Budgetary Brouhaha: Tax (Un)Relief, Hidden Spending,
and Lingering Toll Hikes
Posted February 29, 2008

Sober and responsible.  This is how Governor Jon Corzine described his proposed state budget for fiscal year 2009.

In his annual budget address in the State House on Tuesday, the governor presented what he called “a ‘turning point’ in the fiscal management of our state” and “’cold turkey’ therapy for our troubled spending addiction.”

Unfortunately, for all its pithy sound bites, the governor’s speech fell short of the right substance for fixing the state’s fiscal fiasco.  And while Corzine noted that his proposed budget for next year is 1.5% – or $500 million – smaller than this year’s budget, instead of owning up fully to the government’s responsibility to pay for its own fiscal mismanagement, Corzine once again expects taxpayers to pay.

And he wants to hit them where it hurts the most: property taxes.

Tax (Un)Relief…

Under the governor’s proposed budget, 30 percent of New Jersey households would see their property tax relief either reduced or completely eliminated. Property tax rebates would completely stop for approximately 10 percent of households – those earning $150,000 or more – and rebates would be cut by over 30 percent for an additional 20 percent of households – those earning between $100,000 and $150,000. 

The Courier-Post explains these cuts in real numbers:

“The rebates are being eliminated for some 180,000 households earning between $150,001 to $200,000 and scaled back for 325,000 tax filers with incomes between $100,001 and $150,000. The top earners will lose rebates that averaged $745 last year.  For the second group, it means rebates will fall to a $665 average, from $960.

Renter rebates will fall from a high of $350 last year to $80 for 715,000 tenants

Some 1.6 million homeowners will still receive some rebate, including 1.2 million whose checks will stay the same, a $1,115 average. But even those checks won’t increase to reflect growth in local property taxes.

This underscores the truth of concerns we highlighted last year regarding the validity of the tax relief. As Senate Minority Leader Tom Kean, Jr. (R-Union), stated earlier this week, “The property tax rebates last year were simply a gimmick, and we were promised that they weren’t.”  

Hidden Spending…

As if slashing tax relief were not bad enough, the word is now getting out that the governor’s proposed budget contains $334 million in hidden spending. The Bergen Record reports, “At issue is an ‘off-budget’ fund of $334 million the state is setting up largely to pay for a new early-retirement program designed to trim the state workforce by at least 3,000.” 

If the state is to be believed, however, this spending really isn’t spending at all. “We’re characterizing that as a one-time payment,” state acting treasurer David Rousseau said, “It’s not part of the $33 billion budget.”

Last time we checked, spending was spending. Or, as Senator Leonard Lance (R-Hunterdon/Warren), the ranking Republican member of the Senate Budget Committee, put it, “I know what spending looks like, and this is spending.” 

Given this $334 million in “spending that really isn’t spending,” the actual budgetary cut from this year to next would not be the $500 million that the governor claims at all but rather would be closer to $200 million, bringing the actual proposed fiscal year 2009 budget up from the stated $33 billion to $33.3 billion.

And Lingering Toll Hikes

To top matters off, from intimations made in the governor’s budget speech, it is obvious that he still has not abandoned his idea of hiking tolls on New Jersey’s roadways by 800%.  In his address, he stated, “I understand that the toll proposal is not popular,” but he went on to add, “[I]t is not enough to just reject the toll proposal. If you don’t like that alternative, give me another viable approach to significantly reduce debt and fund important, vital transportation improvements.” 

We question what the governor has done with ideas presented to him already, including Senate President Richard Codey’s (D-Essex) proposal, which we related several weeks ago.

The governor may be able to convince a few people that his budget is “sober” and “responsible,” but when one takes a closer look at it, the more appropriate words that come to mind are “more of the same.”

To read our official press statement on Governor Corzine’s proposed budget, please click here.

 

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