N.J. Gov. DiFrancesco places $300 million in state reserve

Acting N.J. Gov. Donald DiFrancesco recently placed $300 million of state spending in reserve in response to the decline in state revenues after the attacks of Sept. 11. This decision increased total funds held in reserve to more than $501 million and improved the fiscal year surplus to nearly $1.75 billion.

"These actions, when combined with the $1.02 billion surplus included in the budget I signed last June, will help us deal with any revenue decline in a fiscally prudent way. My commitment to the next governor, and to the people of New Jersey, is to leave behind a budget that works," DiFrancesco said.

DiFrancesco spokesman Rae Hutton said the governor made these changes to combat New Jersey's current revenue problems.

"A revenue shortfall is not unusual, but revenue has fallen this year because after September 11 unemployment went up, so revenue from income taxes decreased," Hutton said.

Because DiFrancesco said it is difficult to determine the extent of this revenue shortfall, he instituted the new reserve funds policy as a precaution.

"[While studying the amount of revenue decline] we must exercise fiscal restraint and work to identify potential savings and reductions in the budget," he said.

DiFrancesco also indicated that these changes are not necessarily final.

"[The new budget policy] is an on-going process," he said. "We will continue to explore options and look for additional savings. Spending reductions are never easy or without pain. But, it is important that we keep our eye on the bottom line while maintaining the flexibility to deal with the many demands placed on state government."

Even though the funds could be reallocated at any time, Hutton speculated that DiFrancesco will leave this decision for incoming Gov. Jim McGreevey.

Hutton said that though funds from many departments have been redistributed to the reserves, there is not a decrease in funds allocated to higher education.

These changes will have no effect on the University, which has not received state funding since it was denied a grant last year.

"All budgets have priorities where the neediest residents come first, and that item didn't make the cut," Hutton said.

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Hutton said this decision might have been influenced by the fact that the University has a large endowment and funds were available from sources other than the state government, including individual donors.