If you want to sell bonds to Wall Street, you have to disclose full and accurate information about your finances. New Jersey signed a deal with the Securities and Exchange Commission that it would do exactly that. By failing to include the potential $183 million reduction in the state’s surplus from the proposed tax cut in two financial disclosure documents related to school construction bonds, has the Christie administration decided that the tax cut will not be enacted this year or has it failed to disclose an action that would impact at least 30 percent of the projected surplus?
As was noted in the an earlier blog on the original disclosure, the administration acknowledged that the projected $648 million FY 2013 surplus will likely be reduced by a significant reduction in the FY 2012 closing surplus (which the Office of Legislative Services estimates to be about $250 million) along with other items.
What was not included was the potential cost of the compromise tax cut plan that the governor has been touting since June. It is surprising that the cost of the governor’s highest priority – representing nearly 30 percent of the FY 2013 surplus – was not included at all as a potential impact on the state’s finances.
In an updated October 15 disclosure, the impact of the proposed tax cut was again ignored. This is odd, since the update includes a handful of developments that have far less potential impact on the surplus than the tax cut – everything from the lower-than-anticipated first quarter revenues to unspecified but lower-than-expected savings on Medicaid as a result of the federal government’s recent approval of the state’s comprehensive Medicaid waiver request.
If the governor is as privately committed to the tax cut as his “town hall” videos suggest, the administration should update the disclosure to include the $183 million tax cut costs as a threat to the projected surplus, already lower because of the lower surplus from last year and the low tax collections in the first quarter of this year.
If the disclosure documents are accurate as submitted, the administration has given up on a tax cut this year. If that’s the case, the governor should stop touting his proposal and stop blaming Democrats for not enacting a plan that even his Treasurer is not willing to acknowledge.
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