Corzine's Choice

Jon Corzine was up against a tough crowd this spring when he appeared before the annual New Jersey Conference of Mayors in April. It was just a few weeks after the governor proposed massive cuts to state aid for municipalities, among other drastic reductions to the state budget for 2008, and it was the first time he was in a room surrounded by the local leaders who would have to deal with the impacts of those cuts.

The president of the Conference of Mayors, Colleen Mahr, didn't give him any leeway in her opening remarks. "Our residents will feel the strain if the plan goes forward," Mahr said, turning away from the crowd and directing her comments directly at the governor, seated beside her. "Every mayor here today takes the challenges put forth by you, governor, very seriously, and as you know, we will continue to fight those that we don't agree with."

It was after speaking at this very conference last year that Corzine had his much-publicized, near-fatal auto accident on the Garden State Parkway. Like that day, it was overcast and foggy outside, so he couldn't take a helicopter to the event. It seemed Corzine was aware of how surreal the anniversary was, but he used it as an opening to address the task at hand: convincing attendees to go along with his sweeping plans to alter the state's fiscal course.

"Thank you all for your expressions of concern and well wishes after last spring’s accident," he started. "I’ve learned a lot, and I don’t just mean the lesson of wearing a seatbelt." He continued, "I am focused on fundamentally changing and correcting our state’s deeply flawed spending and fiscal habits, while maintaining a progressive, strong partnership with the people of New Jersey."

It's been his progressive policies that have earned him a national reputation since taking office in 2006. In just two years, the state has abolished the death penalty, passed paid family leave, expanded the earned income tax credit, extended the application of state health insurance for children, and legalized civil unions for same-sex couples. But the state's crippling financial woes have made it nearly impossible to enact any changes that would require additional state funding, and have forced some decidedly unprogressive cuts to the state budget -- hospitals, nursing homes, the arts, higher education, and state parks have all been the target of budget reductions this year.

Corzine is not the first governor who has had to figure out how to manage a state during hard times without compromising his progressive ideals or his political career. But in recent months, he has taken steps almost unheard of in state government: broad spending cuts, along with innovative measures to pay down the state's crippling debt. (Actual spending cuts are rare for state governments. Most governors handle economic troubles by borrowing or reducing growth in spending.) In February, Corzine proposed shaving $500 million off the state's budget for the fiscal year beginning in July, and a few weeks earlier in his State of the State address, he suggested a separate plan to create a public-private partnership and a sizable increase in fares for the state's toll roads.

When Corzine took office two years ago, the state was already carrying a $32 billion debt, the fourth-largest per-capita debt load in the country. He followed four different governors who didn't serve full terms, including Christine Todd Whitman, who left to serve as head of the Bush administration's Environmental Protection Agency and Jim McGreevey, who famously resigned following a gay sex scandal. The state's now-crippling debt load is the result of more than a decade of mismanagement by previous governors from both sides of the aisle. Former governors also failed to fund the pension and health-care programs for state employees, which could cost up to $100 billion over the next 30 years to replenish. Then there's the state's transportation fund, which will go broke by 2011 without significant new investment. "It’s not a Democrat or Republican problem," said Corzine, as he gulped down a ham sandwich shortly after his address to mayors, "but people have been borrowing to fix budget holes for a very long time."

New Jersey is a generally blue state with a Democrat-controlled legislature, so many assumed Corzine would be able to gain more traction than he has. But over the past two years he's fought a series of legislative and public-relations battles as he's attempted to fix the problem. The chilly reception at the mayor's conference certainly proved that.

"I wasn’t expecting standing ovations from anyone," Corzine said about the speech, in which he tried to outline his overarching goals for fixing the state's fiscal crisis. "I was trying to convey that we need to step back and look at it as a whole cloth, not just your individual cuts. That’s not a fun message, but it’s one that has to be delivered."

Just how "not fun" was the message? His original budget proposal included a plan to create a public-private partnership for the state's toll-road system and increase tolls on those roads five-fold by 2022, the proceeds of which would be used to pay down the state debt and invest in the transportation infrastructure. It also included major cuts in funding to municipalities and slashed funding for charity care at state hospitals, state universities, public parks, and the arts. It would have eliminated 3,000 jobs from the state payroll and axed the state's departments of Agriculture and Personnel and the state Commerce Commission altogether.

It was, unsurprisingly, controversial and met with a lot of bipartisan friction. But earlier this week, Corzine and the state legislature appeared to reach a compromise on that budget, which eases some of those cuts. He's shelved the toll plan for now and agreed to a compromise that would restore much of the aid to municipalities, expand health-care programs for the poor, preserve some of the funding for state parks, and maintain state scholarships for community colleges. But if the legislature approves this compromise budget next week, hospital aid to treat the uninsured will still be cut by 9.5 percent, the Department of Personnel and the state Commerce Commission will be abolished, and municipalities will still face stiff cuts in state funding. Between 1,800 and 2,000 state employees will be offered early retirement. In all, the budget is $600 million below the one the state adopted last June.

Though it's currently the biggest thorn in his side, the budget crisis was actually one of the chief reasons Corzine was elected governor in the first place. He came to New Jersey politics after 25 years in the corporate sector, most recently as the chief executive of Goldman Sachs from 1994 and 1999. His time in finance helped him accrue considerable wealth and a reputation as a businessman and innovator. After spending $62 million of his own money to run for Senate in 2000, he took the seat vacated by Frank Lautenberg.

Corzine hadn't even completed a full term as senator before the McGreevey administration's meltdown, but the Democratic establishment and the public saw the former executive as the right person to address the state's staggering debt and years of fiscal mismanagement. He was easily the most popular New Jersey Democrat at the time, and voters -- even those who didn't agree with his politics -- pinned their hopes on Corzine as the manager who would set the state's finances on the right path. "He certainly had people giving him the benefit of the doubt, if not the support," said Ingrid Reed, a policy analyst at the Eagleton Institute at Rutgers University.

Despite coming in with a good sense of the problems in the state, even Corzine said he wasn't quite aware of how bad the financial situation was. He hoped to accomplish a number of progressive reforms -- expand access to health care and improve the state's public schools, among other goals -- but found budget deficit after budget deficit standing in his way.

"He's a numbers guy, and the numbers don't lie. New Jersey is in difficult straits," said Richard Leone, a longtime friend and adviser to Corzine who served as the chair of the governor's transition team in 2006. "He didn't come to Trenton to cut higher education programs or reduce aid to hospitals or to close state parks, yet all of that is going to happen."

Perhaps predictably, this has led to less-than-ideal public opinion of the governor and his policies. Aides and observers say this is largely because Corzine's presentation of these expansive financial plans has left something to be desired. He has demonstrated a willingness to get into the nuts and bolts of budgets, often as if he's doing a financial analysis on Wall Street, according to those who work closely with him. But his tendencies highlight both the strengths and weaknesses of having a CEO at the state's helm. In public, Corzine speaks dispassionately about the cuts and often sounds as if he's addressing a board meeting rather than citizens whose local schools have experienced cuts.

After announcing his sweeping toll and budget plans, he took to the road, holding town hall meetings throughout the state to meet with often hostile audiences, spending hours explaining the details of his plan. But many people criticized the presentations as too dry and said they left feeling like the governor didn't understand why they opposed his toll-hike plan. Of course, while the public wants to see the state's finances fixed, they don't want to deal with the sacrifices that might entail. And according to many in the state, Corzine hasn't done the best job of selling the public on the need for these sacrifices and their long-term payoffs.

"The public agrees with what he's trying to do, they just don't trust him," said Patrick Murray, director of the Monmouth University Polling Institute. "Our polling showed that during the course of [his town hall meetings], opinion on the toll-hike plan did not move at all, but his opinion rating plummeted."

According to Murray, this is partly due to the relative ease with which Corzine won in both the senate and gubernatorial races. "He's run two elections where he hasn't really had to go out and meet the voters, so he hasn't really come up through that process of having to press the flesh, and that has a lot to do with your ability to empathize with people and show that you share their concerns," said Murray.

Corzine tried to refocus the conversation on the larger elements and long-term benefits of his budget proposal rather than specific cuts. His four-part plan to overhaul the state's finances calls for an immediate freeze in spending, and a cap on government spending going forward in the form of a constitutional amendment that would peg expenditures to recurring revenue sources. That means it couldn't come through bonding or one-shot budget gimmicks -- the kind of habits that led the state to these financial straits. It also calls for an end to contract bonding and gives only voters the power to approve bonding through ballot questions, rather than the legislature.

Though his more immediate plans to reform state finances have been met with hostility from voters and the legislature, his bigger plan has won the favor of some of the state's leading Republican politicians, including Bob Franks, the man he defeated for the Senate seat in 2000. Corzine's proposal is the best option to "attack the reckless spending practices of the state capital," said Franks, who heads the steering committee charged with selling the state on Corzine's long-term plan. Franks said he thinks it should have clear resonance with the state's conservatives, especially the other three components of the plan.

Other leading Republicans in the state, including Leonard Lance, who first proposed the amendment to tie expenditures to recurring revenues and allow voters to approve all borrowing, have come out against the specific cuts, but say they are on board with some of his bigger-picture proposals.

Corzine's victory in achieving an overall cut to the budget this year is evidence of his unique ideological approach to governing the state. "I don’t think anybody would call me a liberal with regard to my views that we should spend what we take in," he says. Despite his budget compromises, Corzine has done plenty to earn him the liberal firebrand. In his first two years in office, the state abolished the death penalty, passed paid family leave, expanded the earned income tax credit, extended the application of state health insurance for children, and legalized civil unions for same-sex couples. He's also been an advocate for environmental action, and signed legislation last year to establish a cap-and-trade system for New Jersey's electricity producers, making the state among the first three in the country to do so. He has reformed the state's child welfare system, restructured school aid so that state money follows the poorest children rather than simply flooding to the poorest districts, and reformulated charity-care funding for hospitals. He's focused on ethics; his first action as governor was an executive order requiring an additional 625 state employees to file personal financial disclosure forms. His administration has also put through legislation to bar dual office holding in the state.

"I think he's among the most enlightened a Democrat can be, which is to be compassionate and progressive on social issues and to be fiscally conservative," said Joe Roberts, speaker of the state assembly, who was one of the chief advocates for abolishing the death penalty in the state. "We have to balance the budget, we have to live within our means, we have to confront issues honestly. And if we do all that, then we have the resources and the credibility to confront progressive social issues."

The state is well on its way toward being one of the most progressive in the country, and probably the most progressive on the East Coast. Yet as Roberts notes, financial burdens are still holding Corzine and the state back from doing even more. As Corzine puts it, "I’d like to be investing in our future, and I’m limited by a past. The hardest decision is controlling my own desires to do what I think in a perfect world we’d be able to do, but we can't."

If the budget is approved next week, it will be a significant accomplishment for Corzine. The compromise isn't perfect, and there are still a number of cuts that residents and legislators aren't particularly pleased with. But on the evening that he announced that a budget deal had been reached with state legislators, he hosted the annual Governor's Gala, where he heralded the administration's accomplishments thus far. He said he is "proud of what we have done" on both policy and budget, and announced his intention to run for re-election next year. It's still unclear whether his budget crusade will help him or hurt him in that pursuit, but Corzine remains firm that it has to be done to ensure the state's long-term success.

After all, as he puts it, "If we progressives don’t attack the fundamental capacity to produce or provide for the resources to do the things we want to do, we’re going to lose."

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