NJ 101.5
Kevin McArdle
August 2, 2010

Two weeks ago, the research arm of the New Jersey Legislature predicted the state will face a $10.5 billion deficit for next year's budget. That's roughly the same size gap that Governor Chris Christie closed in the just-completed budget, which slashed aid to schools and municipalities, suspended property tax rebates and skipped a $3 billion payment to employee pension funds.

The memo by the nonpartisan Office of Legislative Services (OLS) points out that many big-ticket items that contributed to the current year deficit still will be around next year. They include $3.5 billion for pensions, $2.3 billion to fully fund schools and $2.1 billion for rebates, but the deficit estimate will be revised throughout the year to reflect changes in tax collections and spending.

Assembly Budget Chairman Lou Greenwald on Tuesday announced he has called an August 5 hearing into the projected $10.5 billion budget deficit for next fiscal year. The nonpartisan Office of Legislative Service estimates a $10.5 billion deficit for the fiscal year that starts July 1, 2011.

"This is obviously a big concern that needs to be addressed," says Greenwald. "We cannot continue to rely on moves such as failing to make pension payments and slashing property tax relief. Real change and plans to stimulate our economy, create jobs and put people back to work are what's needed. We cannot continue to do the same the old things."

Daily Record
By Louis D. Greenwald
Jul 27, 2010

The facts are simple.

Home sales in New Jersey fell 23 percent in May and 27 percent in June. Those numbers are even scarier considering those are typically busy times for the real estate market.

Home construction has plummeted.

Our unemployment rate stands at 9.6 percent.

As we saw painfully across our country, our economy relies heavily on the real estate industry. When it's strong, our economy is strong. When it's weak, our economy is weak. It's that simple. New Jersey's economy is no different.

That's why, as New Jersey struggles to emerge from the worst economy since the Great Depression, I introduced legislation to create a New Jersey Homebuyer Tax Credit program. It was a sensible way to revive our economy and put people back to work. It was widely praised and backed by both Democrats and Republicans. It passed the Senate 38-0 and the Assembly 67-8. Everyone agreed it was the shot in the arm New Jersey's economy needed.

Well, almost everyone.

Only one person failed to understand the value of this program, and unfortunately that person was Gov. Chris Christie, who vetoed the bill last week.

This veto showed an alarming lack of understanding of how the tax credit works, and I fear that lack of understanding will put New Jersey's struggling economy in a tailspin.

Consider:

Bergen Record
Kathleen Lynn
July 28, 2010

A $15,000 state tax credit for home buyers was vetoed Friday by Governor Christie, who cited its $100 million price tag and the state's budget problems.

"This legislation will only briefly and artificially inflate home sales and consequently does not merit a $100 million revenue loss to the general fund," Christie wrote in a veto message. New Jersey, he said, "must learn to live within its means."

The bill had the support of builders and real estate agents, who had hoped a tax credit would boost sales. The bill's sponsors criticized the veto.

"We are now headed toward sharp cuts in home prices that will hurt our larger economy. Carpenters, bricklayers, pipefitters, builders and lenders will continue to struggle to find jobs," Assembly Budget Chairman Lou Greenwald, a Camden Democrat, said in a statement.

Greenwald argued that the cost of the credit would have been offset by tax revenues generated by the sales of appliances and furniture, as well as homes. But Christie disputed that, saying that the credits would be used by buyers who would have bought homes even without a tax break.

A federal tax credit of $8,000 for first-time buyers and $6,500 for repeat buyers expired April 30, and home sales have fallen since then.

Press of Atlantic City
Editorial
July 27, 2010

The bad news from Trenton just keeps flowing, with no cap in sight: Now, the Office of Legislative Services says next year's budget deficit may be almost as big as the most recent one - possibly $10.5 billion, although that figure could change considerably depending on revenues.

The report has given Democrats ammunition: "While there's more work to do, the governor should stop taking victory laps," said Democratic Assemblyman Joseph Cryan of Union County, pointing to Gov. Chris Christie's contention that he closed an $11 billion budget gap.

Meanwhile, Christie called the OLS estimate "completely fake." He said the report assumes the state funds all of the costs it is required to fund and that programs now in the budget will still be in next year's budget.

True, it does. But the OLS figures are hardly "fake."

The state budget has had a structural deficit for years, exacerbated now by the recession, as well as mounting pension costs and other factors. Those pension costs - $3.5 billion next year - represent the single largest portion of OLS's projected deficit next year. Deferring $3.1 billion of pension payments this year was also the single largest way Christie closed that $11 billion budget gap.

How long can this go on? Every year those costs are deferred, the more costs mount the following year. Christie didn't start this snowballing debt - and the severity of this year's crisis may have left few choices. Still, it's got to stop.

The Assembly Budget Committee will meet Friday at 10 a.m. to hold a hearing on property tax caps. The meeting is scheduled in Committee Room 11, 4th Floor, State House Annex, Trenton.

Various state officials have been invited to testify. The committee also will entertain testimony from members of the general public. The hearing will be streamed live at: http://www.njleg.state.nj.us/media/live_audio.asp.