Posted on 02/08/2004 4:56:55 PM PST by Sub-Driver
NJ running out of quick fixes to cover another budget shortfall Sunday February 08, 2004 TRENTON, N.J. (AP) A looming budget deficit is threatening Gov. James E. McGreevey's often-repeated pledge to hold the line on sales and income taxes.
Covering the estimated $4 billion shortfall could require sharp cuts or tax increases a politically unpalatable situation for Democrats who remember the voter backlash that eventually sent former Democratic Gov. Jim Florio packing and tilted control of the Statehouse to the GOP.
The state's revenue collections have been buoyed by a reviving economy, running $350 million ahead of projections for the first six months of this fiscal year.
Although that trimmed the deficit projections down from $5 billion, it won't dry up the red ink. The $4 billion deficit is about 17 percent of the state's total budget.
Faced with a shortfall last year, McGreevey bridged with gap with temporary fixes, such as $1.3 billion in proceeds borrowed against the state's share of the national settlement with tobacco companies and $500 million from a federal aid package.
Twice in two budget years, the state's per-pack tax on cigarettes has been raised, while in one budget year the corporate tax was raised.
``Now, the low-hanging fruits are gone. The obvious and easy choices have all been exercised, if not exhausted,'' Henry Coleman, director of Rutgers University's Center for Government Services told The Philadelphia Inquirer. ``The governor is either going to have to get awfully creative, or look on the other side of the budget and severely cut spending.''
Some ideas were detailed in an internal Treasury Department memo that surfaced last week, including a suggestion to eliminate the NJ Saver rebate, a popular property tax relief program, and to expand the state sales tax to cable television and drycleaning.
McGreevey's staff downplayed the memo, calling it brainstorming and unlikely to be considered further. McGreevey's spokesman reiterated that the governor would craft a budget without increases in sales or income taxes.
``He plans to meet the budget gap by reducing state government spending, the same way he balanced the last two budgets,'' said spokesman Micah Rasmussen.
Not all Democrats are as certain. Democratic strategist Richard Thigpen believes McGreevey will have to consider some tax increase as a last resort, possibly targeting the state's wealthiest residents with a so-called millionaire's tax.
Such a tax has been pitched before and has won support from many of the state's Democratic lawmakers, including Assembly Speaker Albio Sires.
Republicans oppose the idea, arguing those residents would move to New York or Pennsylvania to escape the tax.
``A millionaire's tax is still an income tax, and he promised there would be no income tax increases,'' Senate Minority Leader Leonard Lance said.
make n.j. a "kalli-fornica" county...
ah-nold n the dem's are going to "tax n borrow" their way to prosperity. we could get a "two-fer"
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