The Governor announced a $1 billion no-tax solution to ensure that the state's transportation infrastructure needs are met. When combined with federal dollars the state will invest $2 billion in the transportation trust fund. The proposal increases pay-as-you-go funding.
- Reducing annual fees from $15 to $5 and dropping the investment earnings fee by 50 % from the first 1 percent of earnings to .5 percent.
- State employees will have the option of an automatic payroll dedication for contributions to the plan.
- Students in the plan for more than four years who continue to contribute a minimum of $300 will receive an additional scholarship of $250 for every additional two years that a contribution is made with a maximum scholarship of $1,500.
- The plan will employ more aggressive investment strategy, placing investments of younger children in more aggressive holdings and those of older children reaching college age in more conservative investments.
The Governor said the strong fiscal position of the state helps with another infrastructure need - the hospital industry. The $172 million plan to help the state's hospitals includes $30 million, $15 million in tobacco money and $15 million in matching federal funds, to make sure nearly every New Jersey hospital receives assistance for charity care. In addition, the plan calls for $50 million to provide partial reimbursement for medical providers who weren't paid due to two recent HMO failures. This is one- third of the unreimbursed costs left behind by the HMOs.
The Governor addressed another need for financial resources in her address- the future. Saying that another benefit of the state's prosperity dividend is the ability to use money today to save money in the future by reducing the debt load. The Governor wants to create a permanent, dedicated Debt Reduction Reserve Fund to reduce outstanding debt. The Governor proposed capping the rainy day fund at $720 million and using 50 percent of any additional revenues to fund the reserve fund with the other half going to the general surplus.
Finally, the Governor announced that she wants to create a $200 million Cultural Trust for the state. The trust will combine $100 million in state funds over the next ten years to match private funds dollar for dollar. The trust will not replace current funding, which this year will meet the Governor's goal of $20 million by 2000 to the Arts Council, but will supplement it.
"I challenge the business community, our foundations, and all New Jerseyans to do as the state will do," said the Governor. "Let's go above and beyond our usual generous support for our cultural institutions. Together we can ensure their health and survival in the 21st century."
In conclusion the Governor said, "This budget maintains and expands our commitment to the major accomplishments we've achieved over the past six years and it uses New Jersey's prosperity dividend to do even more for the people we serve."