NJ Shutdown: Day 3

Don't expect a deal today that would solve New Jersey's budget blues. Things are pretty much at a standstill with no progress to report. No kidding.

Gov. Corzine is still set on the sales tax hike, which the legislature is resisting. It's not just the budget process at stake, but the political landscape for the next several years in Trenton.

If Corzine gives in, he'll lose face and political capital for the rest of his term - as the legislature will exploit Corzine's failures over the next three years. He'll also face the wrath of the unions that backed him because the changes to the budget will largely affect the unionized state workers.

If the Legislature gives in, Corzine will exploit the failures and push through his agenda over the legislature.

So, it isn't just about dollars and sense, but about who will be able to dominate the political landscape in Trenton.

Now, if you think that New Jersey is dysfunctional based on the budget shutdown, you haven't seen anything yet. New York has witnessed late budgets for nearly a decade straight, and everything from withholding legislative pay to threats of shutting down state operations did nothing to impose fiscal sanity in New York. Spending kept increasing, right along with the taxes.

New York's fiscal position improved as Wall Street did. New Jersey does not have that luxury. It has to rely upon revenues generated from the gross income tax, corportation business tax, sales and use tax, property taxes, and all the fees and miscellaneous taxes that are imposed by the state.

Gov. Corzine wants to increase the state sales tax to 7% from 6%. That doesn't sound like much, but in a state with one of the top five highest tax burdens in the country, one has to wonder what it will do to the business environment in the state. Will people take their business to better tax climates across state lines? That's a distinct possibility.

Will the revenues expected to be generated reach the levels predicted? That's not clear - as past cigarette tax hikes failed to bring in the expected revenues.

Trenton has to get its act in gear, and stop looking at the budget as simply what areas can be taxed without incurring the political liabilities in November. They must look at spending cuts, including culling the state workforce, which is larger now than at any other time in state history despite a shrinking population base.

UPDATE:
Tigerhawk thinks that Corzine's showing political courage in trying to clean up the fiscal mess in Trenton. I'm not so charitable. Corzine wants to raise all manner of taxes to cover his increases in state spending. The Assembly wants to raise taxes other than the sales and use tax to cover increases in state spending. Neither wants to tackle the problem of out-of-control spending.

UPDATE:
Today's budget meeting lasted all of 30 minutes.

Roberts emerged from the governor's office at the Statehouse declaring himself "frustrated.... (Corzine) seems to be focused on the sales tax. We need to solve this problem and we need to have a budget that has its roots in reality."

Corzine says an increase in the sales tax from six percent to seven percent is needed to put the state on a sound fiscal footing, while Roberts wants any such revenue dedicated to property tax relief. Corzine has supported a plan to put about half of that to property tax relief.

Roberts then challenged Corzine to name the 21 senators and 41 Assembly members who support his plan to raise the sales tax.

"If the governor can demonstrate that legislative support is there, then I will post his sales tax bill in 24 hours," Roberts said.

Note that all that is being discussed is raising one tax to offer relief from another tax that will continue rising unless permanent fixes are made. Those permanent fixes can only come through reductions in spending - structural changes to the budget that neither Corzine nor the Legislature are willing to even address.

A judge ruled that the 12 Atlantic City casinos did not have sufficient grounds for relief to keep the state from shutting them down.

Zazzali, sitting as a single justice hearing an emergency appeal, took the case after a three-judge appeals court also rejected their bid to remain open during the government shutdown that already has stopped lottery ticket sales and will halt horse racing and close state parks on Wednesday. The appeals court ruled this morning.

The casinos’ planned shutdown time of 8 a.m. on July 5 was set by Casino Control Commission Chairwoman Linda Kassekert, who said closing gambling operations during the crowded July 4th weekend would pose a threat to public safety. She emphasized that if the gaming tables and slot machines are shut down, all other casino amenities - hotel rooms, restaurants, shops, lounges and entertainment facilities - would remain open.

The casinos are going to the state Supreme Court to try and stay open. Good luck with that. I give the casinos the same odds of winning in Court as I usually do when I hit the tables. Slim. Real slim.