New Jersey doesn't depend on federal revenue as much as other states
State Treasurer Andrew Sidamon-Eristoff is shown in this January file photo. The bipartisan debt ceiling deal expected to pass the Senate today isn't expected to hurt New Jersey until 2013.TRENTON — States including New Jersey are bracing for more than $2 trillion in spending cuts over the next decade as Congress nears the finish line with a bill to raise the nation’s debt ceiling.
But in the short term, at least, the cuts are not expected to have a big impact on New Jerseyans.
The bipartisan proposal heading for a final vote in the Senate today would trim $7 billion in federal spending this year, according to federal officials, who said it’s a relatively small sum in a $3.6 trillion budget.
The reduction would still hurt if it ends up shifting costs to New Jersey or diminishing services here, but safety-net programs such as Medicaid, Medicare and Social Security would all remain untouched this year, federal lawmakers said.
Rep. Steve Rothman (D-9th Dist.) said the deal “doesn’t resemble in any way, shape or form what was necessary for our country.” But he said New Jersey could at least breathe easy until 2013, when the bulk of cuts would start to take effect.
“I held my nose as I cast my vote in favor of it,” Rothman said. “But I know that default would be much, much worse.”
In Trenton, Christie administration officials said details were still scarce and they were waiting to see the finished product.
“It’s still a pretty fluid situation,” Treasury spokesman Andy Pratt said. “When we’re notified if something’s cut, we’ll respond and deal with it.”
State Treasurer Andrew Sidamon-Eristoff said last week the state is in a good position to deal with the fallout, since it does not depend on federal revenue as much as other states. Still, New Jersey already faces economic pressure from a 9.5 percent unemployment rate, a slow recovery from the recession, budget cuts from Gov. Chris Christie and only $225 million in surplus funds to offset losses in federal revenue this year.
Christie said Monday he was relieved Washington finally hammered out a deal after months of wrenching negotiations, though he blamed President Obama and both parties in Congress for playing politics with the country’s finances.
“What the hell are they doing down there?” he recalled thinking during the negotiations. “There were a lot of Republicans in Congress who did not know when to declare victory.”
While the immediate cuts would only total $7 billion this year, a special committee of federal lawmakers would have to find, by year’s end, an additional $1.2 trillion in cuts for the next decade. That could potentially cut the size of Social Security checks, Medicaid and Medicare.
The committee could also recommend raising taxes, and half of the cuts are poised to come from the Defense and Homeland Security departments.
That round of cuts is much more likely to upend states’ finances, but it would not begin until 2013.
“A lot of these cuts will put more burden on the states,” said Rep. Frank Pallone (D-6th Dist.), who voted against the bill Monday. “If you end up cutting Medicaid ... the state either has to make up the difference for nursing homes, for example, or not provide the funding for nursing homes.”
Pallone also raised concerns about the $7 billion in cuts this year. “The problem is, is the state going to fund these things on its own or are they not going to happen?” he said.
Staff writers Chris Megerian and Christopher Baxter contributed to this report.