New Jersey's governor warns of budget troubles, job cuts

MONTCLAIR, N.J. -- Warning that New Jersey faces a $2.8 billion budget shortfall, Gov. James E. McGreevey said that hundreds of state employees would face layoffs.

McGreevey, who took office last week, made the announcement at a town meeting at Montclair State University. He said 600 state workers would receive layoff notices on Wednesday. It wasn't immediately clear whether more notices would follow.

McGreevey's announcement was one of several ominous forecasts this week by governors around the country.

In Missouri, Gov. Bob Holden on Wednesday said he plans to eliminate nearly 700 jobs. Virginia Gov. Mark Warner also warned that state layoffs were possible as he outlined deep spending cuts Tuesday.

Massachusetts acting Gov. Jane Swift proposed smaller lottery payouts Wednesday to help cover an estimated $1.6 billion budget shortfall. The state currently returns 71 percent as prizes. Swift, a Republican, recommended 63 percent, saying it could bring $274 million in savings.

New York Gov. George Pataki and Florida Gov. Jeb Bush both called for modest spending increases in their states, partly for security measures.

McGreevey has asked all state agencies to cut spending by 5 percent and warned the state's mayors that they can't count on more state aid.

"They're not getting another red cent, and they're going to have to live within their means," the Democratic governor said Tuesday.

McGreevey and his two top budget aides accused the previous Republican administration of reckless spending, saying the current fiscal year's budget planned for an unrealistic 7 percent increase in revenue.

New Jersey's Constitution requires a balanced budget.

In Virginia, state employees and school teachers will forgo raises, and the state car tax won't be fully phased out until at least 2004 under Warner's plan.