NJ Shutdown: Day 7

It's not quite time to end the shutdown watch because the budget hasn't been signed into law, and the casino gaming floors aren't reopened, and thousands of state workers and others dependent upon the state are still in limbo. The casinos will probably open up sometime tomorrow morning if everyone signs on the dotted line today.

So who won in this budget battle? Some think Corzine won. I don't. It's a phyrric victory at best, considering that voters will remember who raised their taxes and they shouldn't forget.

Indeed, state GOPers should remind voters of this fact every single day between now and November. They should remind voters that it was Corzine and the Legislative Democrats who shut down the state for a week despite the fact that their disagreement over how much to raise taxes could have been done well in advance of the July 1 budget deadline.

So who lost? Taxpayers. Bigtime. More than any single politician, like Norcross or Roberts, taxpayers lost out. Not only is the budget a sham, where there is only a hope that the sales tax increase revenues will be used for property tax relief, but taxpayers will feel the pinch every time they buy items in the state. All while their property taxes continue to increase every year unabated.

State workers shouldn't be happy either. They were sold a bill of goods that Corzine would fund the state's pension fund for the first time in a decade. Well, it's being funded, but only at a fraction of what is needed.

All the serious issues facing New Jersey from the structural deficits, real property tax reform, and funding the various state funds, are not only still present, but have been punted for future consideration.

All thanks to Corzine and the Legislature.

And yet Corzine and Roberts and Codey can trot in front of the cameras and say that a budget is done? Not quite true.

State workers worry that they're going to be shortchanged on their paychecks for the lost days.

So how is this so-called budget deal supposed to work? Here's a scoresheet:

How it works
A 1-cent increase in the state sales tax, to 7 cents, will generate an expected $1.1 billion a year.

Half the money will be used to balance the fiscal year 2007 budget.

Voters will be asked in November to constitutionally dedicate the other half to immediate property tax relief.

Voters will be asked in November 2007 to dedicate the full 1-cent increase for property tax relief in future years.

Who is affected:
Homeowners - Will still receive rebate checks this fall, but most likely at last year's levels or less. The budget deal calls for dedicating some $600 million in property tax relief, but that won't be available until 2007 at the earliest.

Consumers - Will pay 7 cents in state sales tax for every $1 of purchases, up from 6 cents. The hike will add $250 in annual shopping costs for an average family of four. Clothes and most food items remain exempt from the tax.

Seniors - Will continue to receive homestead rebates, which have ranged between $800 to $1,200 in recent years. The actual amount will be determined in final negotiations. A property tax freeze for senior homeowners remains intact.

Public employees - Will receive the first hefty state contribution to the pension systems in almost a decade. The budget contains no layoffs.

Waiting to reopen - The following will reopen after the 2007 fiscal year budget is passed by the Assembly and Senate and signed by Governor Corzine:
State courts
Casinos
State parks, historic sites and beaches
Lottery
Motor Vehicle Commission
Racetracks
Road construction

Enlighten NJ has more, including comments from Blue Jersey Bloggers (progressive/Democrat website). They aren't happy either, though it's more of a surprise to them than to Enlighten, Dynamobuzz, or myself. Enlighten also writes:

We have been pointing out Corzine’s promises to increase state spending on any number of new programs since he began running for Governor. We have been pointing out the $2.6 billion in new spending and the $1.8 billion in new taxes contained in Corzine’s budget since he submitted it. New spending and tax increases are just that, no matter what they money is used for or who winds up paying the taxes.

New Jersey voters have gotten exactly what we said Corzine would deliver – more spending and higher taxes. Stunningly irresponsible! Yes, it is and pathetic that supposedly educated folks hadn’t figured it out before now.

Let's do simple math - spending increases of $2.6 billion and $1.8 billion in new taxes do not match up. You can't increase spending more than you're increasing taxes - it means you're heading for a structural deficit. Yet, that's precisely what was proposed.

If you think this year's budget was a mess, just wait til next year. It's not going to be any better.

UPDATE:
And the shutdown rolls on, as the Senate wont even take up the budget debate until 9PM tonite.

Top legislators, State Treasurer Brad Abelow and Gov. Jon Corzine wrangled through the night and wrapped up most of the details of a final state budget at about 7 a.m. today, firming up a proposal expected to be slightly smaller than the $30.9 billion spending plan Corzine unveiled in March.

The Assembly and Senate budget committees that are scheduled to consider the final budget bill and related legislation to boost the sales tax from six cents per dollar to seven cents and raise a handful of other taxes are tentatively scheduled to begin hearings at 4 p.m. The first full Senate session to consider the budget and other matters is not scheduled to start until 9 p.m.

Timing of the legislative action is critical for the state's casinos, race tracks, parks and lottery, which are all shuttered until Gov. Jon Corzine lifts an executive order he signed last Saturday to shut down state government.

Corzine said yesterday he will not lift the order until a budget has been approved by both the Assembly and Senate.

In a Statehouse annex, staffers with the Office of Legislative Services early this morning began the hours-long task of composing and printing the final versions of the voluminous budget document and the related legislation.

In plain English, this means that the state continues to be shutdown until such time that the budget is passed by the Legislature and signed into law by Gov. Corzine. This weekend is going to be a financial mess for Atlantic City, and the state couldn't care less. They've got taxes to raise.

UPDATE:
Still no budget as of 10:35PM, which means the casino gaming areas are still silent.

So what is Trenton doing? Well, here's a good idea - they're working on which taxes they're going to raise, in addition to the sales and use tax.

Precisely which taxes? Where to start.

There's the 1% tax imposed on transfers of commercial real estate over $1 million.

Raising the cigarette tax to $2.75 a pack from $2.40 a pack. That tax has been raised too many times to count in the past five years. And revenues consistently fall short of projections.

3.5% surcharge on Corporation Business Tax liability.

The sales tax hike to 7% [Senate version is S1996], although there's also a resolution [SCR1] to amend the state constitution that would do the same thing but require revenues to be directed to property tax relief.

This isn't to say that all of these taxes will be implemented, but most will be in one form or another.