Budget Message

That's right. So the governor has just arrived here. You see him auditorium and he's walking into the room right now standing ovation although we were told by one aide. To look for. A lot of applause that was going to interrupt his comments today. That comes of course with the budget that's about 12 little over 12 billion dollars. A 1.8 percent increase over last year spending. Not that much that he's going to get them to plan for today except we're saving some money. He is going to propose however as we told you a little earlier. A 310 million dollar property relief relief plan. And so we'll see how that goes over Senator Rousselle Senate president introducing Governor Kaine here. Let's go up on stage for the introduction. Ladies and gentlemen the governor of the state of New Jersey the honorable Thomas H. Kane.

Thank you. Senate President John Russo and speaker Jack Conway. Speaker of the Senate president left your gavel behind and use it for it. While preparing this budget I found myself returning to my days as a as a high school teacher and I remember spending several weeks on the Iliad. I didn't that great epic poem. Homer defines wisdom as the ability to read or write the present and to move with the occasion. Homer was describing a

virtue that was precarious elusive and re centuries before Christ birth and remains with carious elusive and rare today. Yet this virtue this ability to understand today and yet to plan for tomorrow is precisely what's required of us. When ever you and I invest the people's money. When I first stood before you seven years ago now we read or write the press. We did it together as homo demands. We read at that time 70 years ago was a blueprint for financial and economic disaster. Reeling from the deepest recession since the Great Depression we inherited a state budget with more reading than one of my grades doing spelling papers in relative terms our budget deficit was almost the same size as a deficit of federal government faces today

as a state. We were just holding on by our fingernails. We were like the fellow was walking out on the Appalachian Trail along the kid a Tenney Ridge and he was walking along the edge. It was cold and wet. He slipped and he fell over the side of the cliff. He was plunging down when he reached down. He grabbed the branch desperation and Barry hung knowing it. Have you ever slept well let go. He plunged down onto the rocks below. So he started yelling at Help. Help. Is anybody there. Ms Woods echoed no was absolutely no answer. So we began to pray and then he yelled again Is anybody dead. And all of a sudden a loud voice from above and said My son I am here. I looked up sort of in amazement to the top of the cliff and he said is that you. Is that is that you Lord.

Yes came the reply and he said Well well what should I do. And the voice replied Do you have faith. Well I said yes and the lord replied then let go of the branch. I looked down at the rocks a hundred feet below and a looked back and said Is there anyone else up there. Now that's the way things used to be. But in 1982 working together we had faith and we did something different. We left New Jerseyans grab on to that future. We closed our budget deficit and we did it by the way without decimating the long term investments that were eventually to turn New Jersey around from economic laggard to leave. Once the fiscal crisis is behind us we hastened our economic renewal by toppling the roadblocks that it brought business to a screeching halt at our very borders.

Together we eliminated the corporate networth tax we phased out the inheritance tax and gave struggling young companies a tax break. We cut taxes in our cities and we paid back an unemployment insurance debt. It was an albatross around the neck of wage earner and wage payer like two and a half billion dollars in tax cuts over four years. Its a great deal of money. It averages about $780 for every tax we were to together that $780 to New Jerseyans because we believe that they can spend it better than we could spend it here in Trenton. You know one economist has been defined as someone who could accurately predict the distant past but no one could have predicted

what happened in New Jersey in the 1980s who predicted that a state which had trailed the region and job growth for decades would become the region's leader who predicted that our personal income would sought to the second highest in the entire United States. And who predicted that our unemployment rate would sink to the lowest in the entire nation lower than California. Lower than New York and yes a good many times even lower than that Marichal state of Massachusetts. What happened was disarmingly simple as state taxes went down. State revenues went up. We were able to do something the government in this state has rarely done before with good leadership the leadership of Senate president John Russo and speaker

Chuck Todd what the leadership of Larry Weiss and Assemblyman doc Vilain and so many of the rest of you in the legislature were able to see to look beat on any immediate crises. We looked out and we invested in the long term and look at what we have done together in just eight years. For example we have doubled we have doubled state spending on our schools offering more than two billion dollars in new money. Today we are number one. There is not a state in the continental United States in which tax payers invest as much in US students. And when it comes to young people we will take second place. No one and we created a national model a groundbreaking welfare reform program and then more than quadruple

our investment in just three years and we gave welfare recipients the hand up they did Ziv today so that taxpayers wont have to give any handouts to morrow and we quadruple the state and federal investment in infant care and nutrition so that the babies who are born today deep in our inner cities may live to experience that first day of kindergarten. The freedom of graduation the joy of of a wedding day and the elation of watching your own children into this world healthy and safe and sound. And these are only investments we've doubled state aid to municipalities we've provided over five billion dollars for transportation and look at Medicaid. Over a half a billion dollars in new money and colleges and universities over 400 million plus another 35 million for scholarships.

Again all new money. And we have almost quadrupled our investment in community care for the retarded and the developmentally disabled. And in almost three and just three years we have almost quadrupled our investment in education and treatment to finally rid our young people of the scourge of drug abuse. You say to the single mother on welfare in Trenton or the teenager who's struggling against drugs and what we have sent a simple message we have in Trenton we said Your future is our future. We have borne the responsibility that government is so often accused of should we have looked beyond the clamor of today and we've looked out would come tomorrow. Yes.

Our state of New Jersey is a very good place in 1989 but because of you and because of the investments that you have made New Jersey will be an even better place in 1999. That brings us to this new year. A year in which our new way of doing business will be tested as it has never been tested before. This year you know state revenues are finally slowing. They no longer exceed estimates as they did for the past six years. So instead of investing surplus one must look to cover shortfalls. Before I explain how I think we should proceed I think we have to note a couple of things. First by most indications our economy remains strong. Unemployment shows no sign whatsoever of rising new businesses and workers

continue to march across our borders. And let me say this to those who believe the New Jersey decade is over. I say wait for Act 2. The best is yet to come. So what is wrong. Well be honest we're not sure you know the old saying that if you laid all the economists in the world end to end they would never reach a conclusion. Well our economists can't say definitely whether this slowdown in revenues is a natural result of a full employment economy whether it's a temporary phenomenon caused by federal tax changes or whether it is simply and maybe ominously an early warning of national economic problems to come. But the signs do exist and the money does not. It would be foolish for us to ignore

these facts. One must also note by the way however that we are in better shape than many of our neighbors. We don't have to concoct a questionable borrowing scheme. You don't have to sunder US safety net and we don't have to scurry through the dictionary to find euphemisms for major attacks and crooks. But we still face challenges and these big challenges. The question before us in 1989 is whether at this first sign of rough water we're going to trim our sales and turn back to the failed policies that sank our economy a decade ago. Or whether we will sail ahead knowing that just ahead is another patch of calm water in front of these temporarily rough seas. Let me say this. As long as I am in command of this ship of state of New Jersey the answer is simple. Full speed ahead. This 12 billion dollar budget at present today increases spending

by under 2 percent over last year well below the rate of inflation. This is the smallest increase in state spending since 1976. Back when the Giants still played in New York and code was only a soft drink and Oliver North just another Marine. Fifty eight percent of this budget is in local aid and grants. Another 20 percent of that budget is fixed costs that you and I can do nothing about and the remainder is invested in pressing priorities such as prisons colleges and universities. And of course the protection of our environment. If you're looking for an adjective to describe this budget the one that applies is Austine. Yes we continue to invest in priorities. We've had to weld a scalpel and that scalpel has got big we have sliced

18:9 million dollars from last year's operating budgets this year 15 of our 19 departments will have to make do with less. Our philosophy is that government should sacrifice first so that New Jerseyans don't have to sacrifice labor. Every dollar we've cut is another dollar that we can invest and no investment. I might say to me is more important than education. And that's why while the rest of this budget grows by less than 2 percent state aid to education will increase by 5 percent. Eight out of every ten dollars and increase spending in this budget goes right back to school today. New Jersey taxpayers invest on the average more than eight thousand dollars on every student. That's more than the

cost of a year at Rutgers more than the cost of a great many good private schools. But frankly let me say this if there was more money available I would provide it even more for our schools. And I make a promise to you today I will work with you in any way possible to see if we can find other sources of money to be put behind education and put into all schools. But having said that remember we have increased education spending by three times the rate of inflation since I took office and local taxpayers that come right along and matched our investment. I think maybe it's time for parents and taxpayers together to ask not just how much more money they can get but rather how much more they can get for their money. It is not unfair to ask after doubling school aid after doubling it in the

face of declining enrollment. Should we ask whether our children are receiving an education that's twice as good as they received in 1982. I don't think it is wrong. What we try to provide every dollar we can from the state to seek accountability from those who run our schools. There are other increases in this budget. There is more money for health care for the poor. There is more money to upgrade our Science and Technology Laboratory for urban housing. There is more money to spread the benefits of welfare reform to the urban poor particularly in Camden and Hudson and Essex counties and so you see these investments eventually will be returned to our treasury. We can't afford not to make those investments in people in good times or in bad times. But again these are the exception as a rule.

This is a no growth budget and I believe it is a very appropriate time perhaps in some ways to pause and look at us spending the size of state government has grown considerably in recent years as Washington has told us to do more on one hand and local governments have said they could only do less. We have tried to respond ably and with imagination but no organisation whether it's IBM or a corner newstand can double its budget in eight years and guarantee that all that money is being spent well and efficiently. So of course the issue may maybe in the best interests of a species that have not endangered. It's certainly frequently under attack and that's on New Jersey taxpayer. Cicero to find Prudence's the knowledge of things to be sought and those to be shun.

We seek to share the fruits of AWST prosperity with every new Jews but we shun our return to the misbegotten policies of budget crises one after the other getting tax increases at once made opportunity and prosperity and Postle. Let me just take a quick look at history. This state relies on three main taxes business sales and income. In 1966 we passed the sales tax in 67 we increased business taxes. We increased taxes on business again in 1968. In 1972 in 1975 and in 1980 and we added income tax in 1976 and raised it again in 1982. Now you've heard of the Chinese New Year of the Dragon. Well New Jersey has had a decade of the tax increase and now finally we have been able to at least temporarily slay this monster. And for the first time in over a quarter

of a century New Jerseyans have enjoyed a stretch of six years without an increase in the sales income of business taxes. And to me it is no coincidence that this period has been a time of New Jersey's greatest prosperity but with revenues slowing. I know we will hear a familiar refrain raise the business tax or raise the sales tax or raise the income tax I happen to believe we must resist these demands. The budget before you contains no long term revenue enhancers no extensions of existing revenue sources. You don't have to read my lips. You can simply read the paper on which this budget is printed. This budget is balanced with no new taxes. So it is my spending blueprint it's austere and it allows us to

continue and in some cases even to expand our investments in everything from education infant nutrition and it does so without taking sometimes easy way out and raising taxes. But I know today we said here there is another tax on your minds and that's the problem. So let me just talk with you about that for one moment. This seems to be some confusion about my position on the slip commission's recommendations. Let me make myself clear some editorial writers believe. I guess if I look at slip the same way that Michael Douglas looked at Glenn Close in that strange movie last year as a mistake that I once made that I wish would just go away. The truth is. The truth is of course a slip and my relationship is not a completely

fatal attraction and I would take seriously this moment to salute the able men and women who devoted so much of their time to benefit the state. I did criticize slid because I thought it only looked at new ways to increase taxes and not ways to reduce spending Slik proposed raising state taxes by a billion and a half dollars a suit of which would have to come from the income tax. I just don't believe that the good people of New Jersey are undertaxed. I'm particularly concerned about an increase in the income tax and let me tell you why I believe that a large income tax increase could end the economic advantage that we now enjoy and turn for many in this state prosperity into poverty.

But don't take my word for it. But to the north in Massachusetts the state faces budget deficits which to wall Pharo by any measure. And yet the governor says it would be unwise to consider any rides and the income tax in New York while recommending raising some taxes. A governor is insisting on moving ahead with plans low income tax rates so they can get closer to wards. Now these governors I'm talking about are not exactly prophets of supply side economics but they know something. They know the New Jersey formula of trying to keep income taxes low creates jobs. Now imitation is the sincerest form of flattery but it would be the worst sort of false modesty. And I think misguided governance. The rich pay their attention by reversing our income tax stands. Let me make my point simply and vividly. Higher income taxes are a razor sharp guillotine poised to descend

on the back neck of prosperity. Let me be absolutely clear. I will oppose any income tax increase when it is debated and I will veto any income tax increase if it is passed. But slip is right and its efforts to bring down the property tax so let me tell you what I can support. First I have long believed that the state should take over the cost of administering welfare. If what if. If we do this we can save Camden County taxpayers 13 million dollars Essex County taxpayers 14 million dollars and taxpayers across this entire state almost 110 million dollars a year.

I support a state takeover of welfare reduce the property tax. Second it is past time we took over the cost of the state court system. We run the system we should pay for the system we can save. Property tax pay is at least a hundred and forty five million dollars. So I support a state takeover of the court system. And as I have often reminded you New Jersey is not whole if Princeton prospers while Paterson suffers a property tax problem is at its worst in US cities. So I would propose today we should add at least 65 million dollars on top of our

distressed cities program. I believe we should do so not only to make mayors lives easier which it will but to create a permanent fund so that this money will be available in good times and in bad. And finally you know that was once a very good reason a mailing homestead rebate checks from Tren by sending him out. We need federal dollars that has been changed. That is not true anymore. So I think we should change the system and allow homeowners to deduct directly from their property taxes. And in the process homeowners will see their property tax bills go down

by $350 billion a year and the state can save a lot of money on administrative costs. Taken together this program even without the last thing I mentioned would provide almost a third of a billion dollars in new property tax relief. And I believe we can support this relief without returning to the high tax policies of the 70s. To do this I would support two changes the Ford tax credit remains a reverse Robin Hood giving little to the poor and lots to the rich. I have asked you again and again to repeal the fourth bill and I ask you to do so now and take that money directly to the property tax. And New Jersey should not continue to be the only state in the region in which when you go to a bar and order milk you pay a tax

but you don't pay a tax in the same ball. If you order a dry martini we ought to begin doing what every other state in the region does and that's tax liquor sales across the county. These two changes would support the entire property tax relief program that I've just outlined but to make sure that the promise of property tax relief is equal the rhetoric. I would ask you to lower the cap on county assessments by a dollar for every dollar we provide in tax relief. And because what is good for the goose is good for the gander. I would like to work this year finally with Senator John Russo and put an overall cap on state spending. I know that many of you feel this is difficult. It is an election year. But I also believe

that gives us an opportunity. It's the year we can stop real property tax reform. We are the second richest state in the entire United States. We are not the state to turn our back on cities on the rentiers on the low and middle income homeowners or the elderly all struggling to make their next property tax payment. We can reduce property taxes and we can do it responsibly without putting our state's economy. You see budgets after all and not about numbers. We read numbers but that's not with budgets are about not about economic projections or even estimates. Their budgets are about what we do here makes a difference as in years past. I have invited three New Jerseyans to be with us today because they have people who have been affected by what we have done in past budgets.

Biggest that people who've been helped by our actions in New Jersey and whose lives are better because we've been wise in our investments. Our first guest is a professor at Ramapo College. Like many of us he's concerned that we're producing a generation of young people who are globally illiterate. He was trouble when a recent survey found 75 percent of college aged students could not locate the Persian Gulf on a map and fewer than half couldn't identify the United Kingdom or even Japan. This college professor decided to do something about it with the help of a challenge grant that you approve. He began to make Rambo the college of choice for American students who wanted to be globally literate. Today Ramaphosa students learn foreign languages. They study international business and through the miracle of telecommunications they debate students in Japan and the Netherlands and around the world.

Last year a young Soviet woman visited the United States. She went ahead to inform the sponsors of a trip that she wanted really to visit the sentence of international learning and she mentioned in a telegram for schools Princeton hub Columbia and romal. With our investment this professor Hailes helped but ramp up on the map and in doing so he is helping to guarantee that America will have a place on the world's economic map in the 21st century. Please welcome Dr. Clifford PITA's of Harrington book. A. Second guessed. I'd qualify for a case study I guess

in one of your courses at Rambo. He's an entrepreneur the owner of Synergetics Corporation a small company in Morgan's vale that makes some of the world's most effective tests for diagnosing everything from pregnancy to colon cancer and a number of other medical conditions. This entrepreneur I just has one date on his mind. It's January 1st 1992. That's today when 23 European countries will drop their trade barriers opening up a market with more than five hundred trillion dollars a market larger than this entire United States. Our guest wants his company to be a player in that market let alone he and his workers simply don't stand a chance. Luckily because of an investment you made he has a helping hand through so when a division of international trade. He is attending trade shows needs signing contracts with suppliers all the way across Europe. He's creating good jobs

for people here in New Jersey and at the same time he's reducing our balance of payments he says. If you try to move into the European market in 1992 it will be too late. But with our help he is making his move and he's making his mark today. Meet Michael Katz of. A. Third guest is only 19 years old already. She's a pioneer. She's one of the first graduates of our rich welfare reform from two years ago. The future didn't look very bright for that young woman. She dropped out of high school. She was expecting a baby and she had really no hope for a good job. Given that scenario she expected to be on welfare for years.

She needed a boost. And you knew in the legislature you gave it reach changed her expectations which helped to give her training and today she's employed as a receptionist at the law firm of use Henrik's and Wallace in West Trenton and she's taken further advantage of that opportunity. Given what she's done she has only been at the job less than a year already. She has received one promotion and two raises. She is earning four times what she received on welfare. When this young woman began reach we had to help with transportation. Today we're proud to report she just bought her first car and our 23 month old son Jeffrey is on a good day care center and he has good health care benefits both

because of rage. Today the future looks so much right for this young woman and for her son. And your investment you. That's the reason why. So please welcome Kim breast of track. Kim Michael Clifford to me off a vivid Pro we built in New Jersey and a stronger more confident and yes kind. And it was a decade before we found the courage and the will to do what is right not just for the next election but for the next generation. Now I know that local leaders love to say they're concerned only about the distant future. A number of stories tell my students about Congressman Henry Clay was once in a

debate in Congress when a colleague ended a long dull harangue by saying you Mr. Clay speak for the present generation while I speak only for posterity. I responded yes. And you seem willing to keep on speaking until your audience arrives. Well we have changed the focus of government in New Jersey and today. I guess I simply ask you to keep it going. This tight budget obviously is not going to meet everyone's approval and I'll work with you to make necessary changes. I know all sorts of groups are going to demand more spending on their programs. Some groups are going to come to you and demand higher taxes. I asked you today don't turn your backs on what we have already done together. Don't turn your backs on Clifford and Michael and Kim and all the other people who've been beneficiaries of what we've done two centuries ago. There was a man named Simon Bolivar. And he led a revolution in South America freeing country after country

from colonial rule and the fight was intense struggle long and once full of all was asked how long he would continue. How long can you keep this up. And he replied We are now seeing the light. It is not our desire to ever again be thrust back into the darkness. We in New Jersey in recent years have seen what the light can do for people's lives and for their spirit. The day I say to you we will not go back. We will never go back. New Jersey will never again be thrust into the darkness. Thank you and God bless. And so Governor. Which is eight and final budget address before a

special session of the New Jersey legislature. The governor spoke for about 35 minutes and his speech was interrupted 25 times by applause. I guess the gov spending program as he announced as his administration announced today is worth. Well wait. Not quite. Twelve point one billion dollars. Today he proposed about 320 billion dollars worth of property tax rebates and corrections. Of course this is just the beginning of the governor's budgetary process. John Russo up on stage there joking about the governor's proposal to tax people for buying a drink across a bar when right now theyre being taxed for buying a glass of beer. This is only the beginning of the governor's budgetary process of course it still has to go through legislative hearings and both. The Senate and the assembly. That process will be going on for approximately the next six months because the state asked to have its night fiscal 1990 budget in place by the end of June. That's

our report here from the state museum auditorium. Let's go back to the studio now in Trenton and Bill Bremen. I think with this property tax will be certainly through a big property tax relief the roads. John Russo up there who is speaking right now when he said he would work with Russo to put a cap on property tax spending and that I think was the biggest olive branch here today. Let's go back to you now though. But