Officials were left reeling last week after they learned their cities must return $40million to the state Treasury Department after a state auditor discovered the money had been inadvertently placed in the wrong account for the past three years. The Treasury Department said half of a 1 percentage point sales tax increase, which went into effect in July 2006, should have been deposited in the state's Property Tax Relief Fund, but the money was instead placed in an Urban Enterprise Zone account.
As a result, cities like Elizabeth and Newark may have to postpone projects, officials said. But in many cases, those funds already have been spent or committed to long-term projects. Elizabeth needs to return more than $3.8 million and Newark is being asked to return $4.7million, according to the Treasury Department.
Elizabeth Mayor Chris Bollwage said a $1.8million project to install 150 security cameras throughout the city will be delayed or halted as a result of having to return UEZ funds.
Vineland in Cumberland County must return the most money -- $5.1million -- followed by Jersey City at $4.9million, according to the Treasurer's Office.
The UEZ program is supposed to encourage business growth and stimulate local economies by offering tax and financial incentives such as charging half the normal sales tax and having the revenue generated help fund local development. Here's how the error was discovered:
One-half of the increase was supposed to be deposited into the fund, but an auditor found that never happened, said Tom Bell, Treasury Department spokesman. He said voters approved a constitutional amendment in 2006 that committed those funds to the Property Tax Relief Fund.
"The state auditor was doing the usual audit and found that in the UEZ town cases, it was instead going to the UEZ fund when in fact it should have gone to property tax," Bell said.
Lovely. The DCA said if a city already has spent or committed funding to projects, the DCA and Treasury will work with officials on a repayment plan that will not endanger the projects. But cities are also questioning just how much money they should have to give back:
Bollwage, chairman of the UEZ Mayors Council, said he and others believe the repayment amounts are inflated, in Elizabeth's case, by as much as $700,000. He said New Brunswick's figure, at $615,023, has been overcalculated by $189,000.
Rafael Zabala, acting director of the Newark office of the UEZ, said the $4.7million figure is incorrect and he plans to present his own calculations to the Treasury.
This is a mess, both practically in having to give the money back when everyone is already struggling and politically with the headlines you will have. The towns are accusing the state of a money grab trying to help plug budget holes on their backs. Even if that's not the case, it reflects poorly on how the state ran things that you have this kind of error. The best explanation still looks and sounds bad.
Yesterday, Senator Menendez sent a letter to the Department of the Treasury, urging the administration to restrict credit card companies that receive taxpayer dollars from imposing unilateral interest rate increases and other consumer-unfriendly practices.
"As families tighten their belts and stretch every dollar during these tough economic times, the last thing they need to deal with is more tricks and deceptive practices from their credit card company," wrote Menendez. "Stronger consumer protections, such as prohibiting unilateral rate increases, ending universal default, and requiring that penalty rates and fees be reasonably tied to cost, should be prerequisites for any issuers who wish to benefit from government assistance. These commonsense reforms will not only relieve some of the pressure on consumers, they will also end some of the most egregious practices that have forced so many people to the brink of bankruptcy."
New Jersey revenue collections in March underperformed what were already dampened projections for the month, making April's income tax filings even more important for Gov . Jon Corzine's proposed budget.
The state Department of Treasury reported today that March revenue collections came up about $80 million short of what Corzine forecast for the month when he reset state revenue projections in the new budget.
They better hope those tax filings come in strong because the situation continues to get more difficult. For a wider view of the number:
The shortfall represented 3.7% of the month?s revised forecast. Cash collections in March 2009 were 7.2% smaller than March 2008. And year-to-date cash collections for the first nine months of the state?s fiscal year are 9.8% behind the previous year?s pace.
It's coming time when all the talk about choices and priorities will have to materialize in the form of a workable budget and these new numbers make forming the plan that much more difficult. We are seeing announcements about federal stimulus funding regularly which should help prop things up, but it doesn't appear we have yet reached the bottom upon which we can begin to build back up.
In order to try and get their budget message out, the Assembly Democrats have started producing a weekly video budget address where they discuss a particular area of their budget plans:
The Republicans continue utilizing numerous daily press releases to criticize everything. They oppose most proposals and haven't produced many productive budget suggestions.
It's just another week in Trenton during the economic crisis and an election year.
What I'm worried about is that I see that people like Paul Krugman and Sebastian Mallaby are saying that, as proposed, the bailout is dangerous and that it should be rejected. So it's good to see Senator Menendez's statement:
Major action to help rescue our economy is certainly necessary, but what disappoints me about this proposal is that it's all Wall Street and no Main Street. We can't ignore the millions of Americans who may lose their homes, and there must be accountability to protect the taxpayers. It is both unfair and unwise to throw a lifeline to banks that were irresponsible without so much as offering a hand to homeowners and some real limits on risks for the taxpayers.
As we saw in House vote on offshore oil drilling, it doesn't seem like New Jersey liberals have any influence on the Democratic Leadership, but I think we need to see some accountability for this unprecedented government action, and an effort to help ordinary people.
