NJ Treasurer Explains Tax Cut Benefits [AUDIO]
New Jersey will collect $2.75 billion less in revenue than Gov. Chris Christie originally anticipated through the end of the next fiscal year, but his treasurer told the Assembly Budget Committee on Wednesday that an argument could still be made for tax cuts.
"I think it would be foolish at any point in the economic cycle to rule out the possibility of tax cuts," said state treasurer Andrew Sidamon-Eristoff. "Tax cuts that make New Jersey more competitive over the medium and long run would be sound public policy."
The important discussion when exploring tax reductions is how they would impact the state's competitive position and economic circumstances now and in the future, according to Sidamon-Eristoff. He said that New Jersey is a high-cost, high-tax state and that makes it difficult to market the state as a good place to invest in and do business.
On Tuesday, Christie announced that to keep the current year's budget and next year's spending plan in balance he plans to slash the state's contribution to the public workers' pension system by almost $2.5 billion for the combined fiscal years. For the fiscal year that ends June 30, the state was supposed to contribute $1.6 billion, but Christie now plans to pay in $696 million. Next fiscal year's payment was to be $2.25 billion, but the governor says he'll contribute $681 million.
The state's bond rating has been downgraded six times since Christie took office, twice each by the three major agencies. It costs the state more to borrow when its credit rating is downgraded.
Members of the Assembly Budget Committee wanted to know if there is a concern that borrowing now could leave future generations with a huge bill to pay, and Sidamon-Eristoff was also asked if Christie's pension payment plan could lead to more downgrades.
"We're always aware of the possibility, but our obligation is first and foremost to our responsibilities under the (state) constitution," Sidamon-Eristoff said. "We are of course mindful of independent stakeholders and observers, including the bond rating agencies, but we feel that our first priority is to our constitutional obligation here in New Jersey."
The constitution requires a signed and balanced budget to be in place by midnight on June 30.