News Column

New Jersey Expects More Than a Half-Billion in Extra Revenue for Next Year

May 23, 2011

Juliet Fletcher

Raining money

Treasury officials reported last Tuesday that the state could anticipate higher-than-expected revenues next year. As soon as that news broke, lawmakers started talking about how that money could be used.

State Treasurer Andrew Eristoff reported that the state would see $511 million in additional income from different revenue sources. A day earlier, the nonpartisan Office of Legislative Services' chief budget officer, David J. Rosen, estimated even higher additional revenues of $914 million.

Both Democrats and Republicans have wondered out loud what the sum could be used for.

Some proposed specific ideas, from a widespread boost to tax credits next year to spending it immediately to fund other programs that suffered cuts last year. Others advocated holding onto it to help prevent future tax increases or the possible court-ordered increase in school funding.

Gov. Chris Christie reacted to the news with two specific proposals: to increase the amount the state would pay into its depleted pension fund, and to boost existing homestead rebates.

Michael Drewniak, Christie's press secretary, said the governor's plan for the increases would hinge on deadline action by the Legislature.

Treasury could increase a planned pension payment in the fiscal year 2012 budget from an expected $506 million to $759 million, but only, Drewniak said, "if pension reform is passed by the Legislature before June 30." Likewise, the governor could add $225 million in funding to the Homestead Benefit property tax credit program, but only if the Legislature tackles proposals to increase public workers' contributions for their health benefits.

But area lawmakers quickly brainstormed their own uses for the money.

Sen. Jeff Van Drew, D-Cape May, Cumberland, Atlantic, said Thursday he wanted to see part of the cash set aside.

"We should treat this new money the same way residents would treat an unexpected bonus check in their own homes, by making payments on bills that immediately need paying, and putting the rest in savings for use should an emergency arise."

Van Drew has sponsored a resolution for a constitutional amendment that would set up a pair of so-called "Rainy Day funds," tucking away additional revenues for the state's general fund and for the property tax relief fund.

He said his reasoning would pay off "in the event that state revenues come in below projections down the road."

"While I recognize there will be wide-ranging discussions in the Statehouse about how to spend this extra money, it is our responsibility as lawmakers to exercise a measure of fiscal restraint," he said.

Republican Assemblymen Vincent Polistina and John Amodeo, R-Atlantic, threw the question open to the public.

On their Facebook page, where Polistina has begun campaigning for the 2nd District Senate seat with Assembly running-mates Amodeo and attorney Chris Brown, the trio asked their supporters for their views.

"Tax relief? Pension payments? Something else? Let us know," read the page.

Polistina later said he personally supported using some for direct property tax relief, and some to help fund the Transportation Trust Fund, which pays for work on roads and transportation infrastructure across the state.

"By using it for TTF, we'll decrease the reliance on more borrowing, while creating jobs," he said. He added that this idea also means "ending any talk of the Dems' push to enact a gas tax, which would further hurt the economy."

Sen. Jim Whelan, D-Atlantic, said: "Help for our working class families, particularly in the forms of property tax relief and job creation, should be our top priorities.

"Even with the good news of unanticipated revenues, we need to think carefully about any spending decisions," he said.

From the list of programs trimmed by Christie, Whelan singled out three areas for help: "Senior property tax rebates, job creation programs like our Urban Enterprise Zone program, and women's health care."

Some of those line items are comparatively small: Christie's cut to funding for women's clinics in last year's budget saved around $7.5 million. UEZs will this year contribute around $93 million to state coffers in sales tax, money which in previous years was returned to the zones themselves to fund blight reduction and loans to zone businesses.

But many Democratic lawmakers said they were against merely selecting big-ticket items to fund.

"This isn't the time for a spending frenzy," said Assemblyman John Burzichelli, D-Gloucester, Salem, Cumberland.

He said he would prioritize an increase in funding for the program known as the "Senior Freeze," which reimburses eligible long-term residents over the age of 65 for property tax hikes. "By spending an additional $95 million, we could include those seniors who have been shut out for the last two years," Burzichelli said.

He said he supported doubling the Homestead Benefit, but said that would still amount to around half of the program's size under former Gov. Jon Corzine.

Corzine allocated $1.1 billion to the program in fiscal year 2010. Even with Christie's proposed extra funding, the program would stand at $680 million.

But some lawmakers saw the timing of the new revenue projections as a clue to why the decision should wait.

Sen. Christopher Connors, R-Ocean, Burlington, Atlantic, said Thursday he was mystified by other legislators' firm plans for the extra dollars.

"When the overall financial picture for the budget is so uncertain?" he asked. "When the school funding formula decision has not yet been made?"

Republicans including Christie acknowledge that the state Supreme Court may determine the government has to pay anywhere up to $1.6 billion to satisfy a formula for school funding.

One outcome, Connors noted, is that the court asks for less than $1.6 billion -- say, somewhere between $500 million and $900 million?

"That could be the outcome," he said. "We have to be ready for that. Let's keep our powder dry."



Source: Copyright (c) 2011, The Press of Atlantic City, Pleasantville, N.J.


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