The New Jersey Legislature was poised yesterday to override Gov. Jim Florio's veto of the fiscal 1993 budget, but a single lawmaker is likely to make the vote a down-to-the-wire affair, according to legislative sources.
Sen. Leonard T. Connors, R-Ocean, who sided with the Democratic governor against the budget, holds the key to the two-thirds majority needed for an override in the Senate. But he has so far refused to give in the pressure from his fellow Republicans and switch his vote.
The Assembly has enough votes for an override, but the Senate would be one vote short without a reversal from Sen. Connors.
Gov. Florio vetoed the $14.7 billion budget late Friday night, becoming the first New Jersey governor in history to reject a budget outright rather than utilizing a line-item veto. The ongoing dispute is causing headaches for municipalities who have been forced to miss deadlines for mailing tax bills.
Sen. Connors, who could not be reached for comment yesterday, campaigned last November on a promise that he would not allow any dilution of New Jersey's popular Homestead tax rebate program. But the Republican-controlled Legislature, which rolled back a $608 million sales tax increase earlier this year, cut $385 million in Homestead rebates to help make up for the revenue loss.
Legislative sources said Sen. Connors is likely to change his vote late tonight before the deadline expires, because he feels the crisis by missing the deadline would be worse than breaking his promise to constituents.
Meanwhile, the state budget crisis is beginning to take a toll at the local level as well, as the uncertainty prevents municipalities from mailing property tax bills on time.
In calmer budget years, the governor and Legislature have typically come to an agreement early in the process - usually by March or April - on the amount of local government aid they will allocate for the upcoming budget year. Municipal officials then mail property tax bills based on that amount by June 15, to comply with a mandatory 45-day notice period for the Aug. 1 payment deadline for third-quarter property taxes.
This year, however, no such agreement was struck, so the bills have not been sent and the Aug. 1 deadline will be missed, according to Jay Johnston, a spokesman for the New Jersey Division of Local Government Services, which certifies local budgets.
"Practically speaking, there isn't a municipality in the state that's going to get its tax bills out on time," Mr. Johnston said. He explained that the division anticipated the delay in February and told local governments to submit budgets that assume the same level of funding as last year.
That means all the budgets have advanced to the point where they need only to make their final state aid calculations to be certified.
But that process will be harder for some towns than others. Although the Legislature's budget leaves total state aid to municipalities at 1992 levels, the mix has changed and about 111 towns and cities will have to adjust their budgets to account for increases or decreases. Mr. Johnston said. Those municipalities will take the longest to be certified and have the highest potential for "serious cash-flow problems," he said.
He said those municipalities are also the most likely candidates to draw down cash balances or issue short-term notes.
The state Attorney General's office is working on a way to mitigate the problem by devising an informal notice local governments can mail to taxpayers that estimates their bill and asks for payment by the Aug. 1 deadline, despite the absence of a formal bill.
Once the final budget is in place, the division can begin certifying local budgets. But even that process will be hobbled by the state's budget crisis. As part of the $1.1 billion in spending cuts the Legislature enacted, the division's administrative budget was slashed, Mr. Johnston said.
That means that as of July 1, division officials must lay off workers and use their salaries to pay the administrative costs of budget certification. To reduce the number of employees affected, none of the overtime usually associated with budget review season will be allowed, further delaying the certification process, Mr. Johnston said.
In his veto message Friday, the governor said he could not agree to the Legislature's spending plan because it makes too many spending cuts in vital programs. In addition, he said it double-counts federal funds, delays payment of Medicaid expenses in violation of Generally Accepted Accounting Principles, and is unconstitutional.
The revenue errors amount to at least $261 million, according to Gov. Florio. That means the surplus at the end of 1993 would be only $26 million, instead of the $280 million he said is necessary to avoid jeopardizing the state's credit rating.
The governor also took issue with the Legislature's attempt to gain greater control of the state's short-term note borrowings. The budget would give the Joint Budget Oversight Committee a role in the note approval process, which until now has been governed by the state Treasury. Gov. Florio said that violated the separation of powers doctrine.
Hyman Grossman, a managing director at Standard & Poor's Corp., said the rating agency has three main concerns about New Jersey's 1993 budget: a $770 million one-shot cast cash infusion manufactured through a reassessment of pension fund assets, a $450 million hole created when the federal government rejected a Medicaid reimbursement request, and the uncertain fallout from a court decision invalidating the state's method of financing health care for the poor and uninsured.
Standard & Poor's, which rates New Jersey AA-plus, placed the state on Credit Watch with negative implications earlier this month because of the budget crisis. Moody's Investors Service and Fitch Investors Service rate the state triple-A.