About that 10 percent income tax cut that Gov. Christie promised us yesterday … don’t start planning that dream vacation quite yet.

Despite polls that show New Jersey voters expecting a median savings of nearly $750 from the cut, the true savings are much, much less.

For someone earning $60,000 a year, which is pretty close to half of all workers, the cut will amount to income tax savings of less than $35 in 2013. It would double to $70 in 2014, before finally hitting the full $105 – or about $2 a week — in 2015.

What’s more, there will actually be no income tax cut this year. Instead, taxpayers will have to wait until they file their 2015 taxes in 2016 to get all of what the governor is promising – and even that won’t amount to much for most of us.

The income tax proposal put forth by the governor doesn’t become “operational” until January 1, 2013, according to a footnote in the Department of Treasury’s Budget in Brief, a 150-page document that adds detail to the budget proposal outlined in Tuesday’s speech.

So while the governor unabashedly refers to his plan as a “10-percent income tax cut,” it’s really more like a “3.3 percent, and you-gotta-wait-til-next-year-to-get-it tax cut.”

And here’s the kicker: over three years, this cumulative pittance in individual tax savings will end up costing the state $1.7 billion in revenues. Quite simply, in this economy and given the devastation caused to services in the past two budgets, the state can’t afford to give up those revenues.

The governor’s solution to that issue is to create the illusion of more money. His economic advisers are forecasting 7.3 percent growth in the state’s tax collections next year – a $2.2 billion windfall that the state hasn’t seen since pre-recession days, when the economic bubble was being stretched to bursting.

“Revenue growth will primarily result from the continued improvement in the state’s economy,” according to the Budget in Brief.

The governor’s budget numbers are incredibly optimistic, even though New Jersey lags the rest of the nation in economic recovery with a 9 percent unemployment rate, and even though the state is expecting revenues for this year to fall short of projections by 3.2 percent, or $325 million.

In the end, this budget is a dog. The revenue numbers are suspect. The promise of a 10 percent tax cut is false. And the political narrative of a “New Jersey comeback” is just so much fiction.

It is now incumbent on the legislature to draft a budget that includes realistic revenue numbers that will adequately fund some of the good priorities the governor did lay out in his speech – increased school aid, restoration of the state Earned Income Tax Credit and expansion of drug courts.

That budget must include increasing the top tax rate and demanding that the wealthiest one percent share in the burden that the other 99 percent have endured the past two budgets.

From ThinkProgress, February 21, 2012:

New Jersey Gov. Chris Christie (R) today formally announced his intention to implement a 10 percent cut in New Jersey’s income tax. “Lower tax rates will relieve over-burdened middle class families,” Christie said in his annual budget address.

However, the middle class is likely to hardly notice Christie’s cut, as it would give just $80 annually to a households making $50,000. In fact, according to New Jersey Policy Perspective, President Deborah Howlett, 40 percent of the benefit of Christie’s tax cut will go to the state’s richest 1 percent.

From the Philadelphia Inquirer, February 21, 2012:

Gov. Christie presented a $32.1 billion budget to the state Legislature this afternoon that increases school aid by $212.5 million, makes the largest payment toward public employee pensions in state history and uses rosy revenue projections to help pay for an income tax cut.

The spending plan is the highest since fiscal year 2008, and about 8 percent higher than the current fiscal year budget. It projects a 7 percent increase in revenues.

The Inquirer notes that NJPP “slammed the income tax cut plan,” pointing out that “the cut would be relatively meaningless to the middle class but provide a windfall for the wealthy.”

NJTV’s New Jersey Capitol Report had NJPP president Deborah Howlett on as a guest February 10 to discuss Gov. Christie’s proposed 10-percent income tax cut.

“If the point is to stimulate the economy, a 10-percent income tax cut isn’t going to cut the mustard. It becomes almost meaningless to people at lower income levels,” she said. “For instance, if you make $60,000, which is roughly the median income in New Jersey, you’re going to get a $105 tax cut. That’s $2 a week. Your property taxes are going to go up more than that.”

Howlett stressed the need for the state to invest in a plan to get New Jerseyans back to work.

“The idea is to put people back to work,” she said. “Giving somebody who earns the median income 70 cents more in their paycheck is not going to put people back to work. What we really need is a substantial jobs program, not gimmicky tax cuts that pretend to put people back to work.”

The clip, embedded below, begins around the 15-minute mark.

Watch New Jersey Capitol Report with Steve Adubato & Rafael Pi Roman on PBS. See more from New Jersey Capitol Report.

The recession blew a $2.5 billion hole in the state budget that has never been filled. Now, the governor wants to dig that hole even deeper with an irresponsible gimmick that only benefits the wealthiest 1 percent.  
 
Proposing an income tax cut might be good politics, but it’s bad policy for most New Jerseyans.

For most of us, the governor’s proposed income tax cut will amount to $2 a week, which will be quickly eaten up by rising property taxes. Meanwhile, the top 1 percent will reap nearly 40 percent of the savings.

The state’s tab for this tax cut will ultimately be $1.1 billion, and that money has to come from somewhere. While the governor seems to think it will come from his pie-in-the-sky revenue projections, it’s hard to imagine the state’s stagnant economy will turn around quite so quickly. At the end of the day, it will be New Jersey’s future generations footing the bill.

For more on the budget address, see the governor’s prepared remarks here.

From the Jersey City Reporter, February 19, 2012:

If there is any question that Mayor Jerramiah T. Healy wants – and believes he deserves – another term as mayor, Healy hammered the message home during the final moments of his State of the City Address, delivered Thursday.

Among the accomplishments that Jersey City’s mayor touted during his speech was the luring of Goya Foods to the city and the jobs that will come as a result. But as the Reporter rightly notes, the jobs number Healy is citing isn’t quite accurate:

While Healy said Thursday that Goya would “bring close to 500 permanent jobs” to Jersey City, the nonprofit think tank New Jersey Policy Perspective found that only about six new jobs would be created. The rest of the jobs that the company will bring to Jersey City are already held by employees who currently work at Goya facilities in Secaucus and Long Island.

New Jersey would receive at least $171 million in funding for clean energy projects between 2012 and 2018 if the state were to stay in the Regional Greenhouse Gas Initiative (RGGI), according to a report released this week by Environment New Jersey.

Gov. Chris Christie, calling the 10-state program “gimmicky” and “a failure,” announced last year that New Jersey would withdraw from RGGI after just three years of participation. However, a bill is moving through the legislature to have the Garden State remain in the program.

The $171 million is the a conservative estimate of funding, according to the report. If the program were to be strengthened, for example – something several participating states would like to see happen – New Jersey could see anywhere from $340 million to $680 million over that same time frame.

A few other key numbers from the report worth noting:

$25: average savings in avoided electricity costs RGGI has already delivered to residential customers
$181: average savings in avoided electricity costs RGGI has already delivered to business customers
1,800: number of job-years of employment RGGI has already created in New Jersey

As Gov. Chris Christie prepares to unveil the specifics of his proposed 10-percent income tax cut at next week’s budget address, he’s working under a key tenet of conservative economics: that high tax rates harm economic growth.

There’s just one problem, according to a new national report by the Institute on Taxation and Economic Policy (ITEP): that tenet doesn’t match up with reality.

These claims are based largely on misleading analyses generated by Arthur Laffer, long-time spokesman of a supply-side economic theory that President George H. W. Bush once called “voodoo economics” because of its bizarre insistence that tax cuts very often lead to higher revenues. Recently, Laffer’s consulting firm has been very successful (with the help of the American Legislative Exchange Council, Americans for Prosperity, and the Wall Street Journal’s editorial page) in spreading the talking point that the nine states without personal income taxes have economies that far outperform those in the nine states with the highest top tax rates.

In reality, however, residents of “high rate” income tax states are actually experiencing economic conditions at least as good, if not better, than those living in states lacking a personal income tax.

The report pits the nine “high rate” states identified by Laffer (a list that includes New Jersey) against the nine states that don’t have a broad-based personal income tax in three categories: growth per capita, median family income and unemployment rate.

From 2001 to 2010, the “high rate” states have seen stronger growth per capita and less erosion of median family income, while the average unemployment rate has been the same as the un-taxed states.

The bottom line, according to ITEP?

“There is no reason for states to expect that reducing or repealing their income taxes will improve the performance of their economies.”

From the Star-Ledger, February 10, 2012:

Gov. Chris Christie’s plan to spend $300 million less on Medicaid this year has hit a snag with the federal government that jeopardizes about $107 million of the savings he anticipated in the current state budget.

NJPP senior policy analyst Raymond Castro says he hopes the problem can be resolved at the federal level, but that even if it isn’t, the end result shouldn’t be further cuts in vital services.

“What’s important here in New Jersey is that the elderly, disabled and children don’t see service cuts, particularly during the down economy when these services are so crucial,” he tells the Ledger.

New Jersey will receive an estimated $838 million from the $26 billion national settlement among the states and five major lenders that was announced this week, according to figures released by the state attorney general.

However, as NJ Spotlight reports, the amounts for individual homeowners “will be pennies on the dollars — at most”:

As described by authorities, the top amount any homeowner would receive is likely to be $20,000, and many would get no help.

For those who can demonstrate that they lost homes over the past four years due to abuses in foreclosures, payouts would be in the $1,800 to $2,000 range.

In a blog post, Good Jobs First research director Phil Mattera says that the settlement “will do nothing for most of those who have been dispossessed in one of the most egregious cases of corporate lawlessness this country has ever seen.”

Despite the settlement being dubbed as a landmark deal for consumers, Mattera concludes that it “signals to large financial institutions that they can go on mistreating their customers and that the worst consequence would be modest financial penalties that can be written off as a cost of doing dirty business.”