Tag Archive: property tax relief

Christie Re-Proposes His Tax Relief Plan

AP is reporting Governor Chris Christie is reviving a tax-cut plan similar to one that floundered last year. Below is an early read on the plan.

The wisdom of this proposal is dubious at best. “The nonpartisan Office of Legislative Services said this month that the state government could miss revenue estimates by $302 million in the budget year that ends June 30 and could be another $335 million short in the next fiscal year.” Next year’s budget will be all the more difficult with a steeply increased contribution to the pen/ben plan, highway/transportation costs, and other added expenses.  We are in a gubernatorial/legislative election year, so the political benefits of the plan are obvious, but the long-term benefits to New Jerseyans and their State budget are less apparent.

In combination with a property tax cut Governor Christie has re-proposed to “increase” the Earned Income Tax Credit (EITC) from 20% to 25%. In reality it was at 25% until he lowered it, so he really is offering just to return it to 25%. As with the school budget his technique has often been to make a substantial cut and then praise himself by later increasing the expense item. The EITC benefits low to moderate income individuals. The EITC is totally separate from homeowner taxes. He should just return it to 25% and not link it in his deal with property tax relief, but Christie will not likely change his mind.

Our tax laws are too arcane, complex, and riddled with exceptions. To over-simplify, NJ provides a property tax deduction which reduces your taxable income by $10,000 or the the amount of the property tax bill – whichever is less. Alternately it provides a property tax credit which reduces your income taxes up to $50. You select whichever is more beneficial to you.

The new plan will be particularly advantageous for the weathiest. Under the new plan to be phased in through 2016 households earning up to $400,000 would receive an income tax credit equivalent to 10 percent of their property tax bill – capped at $10,000. Last year, New Jersey homeowners paid an average property tax bill of $7,900. Such individuals would receive a credit of  $790 against their taxes. An individual would need to have a property tax bill of $100,000 or more to receive the maximum $10,000 credit. As the wealthiest individuals rely not so much on income but tax free bonds and capital gains they might well report income of $400,000 or less and thus be able to receive the full $10,000 credit.

Given our State budget shortfall we cannot afford this tax decrease. Available funds should be used for more essential services. The EITC portion should not be linked as an inducement to the property relief portion. Most homeowners would receive tax relief, and renters would see a minimal increase in their tax credit from $50 to $200 by 2015. However, the wealthiest who live off tax-exempt funds and own expensive homes will benefit significantly more. That’s how Christie rolls. We will see how the Legislature rolls.

Governor Christie And The Legislature: “Deal Or No Deal?”

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Update 1:45 pm. In his speech Christie urged the legislature to enact now what is essentially the Senate property tax relief plan, rather than have it be contingent on meeting his own tax revenue forecast. Inspite of earlier speculation he offered no sweeteners in his speech.

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Governor Christie has ordered the Senate and Assembly into session today, and he plans to address the joint legislature at 1:00 PM. Members who do not appear can be brought to the State House by law enforcement, but they can not be forced to vote or take other action.  

Christie seeks to burnish his national Republican credentials. He would probably like to be the keynote speaker at the Republican convention, and he might still harbor a desire to be the Republican Vice Presidential candidate. However, he is becoming increasingly embattled. He is hampered by recent revelations regarding his ties to Community Education Centers (CEC) and his failure despite numerous warnings to remedy problems at the halfway houses. The strain seems to be showing in his increasingly intemperate comments: calling a reporter an “idiot,” Senator Paul Sarlo “an arrogant SOB,” and OLS Budget Director “the Dr. Kervorkian of numbers.”

Nowhere was he more angry than in Brick last week when he shouted that lawmakers should, “Get the hell off the beach and back to Trenton and deliver my tax cut, right now.” He desperately wants his tax cut and he wants it now. This afternoon he will probably offer a sweetener to convince legislators to enact the cut immediately, as opposed to waiting until later in the year when we will have a better fix on incoming tax revenues.  

The reality is that any tax cut would not take effect until January 1, 2013, so waiting a few months makes sense. Also Mark Magyar points out in today’s NJ Spotlight that Christie’s reliance on one-shot, non-recurring revenue in our new budget combined with increased costs for pension, debt service, transportation and business tax cuts will start off the next budget year with $1.9 billion in the hole which will already exceed all of that years’ expected revenue growth. He goes on to say,

“The addition of a multiyear income tax or property tax cut at the level proposed by Christie would take $183 million out of the current surplus, would cost $575 million in revenue in Fiscal Year 2014, and would most likely create a major budget crisis just 4 1/2 months before the governor and all 120 members of the Legislature are up for reelection in November 2013.

The legislature is wise in exercising caution. Although we don’t yet know what “deal” the governor might offer, it appears the legislature’s best response would be “No deal.”

NJ Democrats Property Tax Relief Plan

For anyone who missed this, here is a great website that gives all the information you could possibly need regarding the Democrats budget plan.

http://www.realreliefnj.net/Me…

The Democrats’ plan aims to give property tax relief to 95% of the taxpayers in NJ with incomes below $250,000 instead of giving 50% of an income tax cut to those in the top 5% – which is Christie’s plan.

The website is accessible and interactive.  There is a tax savings calculator and you can click on the maps and see exactly what your numbers will be for your municipality.

It explains quite a bit in plain English and starkly draws the contrast between Christie’s plan which is a windfall for Romney’s ilk, and and the Democrats’ plan which helps ordinary NJ taxpayers.  You can also read the newspaper articles about both plans.  

Please share this website with everyone and anyone you know in NJ who pays taxes – which is pretty much everyone.  

This one is not complicated.  We need to support the Democratic plan for the budget.  Please call your NJ state legislators THIS WEEK.  

No Comeback – More Legislative Pushback

Governor Christie yesterday obliquely said he will not sign the version of a bill to increase the state minimum wage that passed the Assembly, and he continues to oppose a millionaire’s tax. Screw the poor and help the wealthy is his way toward a Jersey Comeback. It’s not working. The legislature, however, after passing Marriage Equality, rejecting two ill-chosen Supreme Court nominees, pressing the brake pedal on Christie’s education agenda, and proposing separate Assembly and Senate property tax relief programs is showing more pushback.

In the meantime the Office of Legislative Services based on May data now projects an additional  $50-100 million reduction in revenue collections through June 2013, increasing the total shortfall to $1.4 billion. Governor Christie has modified his budget to reflect only a $705 million shortfall.

Particularly troubling has been the June report from U.S Dept. of Commerce:

“In 2011 real GDP increased in 43 states, with a national average of +1.5%. In NJ GDP decreased by 0.5%, and ranked 47th. The category of Real Estate, Rental, & Leasing contributed the largest percentage decrease for NJ: down 1.14% vs. an average decline nationwide of 0.32, ranking NJ 50th. Other declines were in Educational Services, Government, and Accommodations/Food Services.”

The sharp decline in Real Estate, Rental, and Leasing is  disturbing not only because we rank 50th but because this category is so essential for any robust growth. In fact the just issued NY Federal Reserve Bank’s Indexes of Economic Indicators “for April show economic activity grew at a modest pace in New Jersey,” not at the much higher rate projected by Christie in his revised budget.

Christie has now given up on his 10-% tax cut plan which would have been a bonanza for the wealthy, and he signaled publicly at an AARP conference in Trenton that he would compromise with something akin to the Senate’s property tax relief program. However, given that to meet even his new reduced projection of revenue he must increase borrowing against the transportation fund, redirect affordable housing funds, and use other gimmicks, it is apparent that he will not have the monies to meet basic obligations and fund a property tax relief program.

The parallel Assembly bill calls for a millionaire’s surcharge, and yesterday Sen. Barbara Buono (D-18) said she will introduce Senate legislation instituting a millionaire’s tax and dedicating the revenue generated to fund the Senate property tax relief plan. If Governor Christie were to acquiesce to a millionaire’s tax, which is doubtful, there might be sufficient monies for property tax relief. Otherwise, the legislature should wait until later in the year, and review the level of incoming tax revenue before making any decision.

With Christie at the helm New Jersey is not enjoying a comeback. Its economic growth is modest, its unemployment rate is at a high 9.1%, and it is doing poorly in comparison with other states. Fortunately the legislature is pushing back, and it is not a minute too soon as the budget must be finalized by the end of this month.  

This doesn’t sound good

The trial of Wayne Bryant gave some news today that is sure to have people involved in NJ Politics buzzing:

Masked by an obscure state budget account dedicated to property tax relief, key state lawmakers were given millions of taxpayer dollars to hand out to their constituents as they pleased, testimony in the corruption trial of former Senate Budget Committee Chairman Wayne Bryant revealed today.

The $40 million Property Tax Assistance and Community Development grants program lawmakers added to the state budgets in 2004 and 2005, was parceled out directly to individual lawmakers for them to spend on pet projects, George LeBlanc, Democratic budget officer, testified.

Bryant, a Camden County Democrat, was allotted $4 million from the fund. Senate Majority Leader Bernard F. Kenny, Jr., (D-Hudson), was also given $4 million from the fund, which he shared with other lawmakers, LeBlanc testified. Both Kenny and Bryant left the Senate last year.

The story goes on:

The testimony contrasts with claims by lawmakers that individual grant recipients had to apply to the state Treasurer for funding from the $40 million pool, and that grants were awarded competitively.

“To my knowledge, individual legislators were the deciders,” LeBlanc told jurors. “They were the ones who designated which entities would receive amounts of money from the accounts.”

When asked about the revelation, Senate President Dick Codey offered no comment on advice from his lawyers, while Speaker Roberts put out this statement through Derek Roseman in the Assembly Majority Office:

“We’re not aware of the specifics of today’s testimony, but in recent years we’ve implemented new rules and regulations that open up the budget process more than ever before and let the public see every requested budget change and exactly who is proposing it.”

You wonder where this will go next.

EENY, MEENY, MINEY, MO

While other states have ballot questions this election dealing with such juicy issues as abortion, drugs, same-sex marriage, eminent domain, stem cell research, etc., New Jersey presents us with three rather dull-sounding (and barely intelligible) ones that had unanimous legislative support. Anyone care to weigh in on how a good progressive should vote on them? Seems like some of us think Question #1 is too vague to have any meaningful effect on property tax reform and may in fact hinder it. Question #2 has broad support among environmentalists. Question #3 sounds logical enough but I’d hate to see the majority of funds spent on new roads and automobile transportation rather than public transit.

The League of Women Voters feels strongly that tax revenues should not be constitutionally mandated and discusses other pros and cons at: http://www.lwvnj.org.

Since the state budget is just a huge shell game anyway, does any of this really matter? Any light that wiser folk can shed on this will be greatly appreciated.