New revenue needed to fund budget
By: centraljersey.com
If reports from the Office of Legislative Services are accurate, New Jersey will face another massive budget shortfall next year.
The OLS, the nonpartisan research arm of the state Legislature, says last month that despite the massive cuts made by the governor to the 2010-2011 budget another $10.5 billion gap looms when Gov. Chris Christie and the Legislature turn their attention to the 2011-2012 budget.
The governor disagrees, saying that the OLS calculations assume full funding of all programs – something not likely to happen.
He’s correct, though his claim only underscores the seriousness of the fiscal difficulties that the state faces in the future.
The fact remains that the governor balanced this year’s budget by withholding payments into the state pension system, which only kicks the pension problem down the road, slashing aid to schools and towns and gutting the tax-rebate program. The combined effect of these maneuvers was to push the state’s problems onto local governments – which he then pretended to address by imposing an arbitrary and ill-conceived cap on the ability of local governments and school boards to increase property taxes.
The issue with the state’s budget, the governor says, is spending and spending alone and he has refused to consider ways to increase the amount of money coming into the state, ensuring that New Jersey will continue to face budgetary shortfalls well into the future.
But for the state to meet its basic pension and health-care obligations, minimize property tax increases and provide quality schools – not to mention offer a viable safety net for the poor and elderly – it needs to find ways to generate revenue.
Deborah Howlett, president of New Jersey Policy Perspective, a liberal policy group, said during budget testimony in June that New Jersey needs to address "an imbalance in the state’s tax structure."
"(L)ocal governments in New Jersey rely solely on property taxes and state aid for support," she said. "In other states, local governments have a more balanced revenue stream that includes local income and sales taxes in addition to property taxes."
The state’s residents may pay more in property taxes than the residents of just about every other state; New Jersey residents actually pay significantly less in income, sales and gas taxes. No doubt property taxes in New Jersey are high, but that does not mean New Jersey is a high-tax state.
"When total own-source revenue" – or revenue generated from state and local taxes – "is measured as a percent of residents’ personal income, New Jersey ranks 31st" in the country, she said.
We pay a lot in property taxes, but it is inaccurate to say we are paying more in overall taxes than anyone else.
Long term, a broad-based restructuring of the state’s tax system is in order.
In the short term, however, the Legislature needs to put the so-called "millionaire’s tax" back on the table and force the governor to veto it again, enact a gas tax dedicated to funding infrastructure improvements and begin a discussion about other potential revenue sources, including a fee on developers that would help the state and towns pay for open space and infrastructure.
That’s the only way we are going to dig ourselves out of the deep hole in which we find ourselves.

