Newspaper article The Record (Bergen County, NJ)

Overhaul Would Hit Budget Hard

Newspaper article The Record (Bergen County, NJ)

Overhaul Would Hit Budget Hard

Article excerpt

A hastily written tax overhaul - introduced in the Assembly close to midnight Monday and passed an hour later with no feedback from the public - would be a financial shock to a $34 billion state budget already beset by rising costs and sluggish economic growth.

The surprise proposal from Governor Christie and Assembly Speaker Vincent Prieto, D-Secaucus, would raise New Jersey's gas tax by 23 cents, to 37.5 cents per gallon, and use the proceeds to fund transit projects. At the same time, the sales tax would decline from 7 percent to 6 percent over two years, and taxes on retirement income would be pared over four years.

The price tag for the Christie-Prieto plan: Nearly $2 billion a year in lost revenue after full implementation, according to estimates from the non-partisan Office of Legislative Services released Tuesday.

The Senate is scheduled to consider the Christie-Prieto plan Thursday. Democratic and Republican senators said it could lead to a revenue crisis and further downgrades of New Jersey's weak bond rating.

"We're not going to blow that big a hole in the budget," said Senate Majority Leader Loretta Weinberg, D-Teaneck. "It is extremely irresponsible."

The Assembly passed the tax overhaul hours after a separate ballot initiative that - if approved by voters in November - would mandate a roughly $2.4 billion pension payment next year, and larger contributions in subsequent years.

As a result, the state could wind up with a dearth of cash. How New Jersey could afford a revenue drain of $4.4 billion or more - at a time of credit-rating downgrades, rising costs and funding shortages everywhere from schools to hospitals to the pension system - was an open question Tuesday.

"Trying to take all these policy initiatives simultaneously in the waning hours of the Legislature, frankly, it's a little stunning and the math doesn't work," said Sen. Jennifer Beck, R-Monmouth.

Sen. Paul Sarlo, D-Wood-Ridge, chairman of the Budget and Appropriations Committee, said he would keep an open mind but that he was "very concerned about the proposal the governor has put forth" because it could have a "devastating impact on education, on our ability to pay pensions. …

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