June 29, 2009: Budget and RAD

New Jersey’s Fiscal Year 2010 budget has been approved by the legislature and NJPP is analyzing the hundreds of pages of revenues, expenditures and appropriations for a special summary coming soon. In the meantime, here are highlights of the work NJPP did on the Economic Stimulus Act passed by the legislature Thursday, the same day the budget was approved.

A portion of the act diverts state and local tax revenues away from the public programs and services they support and gives them to private developers. The act specifically repeals the Revenue Allocation District Financing Act of 2001 and replaces it with an alternate tax increment financing (TIF) structure. NJPP believes this new structure will cause a significant revenue loss at a time when New Jersey needs it most.

TIF works as a business subsidy by giving revenue from state and local taxes and fees to developers. The Economic Stimulus Act diverts 11 state taxes and fees – including the corporate business tax and the sales and use tax – to developers. It also diverts 11 local taxes and fees away from schools, municipalities and counties and puts them in the pockets of private interests.

How much money is involved? “Good question,” said NJPP policy analysts Naomi Mueller Bressler and Sarah Stecker in a recent op-ed. Unfortunately, none of the legislators preparing to vote for this can give an answer.” Revenue loss has not been calculated even though state law requires it be done before legislation that increases or decreases state or local revenues can be voted on. In addition, legislators have no evidence to support the claim that tax breaks lead to meaningful development that would help communities.

Subsidizing the construction of a new strip mall is not more important than providing after-school programs to poor children or expanding the state’s FamilyCare program. With falling revenues driving New Jersey to make cuts to vital services, now is not the time to gamble with the state’s limited resources.

Click here to see Sarah Stecker debate Michael McGuinness of the Commercial Real Estate Development Association on WWOR’s New Jersey Now on June 28, 2009.