Monday, May 14, 2012

New Jersey Budget Projects Will Hamper Gov. Christie's Chances To Keep Promised Tax Cuts

As I've been warning for quite some time, budget projections have been far too rosy and assuming growth when one should take a far more conservative outlook on the figures.

By assuming growth in excess of what one should reasonably expect, you set up the potential for budget deficits and that's precisely the situation that Gov. Chris Christie is facing in New Jersey. He offered up a more rosy outlook than the state's Office of Legislative Services (OLS), and with the new projection likely coming in even lower than the OLS projections from earlier this year, the budget talks for the upcoming fiscal year are going to focus on just how much money is available for property tax relief - whether in the form of a tax credit or other relief.

Back in March, the OLS had projected that the revenues would be $537 million less than what Gov. Christie had expected. The new figures are going to be announced this week, and it is likely to spur a cut in what kind of tax relief can be offered because revenues simply aren't coming in at levels necessary to fund the property tax relief.

Once again, the state's legislative leaders and governor are playing games with the budget situation and offering up solutions that require revenues that aren't sustainable. They are making promises that they can't or shouldn't be able to keep. Each time they do, it puts the state on an unsustainable level of services; one that would require significant tax hikes or cuts in services to maintain the existing infrastructure.

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