The decision to delay consideration of any tax cut due to wobbly revenues is still the correct and responsible one. Nothing that Gov. Christie said yesterday changes that fact, or any of the facts that back it up.
• New Jersey’s economy, though growing, is not growing at the rates the administration needs to meet its revenue projections.
• The Office of Legislative Services (OLS) projects that revenues could be at least $700 million to $800 million less than the administration’s estimates.
• Moody’s projects even weaker revenue growth in FY 2013 more in line with this year’s growth, which could mean an additional $700 to $800 million shortfall on top of OLS’s estimate.
• Transportation capital projects are now being supported by $260 million in additional debt as the administration scrounged for money to offset revenue shortfalls in order to keep its tax cut alive.
• School and municipal aid is underfunded. Over $300 million in municipal utility tax receipts intended for homeowner tax relief are instead raided to support the state budget.
• Operating aid for colleges remains flat after years of cuts.
• The budget relies on $1.5 billion in non-recurring revenues that, when added to increased pension contributions and other costs, dig the state into a very deep hole for FY 2014. Enactment of any tax cut will push that number even higher, as the governor’s proposed cut could reach $1.5 billion in four years.
The bottom line: Democrats should be praised for being responsible and delaying consideration of the tax cut. Nothing that the governor said yesterday is any reason to change a position that is only three weeks old, and nothing he can say in the next few months should change anyone’s mind either.
Instead, lawmakers should regroup in six to eight months to have an informed debate on the crucial question: should tax cuts be enacted, or should the state invest the $1.5 billion to put New Jersey back on the path to good jobs, long-term economic growth, and middle-class tax relief?
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