Proclaiming that he had restored “fiscal discipline,” Gov. Chris Christie yesterday unveiled a $32.846 billion election year budget that accomplishes the difficult task of making a huge, statutory pension payment in FY14. But the governor was forced to delay almost $400 million in scheduled May property-tax rebates until August to cover a stubborn FY13 revenue shortfall.
“We have turned Trenton upside down. We have gotten the budget under control, and we have begun to address the long-term health of pensions,” Christie declared in a budget address that previewed the major themes of his upcoming gubernatorial reelection campaign.
Taking aim at Sen. Barbara Buono (D-Middlesex), the Democratic gubernatorial candidate who was seated below him in the front row, Christie warned against a “return to the reckless budgeting practices of the Corzine years” and the “115 tax and fee increases in eight years” before his own election.
Wrapping himself in the mantle of bipartisanship as he has increasingly done since his public embrace of President Barack Obama during Hurricane Sandy, Christie once again suggested that Democrats who want “to fight over every item in this agenda, to play the old partisan games” would be hampering New Jersey’s recovery.
But Buono and Democratic leaders made it clear that Christie’s speech was just the opening salvo of what is likely to be a bitter four-month budget battle. “The governor said he went to law school because he wasn’t good at math,” Buono noted, adding that in his rush to declare victory over property taxes, the governor had missed the fact that property taxes for the average New Jerseyan had risen more than 20 percent on Christie’s watch once his cuts in property tax rebates are figured in.
Assembly Speaker Sheila Oliver (D-Essex) quickly zeroed in on Christie’s decision to shift property tax rebate payments, which average $518 for senior citizens making up to $150,000 and $409 for other homeowners earning up to $75,000, from May to August. “The highest property taxes in the nation just got higher because of the governor’s decision to push off the rebates,” Assembly Majority Leader Lou Greenwald (D-Camden) added.
The property tax rebate shift was the most controversial of a series of budget maneuvers employed by Christie to cover a $473 million revenue shortfall in the combined FY12/FY13 budgets, $1.2 billion in one shot nonrecurring revenues, and almost $1 billion in built-in increases in pension costs, previously approved business tax cuts and promised pay-as-you-go transportation capital funding.
Christie, who branded Dr. David Rosen, chief budget officer for the nonpartisan Office of Legislative Services, the “Doctor Kevorkian of the numbers” for challenging his revenue projections as overly optimistic, effectively conceded defeat on the point yesterday when Christie’s treasurer, Andrew Sidamon-Eristoff, officially lowered his current-year revenue estimates by $407 million to $31.326 billion.
Pushing Off Property-Tax Rebates
It was to cover the lion’s share of that $407 million revenue shortfall that Christie decided to push off the property tax rebates. By shifting the property tax rebate payments permanently from May to August, Christie effectively moved the $392 million cost of the rebates from the FY13 current fiscal budget, which ends June 30, to the FY14 budget, which begins July 1. The accounting gimmick creates a one-time savings of $392 million in this year’s budget by effectively skipping a budget year of rebates, with the only cost being the three-month delay in people receiving their property tax rebates.
Treasury is anticipating a 6.5 percent increase in income tax revenues, a 4.7 percent jump in sales tax receipts, and a 7.0 percent boost in corporate business tax collections to make up most of an overall 4.9 percent -- or $1.52 billion -- increase in revenues in the upcoming year.
Nevertheless, Sidamon-Eristoff, who was forced to rely on $1.2 billion in nonrecurring revenues to fill a budget gap last May when tax collections for FY12 and FY13 started coming in $676 million short, acknowledged yesterday that he would have to use $1.07 billion in one-shot revenues in the FY14 budget.
The treasurer confirmed that the state would once again take $150 million in Clean Energy funds that are supposed to go to energy efficiency programs to balance the budget, but otherwise refused to say what the other one-shot revenues are, saying that they would be included in the full budget that will be released in a week or two. Treasury spokesman William Quinn said last night he did not know what the other one-shots were.
Clearly, one of the additional one-shot revenues is the elimination of the $376 million in pay-as-you-go transportation capital funding that was promised by Christie to reduce future debt when the five-year Transportation Trust Fund extension was approved in December 2011. Sidamon-Eristoff said the state had realized higher proceeds than expected on two previous transportation bond sales, which would enable the state to provide the full $1.6 billion state match for federal transportation dollars without relying either on pay-as-you-go financing or further borrowing.
Another one-shot evidently is the treasurer’s decision to tap $75 million of the expected $375 million end-of-year surplus to help balance next year’s budget. The $300 million surplus that remains is less than half of the $640 million surplus that the state listed on July 1 at the start of the current fiscal year and represents less than 1 percent of the proposed $32.846 billion budget.
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