Sandy’s financial toll may deal knockout blow to N.J.’s budget (NJ.com)

October 31, 2012 – Hurricane Sandy has leveled homes, caused billions of dollars in damage and now may blast a hole in New Jersey’s (Aa3 / 646039TA5) already fragile budget. “Your economy grinds to the halt and you have tremendous expenses,” Kathleen Blanco, the governor of Louisiana when Hurricane Katrina struck her state in 2005, told The Star-Ledger in a phone interview today. “The state has to look at ways to cover things that the federal government won’t pay for.” Weeks after Katrina, Blanco cut nearly $1 billion — or 14 percent — of spending out of the state’s budget to make up for loss in revenue. Most of the cuts came in Medicaid, which saw savings as residents in the poorest neighborhoods moved to nearby states. “You have to reprioritize. It was pretty scary,” Blanco said. “It was severe, but the citizenry understood the steps we had to take and rallied behind it.” Sandy barreled through the New Jersey Monday night and early Tuesday, leaving more than more than 2.3 million homes and businesses without power and causing damage expected to be in the billions of dollars, particularly on the barrier islands. Gov. Christie’s ambitious $31.7 billion budget for the current fiscal year is already strained by disappointing revenue collections and higher-than-expected rises in Medicaid and unemployment costs. Revenues grew modestly in the first three months of the fiscal year that began in July but are $175 million, or 4 percent, less than Christie projected. Revenue would have to grow more than 10 percent in the remaining months for Christie to hit his targets. When Hurricane Irene hit New Jersey last summer, revenues dipped below expectations and State Treasurer Andrew Sidamon-Eristoff blamed it on the “severe weather.”

Link to Full Article: http://www.nj.com/news/index.ssf/2012/10/sandys_financial_toll_may_deal.html

 

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