Eutrusca
31-01-2006, 18:37
COMMENTARY: New Jersey, a solid Democratic Party State for most of the last 60 years, is facing a budget crisis of staggering proportions. Ever think of slimming down the government and not promising what you can't deliver, Gov. Corzine? :eek:
NJ Gov.'s 'Financial Nightmare'
Signals Possible Tax Hikes (http://www.cnsnews.com/ViewNation.asp?Page=/Nation/archive/200601/NAT20060131a.html)
By Jeff McKay
CNSNews.com Correspondent
January 31, 2006
(CNSNews.com) - New Jersey's new governor, Democrat Jon Corzine, may have to propose tax increases to close a $6 billion budget deficit. The state's finances, according to Corzine's own transition team, "have plunged perilously close to ruin." Corzine's own popularity rating has plunged as well.
It's the first crisis of the nascent Corzine administration. A report submitted by the gubernatorial transition team claims "pain will have to be shared," and recommends tax hikes among other options to cover the multi-billion dollar shortfall. It also recommends reducing state spending, layoffs and furloughs of some state employees, and reforming the state's bloated pension system.
"Team Corzine's" report also raises dire warnings of "skyrocketing property taxes due to a reduction in state aid and rebates," along with "reductions in state services," and "tax increases."
The state's current 6 percent sales tax could be expanded to include limousines, cable services, massage parlors, and clothing sales. The tax on clothing could be devastating to New Jersey counties that border New York, since many out-of-state residents travel into New Jersey to avoid their own state's tax on clothing.
In addition, any spike in New Jersey's gas tax would be a blow to retailers as residents of New York and Pennsylvania who travel into New Jersey are known to fill their tanks in a state with the second-lowest gas tax in the nation.
The release of this report, less than two weeks into Corzine's term as governor, places the state's former U.S. senator in a precarious position. The last time a governor raised taxes in New Jersey, the subsequent backlash against then Democratic Gov. James Florio was so severe, Democrats were swept from power. It took nearly a decade for the party to recover.
New Jersey residents now pay the highest property taxes and nearly the highest auto insurance rates in the nation, so lawmakers would he hard pressed to place increases targeting those areas on the table.
Corzine's press secretary was quick to point out at a recent press conference that this report was merely "a report by advisors" and "not policy," adding that all avenues to lowering the budget deficit are being explored.
"Some of the soon-to-be-released recommendations will be flat-out rejected by this administration," said Anthony Coley, Corzine's press secretary.
During his campaign against Republican candidate Doug Forrester, Corzine did not accept Forrester's challenge not to raise taxes. He won anyway, by a wide margin.
State Republican leaders meanwhile are lining up on all levels against the tax increase proposals.
"It is particularly outrageous that a self-described progressive would advocate an increase in the sales tax, a tax that is usually considered among the most regressive," said Tom Wilson, chairman of the New Jersey Republican Party.
"Taxing clothes would balance the budget literally on the back, legs, feet and heads of the poor and middle class. It looks like invest, grow, and prosper has been replaced with tax, tax, and tax some more," Wilson said.
"We ask Governor Corzine to eliminate wasteful spending before he considers more tax hikes on our state's overburdened taxpayers," said Alex DeCroce, the minority leader in the New Jersey State Assembly.
Municipal leaders are also worried about having to hike property taxes as a result of less state aid. "There has been a sharp rise in the amount of state mandated programs in recent years that are not accompanied with state funding," said Manalapan Township Committeeman Andrew Lucas, a Republican.
"The state mandated municipal storm water management plan is one example where a municipality the size of Manalapan will be forced to pay in excess of $1 million over a few years in order to maintain compliance," Lucas said.
"As disastrous as this is, the thought of the Democratic state leadership cutting the standard aid or even the supplemental grants to the municipalities could potentially force a township like Manalapan to raise our municipal tax rate by more than 20 percent," added Lucas, who was the architect of the only budget to lower 2005 municipal taxes in Monmouth County.
The budget deficit is only one of Corzine's budget dilemmas. New Jersey's multi-billion dollar Transportation Trust Fund is also facing insolvency, and the Unemployment Insurance Trust Fund, which pays out nearly $2 billion in benefits per year, currently has a balance of less than $800 million.
During his campaign, Corzine also promised to increase the state's Property Tax Rebate, which gives a fixed amount to homeowners and renters in the state each year to offset the state's high property taxes. However, this is expected to add more than a billion dollars to the already huge deficit. Breaking that promise could spell disaster for Democrats in the State Assembly and State Senate who strongly supported Corzine.
Corzine will have to formally propose a budget to the state before the end of March. A recent Quinnipiac University poll showed that 92 percent of residents believe New Jersey is facing serious budget problems, and 69 percent do not want the gasoline tax touched.
The poll also showed Corzine's own approval rating at 38 percent after just his first few weeks in office.
NJ Gov.'s 'Financial Nightmare'
Signals Possible Tax Hikes (http://www.cnsnews.com/ViewNation.asp?Page=/Nation/archive/200601/NAT20060131a.html)
By Jeff McKay
CNSNews.com Correspondent
January 31, 2006
(CNSNews.com) - New Jersey's new governor, Democrat Jon Corzine, may have to propose tax increases to close a $6 billion budget deficit. The state's finances, according to Corzine's own transition team, "have plunged perilously close to ruin." Corzine's own popularity rating has plunged as well.
It's the first crisis of the nascent Corzine administration. A report submitted by the gubernatorial transition team claims "pain will have to be shared," and recommends tax hikes among other options to cover the multi-billion dollar shortfall. It also recommends reducing state spending, layoffs and furloughs of some state employees, and reforming the state's bloated pension system.
"Team Corzine's" report also raises dire warnings of "skyrocketing property taxes due to a reduction in state aid and rebates," along with "reductions in state services," and "tax increases."
The state's current 6 percent sales tax could be expanded to include limousines, cable services, massage parlors, and clothing sales. The tax on clothing could be devastating to New Jersey counties that border New York, since many out-of-state residents travel into New Jersey to avoid their own state's tax on clothing.
In addition, any spike in New Jersey's gas tax would be a blow to retailers as residents of New York and Pennsylvania who travel into New Jersey are known to fill their tanks in a state with the second-lowest gas tax in the nation.
The release of this report, less than two weeks into Corzine's term as governor, places the state's former U.S. senator in a precarious position. The last time a governor raised taxes in New Jersey, the subsequent backlash against then Democratic Gov. James Florio was so severe, Democrats were swept from power. It took nearly a decade for the party to recover.
New Jersey residents now pay the highest property taxes and nearly the highest auto insurance rates in the nation, so lawmakers would he hard pressed to place increases targeting those areas on the table.
Corzine's press secretary was quick to point out at a recent press conference that this report was merely "a report by advisors" and "not policy," adding that all avenues to lowering the budget deficit are being explored.
"Some of the soon-to-be-released recommendations will be flat-out rejected by this administration," said Anthony Coley, Corzine's press secretary.
During his campaign against Republican candidate Doug Forrester, Corzine did not accept Forrester's challenge not to raise taxes. He won anyway, by a wide margin.
State Republican leaders meanwhile are lining up on all levels against the tax increase proposals.
"It is particularly outrageous that a self-described progressive would advocate an increase in the sales tax, a tax that is usually considered among the most regressive," said Tom Wilson, chairman of the New Jersey Republican Party.
"Taxing clothes would balance the budget literally on the back, legs, feet and heads of the poor and middle class. It looks like invest, grow, and prosper has been replaced with tax, tax, and tax some more," Wilson said.
"We ask Governor Corzine to eliminate wasteful spending before he considers more tax hikes on our state's overburdened taxpayers," said Alex DeCroce, the minority leader in the New Jersey State Assembly.
Municipal leaders are also worried about having to hike property taxes as a result of less state aid. "There has been a sharp rise in the amount of state mandated programs in recent years that are not accompanied with state funding," said Manalapan Township Committeeman Andrew Lucas, a Republican.
"The state mandated municipal storm water management plan is one example where a municipality the size of Manalapan will be forced to pay in excess of $1 million over a few years in order to maintain compliance," Lucas said.
"As disastrous as this is, the thought of the Democratic state leadership cutting the standard aid or even the supplemental grants to the municipalities could potentially force a township like Manalapan to raise our municipal tax rate by more than 20 percent," added Lucas, who was the architect of the only budget to lower 2005 municipal taxes in Monmouth County.
The budget deficit is only one of Corzine's budget dilemmas. New Jersey's multi-billion dollar Transportation Trust Fund is also facing insolvency, and the Unemployment Insurance Trust Fund, which pays out nearly $2 billion in benefits per year, currently has a balance of less than $800 million.
During his campaign, Corzine also promised to increase the state's Property Tax Rebate, which gives a fixed amount to homeowners and renters in the state each year to offset the state's high property taxes. However, this is expected to add more than a billion dollars to the already huge deficit. Breaking that promise could spell disaster for Democrats in the State Assembly and State Senate who strongly supported Corzine.
Corzine will have to formally propose a budget to the state before the end of March. A recent Quinnipiac University poll showed that 92 percent of residents believe New Jersey is facing serious budget problems, and 69 percent do not want the gasoline tax touched.
The poll also showed Corzine's own approval rating at 38 percent after just his first few weeks in office.