New Jersey Revenues Drop Sharply

The worst is still to come. We have only scratched the surface of this mess, and Gov. Corzine and his Democrats' solution is tax increases, and not significant cuts in state spending. They might talk a good game of containing costs and throw some token cuts in, but they will look towards tax hikes as the way out of this mess.

State tax revenues were down, and those revenues are going to continue dropping as the situation intensifies. Sales tax, income tax, and corporate income taxes are all down. Real estate transfer taxes are down significantly as the real estate market is in correction mode and home prices become more affordable (if only to those who actually have the ability to repay the mortgages if they can get them).

Not included in the tax chart is the property tax, which is collected locally.

Corzine put hundreds in millions of dollars towards state funded stem cell research facilities, despite the fact that the business sector is more efficient at putting such funds to work. He's opened an office and stocked it full of high price workers. His attempt to get the state to spend hundreds of millions to repay $450 million in bonds for stem cell research was soundly defeated last year.

All that came at a time when the signs were on the wall that state spending was out of control, and yet Corzine did nothing to contain costs and state spending.

It's not just Corzine's policies that are driving the state's dismal fiscal picture. NJ Transit has wasted hundreds of millions on the Secaucus boondoggle and ill-conceived new transit centers where no one wanted them (Mahwah Rt 17 comes to mind), both of which remains under utilized at a time when mass transit is hurting for every dollar.

You also now have Verizon claiming that they no longer have to pay certain taxes because the majority of New Jersey residents no longer use telephone services as per state law.

Verizon says the law requires the company to pay taxes on landline equipment only when it is the dominant provider. The company says it is losing more than 35,000 residential phone customers a month due to competition.

That's a hit of tens of millions of dollars a year if Verizon can sustain its position in court (which is where that is likely headed).

If Verizon's position is sustained, it means localities will be forced to find revenues elsewhere, causing still more tax hikes.