It isn’t that the five changes would be controversial in New Jersey. State Chamber of Commerce President and CEO Tom Bracken applauded Christie’s budget and backed his interpretation that “this budget calls for no tax increases” and that the tax changes were merely a case of “correcting antiquated tax laws.” But Christie attacked his Democratic predecessor, Gov. Jon Corzine, for “raising taxes” because he extended the existing sales tax to services
Grover Norquist and other anti-tax activists would undoubtedly view the extension of the sales tax to Internet purchases from out-of-state retailers or halving the business-to-business sales tax exemptions for companies in some 35 cities and towns with Urban Enterprise Zones as violating a “no new taxes” pledge.
The $205 million in revenue enhancements is almost three times as much as the additional $77 million that New Jersey businesses will save in this fourth year of the five-year business tax cut plan approved by Christie and the Legislature in the budget they passed in June 2011.
Furthermore, Christie and Treasurer Andrew Sidamon-Eristoff needed the $205 million the tax law changes would raise to balance their budget, which is anticipated to close the next fiscal year on June 30, 2015, with a razor-thin $301 million surplus -- well under 1 percent -- of a $34.5 billion budget.
Even with the business tax changes, Christie had to tap all of the $324 million in New Jersey Turnpike toll money to balance his budget, once again breaking his 2010 promise to use money freed up from his cancellation of the Access to the Region’s Core (ARC) rail passenger tunnel to ramp up pay-as-you-go funding and limit borrowing for the Transportation Trust Fund.
This year’s budget was to include the $324 million in toll revenue, plus $166 million from general state revenues, for a total of $490 million in pay-as-you-go funding for highway, rail and bridge construction projects. But Sidamon-Eristoff acknowledged during yesterday’s press conference that “there is no pay-go funding.”
This makes three years in a row that Christie has used the Turnpike toll money to balance his budget, forcing the state to borrow an additional $261 million for the Transportation Trust Fund in FY13, $375 million extra this year, and $476 million more next year, bringing Christie’s total borrowing for TTF to more than $5.6 billion and pushing annual transportation interest costs well over $1.1 billion in next year’s state budget.
The $324 million in Turnpike toll money is most likely the largest single piece in the $950 million in “one shot” nonrecurring revenues used by the Christie administration this year -- a total that represents just 2.8 percent of the total budget, which is the lowest percentage in Christie’s four years, Sidamon-Eristoff pointed out.
The treasurer said he would detail the nonrecurring revenues within the next couple weeks, but said the one shots included debt restructuring and legal settlements (last year’s the governor used a $60 million settlement in a Passaic River pollution case to help balance the budget, for example).
Not included, however, is a one-shot fund raid like the diversion of $162 million this budget year and $89 million the year before from the Clean Energy Fund, which is paid for by a surcharge on customer utility bills, the treasurer said. Instead, the state is taking $60 million from the Clean Energy Fund to pay for energy efficiencies in state agencies, he said, adding that he expected the program to continue in future years.
The biggest question that remained yesterday was just how the treasurer was going to close the $800 million-plus gap in the current year budget.
Sidamon-Eristoff said yesterday he would rely upon $694 million in lapses -- spending cuts in various programs -- in the current year budget, but declined to detail where those cuts would be made. He confirmed that the state would approve $292 million in supplemental appropriations, with additional snow removal costs from this winter making up about a third of the total.
Sidamon-Eristoff also said he expected improving tax collection to narrow the current revenue shortfall of more than $400 million in this year’s budget by the end of the fiscal year on June 30; that shortfall does not include the hole in the Casino Revenue Fund caused by the five-month delay in the start of Internet gaming and the failure of the program to meet expectations so far. He said the state is now expecting casino revenues to come in at just $33 million, down from the budgeted $160 million.
The treasurer’s projection that revenues would increase by 5.8 percent in FY15 and support a $34.435 billion budget was actually smaller than the increase of 6.5 percent or more that some fiscal experts privately were expecting.