Tuesday, June 22, 2010

New Jersey To Adopt $29.3 Billion Budget

Chalk up a victory for Gov. Chris Christie (R) in New Jersey. His budget proposal has emerged largely unscathed from the budget process and will be approved by the legislature in the next few days ahead of the July 1 deadline.
The budget deal makes about $180.7 million in changes to Christie's proposed $29.3 billion budget, keeping in place some of the biggest cuts, such as a $820 million reduction in aid to school districts.

Lawmakers expect to work on passing the budget — holding committee meetings and full-legislative votes — later this week, with a final vote on June 28, two days ahead of the deadline, Democratic legislative leaders said in a joint statement.

“The budget we will introduce is far from perfect and will still be a tough sell among Democratic lawmakers, but the governor should be commended for working with us to take the sting our of some of its most harmful cuts,” Senate President Stephen Sweeney (D-Gloucester) said in a statement. “Most importantly, this budget will be signed on time, and all the rumors of a shutdown will remain just that.”
So what changes were made?
The changes include:

* Keeping in place the Bergen County "blue laws" that forbid Sunday shopping in that county by finding other revenue.
* Keeping open Hagedorn Psychiatric Hospital in Hunterdon County.
* More funding for welfare, adult medical day care, home-care services, education services for the blind, and various other programs for vulnerable residents.
* More funding for NJ STARS scholarships, the NJ After 3 program, and tuition assistance grants.
* Maintaining the State Commission of Investigation, a watchdog agency Christie had sought to merge into the state comptroller's office.
* Funding for cultural sites including the Battleship New Jersey and the Newark Museum.
* More funding for projects in Urban Enterprise Zones.
The biggest change is that the state loses $64 million by not demanding Bergen County loosen the blue law restrictions on Sunday sales. In all, the changes are about $180 million out of the $29.3 billion budget. This is just window dressing compared with the tougher task of getting property taxes under control.

On that front, Gov. Christie's plan to cap municipal property tax hikes to 2.5% by constitutional amendment has the backing of Newark Mayor Cory Booker (D) and legislative Democrats have floated a plan to cap property taxes statutorily at 2.9% - something they would not have done unless Gov. Christie had demanded the far lower cap. Yet, the Democrats in the legislature continue to carve out multiple exceptions to the cap, enabling municipalities to raise taxes endlessly and avoid the repercussions of facing a cap on higher taxes.

Still, I would expect that the legislature and governor agree at around 2.7% for a hard statutory cap - which is among the measures needed to get skyrocketing property taxes in New Jersey under control. The Governor might even accept a 2.9% cap if the legislature closes all the loopholes. There is room to negotiate there and the changes are such that the state can begin to get a handle on the property tax situation.

Among measures that Democrats could not get Gov. Christie to budge on was the reinstatement of the temporary tax on "millionaires" that would have hit up 16,000 New Jersey taxpayers to fund property tax relief for about 600,000 seniors. Reducing the state's spending overall is the only way to provide proper tax relief not only to those seniors, but to all New Jerseyeans. Raising one tax to help provide relief for another tax is precisely the reason that the personal income tax was instituted in the first place and we're now stuck with both taxes all while the property taxes keep skyrocketing without any end in sight.

Moreover, the sales tax was hiked by then Gov. Corzine as part of his property tax relief, and when sales tax revenue dried up, the rebate was cut and virtually eliminated for many taxpayers, while the increased sales tax remains in place.

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