Budget Day Approacheth
Posted April 25, 2008

With just a bit more than two months until the June 30th deadline for approving the state budget for Fiscal Year 2009, the statewide fracas is intensifying. Governor Corzine has proposed a $33 billion budget – $500 million less than the final 2008 budget – but the source of the cuts, including closing state parks, cutting aid to hospitals, and eliminating the state Department of Agriculture, has left many citizens and legislators less than thrilled.

Now, however, in an attempt to save some of these endangered state entities and programs, lawmakers are considering a different source of cuts – one that may anger residents even more than losing their favorite state park.

Yes, if certain legislators have their way, it looks like property tax rebates just may go the way of the Dodo Bird.

As an article in yesterday’s Star Ledger explains, “[A] growing chorus [of New Jersey legislators] – free from election-year politics – is eyeing the costly rebates as a way to save state aid for parks, hospitals, towns and other popular programs Governor Corzine wants to cut to restore fiscal sanity.”

The article notes that the rebate checks, which in 2003 were $250, ballooned to an average of $1,058 each in 2007 when, incidentally, every official in both houses of the state legislature was up for re-election.

If the rebate cut idea sounds like old news, however, it is because Governor Corzine already proposed eliminating rebates for households making more than $150,000 and scaling them back for households making between $100,000 and $150,000. The difference in the idea legislators are now floating is that it would lower the elimination point from $150,000 to $100,000.  According to Senate President Richard Codey (D-Essex), this move would save the state an additional $143 million.

Senator Barbara Buono (D-Middlesex), Chair of the Senate Budget Committee, expressed her own redistributionist ideas, noting, “I believe we need to restore balance to the burden all of us must share during these extremely painful economic times.”

Unfortunately, the problem with Trenton’s latest “savings” ploy is that it still relies on taxpayers to foot the bill for the state’s gross fiscal mismanagement. Furthermore, it does nothing to address the real problem in New Jersey: out-of-control spending. At the end of the day, cutting or eliminating property tax rebates might provide some extra money for the state this year, but it will do nothing to correct the chronic structural budget problem plaguing New Jersey.

Last year, State Senate Minority Leader Leonard Lance (R-Warren/Hunterdon) voiced his concern that the FY 2008 budget, which included property tax rebates and increased state aid to hospitals, would “make next year’s budget process much more difficult.”  And Assemblywoman Charlotte Vandervalk (R-Bergen) noted the illogic of taking taxpayer dollars in sales tax only to give it back in property tax relief. (Which raises the question, if rebates are on the chopping block, what happens to the sales tax ballot question voters approved of which designates a portion of sales tax for property tax relief?)

This year, Senator Paul Sarlo (D-Wood-Ridge), Vice Chairman of the Senate Budget Committee, echoed Vandervalk’s concerns, expressing his preference for a taxpayer credit over rebate checks, which, as Sarlo told the Ledger, cost the state $10 million to mail. “It’s so redundant,” he said, “to collect this money and then send a check back.”

Moreover, State Senator Kevin O’Toole (R-Essex) views the potential rebate cuts as validation of concerns from past years. “Two years ago we characterized this arrangement [the “permanent” rebates] as nothing but a mere election-year ploy,” O’Toole said, “The speaker’s latest statement proves that we were correct in that assessment.” O’Toole is referring to Assembly Speaker Joe Roberts (D-Camden) willingness to keep the cuts on the table for possible consideration.

The fact that legislators would consider eliminating tax relief for the residents of the state that consistently ranks among the worst in property tax burden does, indeed, raise questions. If this were an election year, would legislators, as candidates, be as eager to jump on the ‘pro-tax’ bandwagon? Undoubtedly not.

Unfortunately for the citizens of New Jersey, this isn’t an election year, and with thoughts of backlash only dimly visible in the future, legislators seem all too eager to eschew true spending restraint and opt instead to continue to leech from New Jersey’s hardworking taxpayers.

 

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