New Jersey’s Budget Shortfall Could Impact You [AUDIO]
It’s easy to get lost in the maze of politics and number-crunching when you hear about a budget deficit, but if New Jersey really is a quarter-billion-dollars in the red for the Fiscal Year that ended June 30 it could affect your wallet.
That’s really all you need to know.
Democrats have been holding off on the guarantee of the tax cut Governor Chris Christie’s wants until they’re certain the state can afford it and now they’re saying the latest revenue numbers provide proof that the state doesn’t have the cash to support the cut.
“I think a possible tax cut at this point in time wouldn’t be prudent,” says Democratic Assembly Budget Committee chairman Vinnie Prieto. “Everybody would want one, but we need to be able to afford it and pay for it and I think that at this time this (deficit) just shows that we can’t.”
Declan O’Scanlon, the ranking Republican on the budget panel disagrees.
He says, “I think a tax cut should be a much higher priority than my friends on the other side of the (political) aisle think a tax cut should be. For them, it’s the very last thing. Once we pay for everything else that are their higher priorities in the budget then they might consider a tax cut.”
Christie’s critics say the Governor’s projection of 7.2% growth in the economy this year is overly optimistic. You can guess what they’re saying now after hearing from the lead budget analyst for the non-partisan Office of Legislative Services in his testimony before the Assembly Budget Committee yesterday.
Although he lowered the gap to $240 million, Dr. David Rosen stands by the report he issued last week that said there was a roughly quarter-billion-dollar shortfall for the fiscal year that ended June 30th. He says that means the state will have to see 8.2% growth in the economy to keep the budget balanced.
“Dr. Rosen’s warning that 8.2 percent growth is now needed to meet this fiscal year’s projections is particularly concerning, especially considering how the previous growth requirement was already considered overly optimistic,” says Prieto. “Sadly, we only got part of the story today. Treasurer (Andrew) Sidamon-Eristoff’s failure to appear to discuss a $254 million revenue shortfall and what it means for the middle-class and poor is blatantly disrespectful to the taxpayers who pay his salary. Governor Christie shares that blame, since the treasurer is a representative of the governor. Their decision to ignore the people’s representatives today was wrong.”
Prieto says he received a letter from the Treasurer a half-hour before the hearing was to start informing him that he would not be there. Prieto says that’s “sad” and “insulting to the people of New Jersey.”
“What’s insulting is that under the guise of caring about the fiscal state of New Jersey we had a politically motivated committee hearing,” says O’Scanlon.
Late yesterday afternoon Treasury released the August revenues. It included some good news. August gross income tax collections surged, rising 3.1 percent above year-earlier figures to $673.2 million. Corporation business taxes for the month were also strong, climbing to $52.8 million, 12.4 percent above last year’s levels. Sales taxes fell 2.1 percent from August 2011 to $652.4 million, suggesting continued consumer unease with efforts to revive the national economy, according to Dr. Charles Steindel, Treasury’s Chief Economist.
“Income tax and corporation business taxes are showing welcome strength,” says Eristoff. “Both July and August income tax were strong, and August even beat the pre-recession results of Fiscal 2008. This was the highest collection of income tax in state history for the month of August.”
The report also included some bad news. For the first two months of this Fiscal Year, the state is $100 million below estimates or 4.9%.