New Jersey Can’t Afford A Tax Cut, Says State Senator [AUDIO]
There are still three competing tax cut plans in Trenton and some sort of deal has to be worked out soon if a one of them is to be included in the State Budget.
The constitutional deadline for a signed and balanced budget is midnight June 30. Sagging state revenues have one influential lawmaker saying the state can't afford any tax cut, but Governor Chris Christie disagrees.
"Any tax cut just is not sustainable on a revenue basis and would do damage to the state," says Democratic State Senator Ray Lesniak. "Giving a tax cut right now particularly to the wealthiest of New Jersey as Governor Christie's proposing is not only irresponsible, but it's reckless."
Asked recently if the State can afford to support any tax cut, the Governor says it can. Christie said, "I'm not questioning slowing it, scaling it back or not doing it at all. I think we have no choice but to do it."
At his frequent town hall meetings Christie boasts of a "Jersey Comeback." He insists it is real and says, "I'm not going to allow the continued onerous tax policy that goes on in this state to put a damper on that."
"We want to cut your taxes this year and we want you to get a 10% credit on your income tax towards your property taxes," said Christie last week. "That's what the Senate President's plan is. I've wanted to cut taxes across the board for the income tax. There's an area for us to compromise there I suspect and you know the senate President and I have compromised on a lot of things over the last two and a half years."
Christie originally proposed to reduce personal income tax rates, across-the-board, for every New Jerseyan, by 10% with the three-year phase-in of the cut with this budget. He says 10% tax cut for every working New Jerseyan will help families to keep more of what they earn and make the state more competitive with other states and attract more new jobs to New Jersey.
The Senate Democrats proposal spearheaded by Senate President Steve Sweeney would provide a property tax relief credit through the gross income tax return, for all residential homeowners with incomes up to $250,000 in the amount of 10% of the first $10,000 in property taxes paid. Recently Sweeney and Christie appeared ready to announce an agreement with a $400,000 threshold. A press conference was scrapped after sources said several Senate Democrats were not sold on the compromise.
A spokesman for Sweeney says, "The Senate President is thrilled that the Governor recognizes that property taxes are the most pressing issue for middle class households in New Jersey, not income taxes."
In his testimony before the Assembly Budget Committee last month, State Treasurer Andrew Sidamon-Eristoff defended Christie's income tax cut proposal by saying, "In our view, investing in a modest across-the-board income tax cut that will improve New Jersey's long-term economic competitiveness is and ought to be a top policy priority for New Jersey."
Assembly Democratic Leader Lou Greenwald says, "The truth is, there is only one person obstructing real, significant property tax relief for 95 percent of middle-class families and seniors - and that's Governor Christie with his obsession for tax breaks for millionaires."
Late last month, Dr. David Rosen, the lead budget analyst with the non-partisan Office of Legislative Services (OLS) estimated that over the next 14 months state revenues will lag $1.3 billion behind Governor Chris Christie's projections. Christie expects the budget gap to be about $676 million. Yesterday, Rosen was out with more bad news.
According to OLS, tax collections for May are $50 to $100 million below last month's dismal projections.
The Assembly Democrats property tax cut plan works the same way as the Senate's proposal, but would provide a 20% savings and be partially funded by a millionaires tax increase which Christie has already vetoed twice and vows to veto again. Seniors would receive a 25% property tax cut under the proposal.
Also last week, Christie said to a group of seniors at an AARP conference. He also asked them for assistance, "We need your help. We need you over the next 24 days. We'll be working with your organization to say to the Assembly Democrats, 'Let's come up with a compromise that reduces people's taxes and doesn't raise taxes in New Jersey anymore.'"
"As if it wasn't enough to slash property tax rebates after promising not to, Governor Christie is now urging seniors to oppose our plan that would give them a 25 percent property relief credit. It's a desperate strategy of distortion and distraction," says Assembly Democratic Leader Lou Greenwald. "The bottom line is clear: New Jersey's seniors don't need more slogans and tax cuts for millionaires. They need a 25 percent property tax relief credit."
Last week, Christie spokesman Kevin Roberts said, "Based on the May revised figures as detailed by the Treasurer last month, not the OLS figures, we actually know that projections are slightly off for May by a manageable $28.9 million across the big three revenue categories. This isn't quite the speculative and panicked $50-100 million range that David Rosen is suggesting for the entire year. While Rosen has already assumed the worst for the next two months, the actual May figures still manage to keep us on track to meet expectations for fiscal year 2012 and fiscal year 2013.
Roberts added, "We tallied Corporate Business Tax collections as being $38.7 million over projections, Sales Taxes (April) at $19.866 million under projections, and Gross Income Tax collections at $47.78 million under projections."