NJ Newsroom: State needs new funding sources to avert damaging budget cuts

NewJerseyNewsroom.com

Wednesday, June 17, 2009
By ROB DUFFEY

The Better Choices Budget Campaign urged lawmakers to enact more revenue raising measures to fill the multi-billion dollar gap in the FY 2010 budget and denounced recent calls to limit revenue as potentially disastrous in a budget that already makes over $4 billion in deep cuts to environmental protection, health care, and property tax relief for lower and middle income residents.

"Too many of these planned cuts go to critical services like job training, after-school programs and health care programs that help working families weather an economic downturn," said Eva Bonime, Executive Director of the New Jersey Working Families Alliance and coordinator of the Better Choices Budget Campaign.

In the weeks leading up to last Thursday's introduction of the $28.6 billion budget into the legislature, there has been vigorous debate over how to fill the $6 billion gap between projected expenditures and revenue. Recently Republican lawmakers and business lobbyists have targeted newly proposed revenue streams such as increased income taxes on wealthy residents and ‘sin' taxes on cigarettes, alcohol, and lottery earnings. Among the objections to the proposals were statements that the wealthy residents and corporations would leave the state. But the Better Choices Campaign maintained that cutting services in a recession was poor policy and targeted revenue increases make good economic sense, and cited several recent analyses. They pointed to a 2008 study by Douglas Massey, Cristobal Young and Charles Varner of Princeton University, who found that the "half-millionaires" tax passed by Governor McGreevey had little to no effect on the migration rates of wealthy New Jersey residents.

Campaign representatives also noted that over forty of the state's top economists and public policy experts wrote to Governor Corzine arguing that in a recession it is unwise to balance budgets by cutting services and support for lower and middle income residents. They asserted that it was preferable to increase taxes on those most able to shoulder the burden.

"While we agree that the state has deferred its responsibilities and relied on one shot gimmicks to cover up its fiscal woes, the answer isn't cutting vital programs. If we are facing a revenue shortfall, the answer is more revenue and not less," said Rex Reid, political representative from AFSCME Council 1, an endorsing member of the Better Choices Budget Campaign.

The campaign also pointed to a 2008 survey conducted by the Bloustein School at Rutgers University which found that over 95% of 150 top executives claimed they would stay in New Jersey for the quality of its workforce, education, and healthcare.

"It's things like good schools, top notch health care, and clean air and water that will keep business in New Jersey. That's why we need to invest in our state's quality of life during good times and bad," said Jeff Tittel, Director of the Sierra Club New Jersey Chapter, a Better Choices sponsor.

The Better Choices Campaign reiterated their call for additional revenue measures to help mitigate budget cuts. Ray Castro, senior policy analyst at New Jersey Policy Perspective, outlined the Better Choices Budget Plan, which could produce an additional $240 million in funds to mitigate some of the more severe budget cuts.

The first proposal would raise income taxes on New Jersey residents making between $300,000 and $500,000 to 8.5%.

The second measure would raise the current 4% surcharge on corporate business tax to 8% and net an additional $80 million in funding.

The third proposal would triple fees on gas guzzling SUVs. Registration for SUVs less than two years old would go from $84 to $252, and from $71.50 to $214.50 for vehicles over two years old. The measure would raise $140 million.

"Inefficient SUVs directly contribute to the global warming crisis. Increasing registration fees on gas guzzlers is a two-fer because it discourages people from driving polluting vehicles while at the same time generating revenue that we can invest in public goods like environmental protection," said Bonime.

Many of the revenue proposals in the current legislation were initially proposed by the Better Choices Budget Campaign. They include:

• Adjusting the state income tax to more closely reflect ability to pay. The FY 2010 budget increases the rate on residents making between $400,000 and $500,000 from 6.37% to 8%, those making between $500,000 and $1,000,000 from 8.97% to 10.25%, and those making over $1,000,000 from 8.97% to 10.75%.

• Curbing business tax breaks and loopholes, including repealing sun setting provisions for minimum tax on corporations with gross receipts of $100,000 or more and 4 % surcharge on corporate business tax liabilities for other corporations. The FY 2010 budget recommends keeping the 4% surcharge on corporate business tax liabilities. The minimum tax on corporations will remain. It is estimated that extending the 4% surcharge will bring in $80 million in FY 2010.

• Levying a 5 percent tax on lottery winnings. New Jersey currently does not tax lottery winnings, while, the federal government and 24 states do. State rates range from 3.4 percent to 8 percent and usually exempt from taxation winning under $600. The FY 2010 budget levies a new tax on lottery winnings over $10,000. This is estimated to bring in $40 million.

• Increasing the alcoholic beverage tax. NJ now taxes liquor at $4.40 per gallon; wine, vermouth and sparkling wine at 70 cents per gallon; and beer and hard apple ciders at 12 cents per gallon. The FY 2010 budget recommends a 25% increase in alcoholic beverage taxes excluding beer. This is estimated to bring in $22 million.

Endorsing Organizations

AFSCME, NJ Council 1
Bergen Community College Environmental Club
Bergen Grassroots
BlueWaveNJ
Center for Women and Work at Rutgers
Communications Workers of America, District 1
Communications Workers of America, Locals 1032, 1037, 1039, 1080, 1081 and 1082
Council of New Jersey State College Locals, AFT
First AME Zion Church in Paterson
Fund for an Open Society
Grassroots Institute of New Jersey
Haiti Solidarity Network of the Northeast
Health Professionals and Allied Employees, AFT
Hispanic Directors Association of New Jersey
Housing and Community Development Network of New Jersey
Immigrants' Rights Defense Committee
La Casa de Don Pedro
National Association of Social Workers, New Jersey Chapter
New Jersey Association of Community Organizations for Reform Now
New Jersey Black Issues Convention
New Jersey Citizen Action
New Jersey Environmental Federation
New Jersey Immigration Policy Network
New Jersey Policy Perspective
New Jersey Tenants Organization
New Jersey Work Environment Council
New Jersey Working Families Alliance
NJIT Student Senate
People's Organization for Progress
Puerto Rican Family Institute
Roosevelt Institution, Rutgers-New Brunswick/Piscataway Chapter
Rutgers Labor Association
Service Employees International Union, New Jersey State Council
Sierra Club, New Jersey Chapter
Statewide Education Organizing Committee
Union of Rutgers Administrators - AFT Local 1766
United Food and Commercial Workers, Region 1
United Presbyterian Church in Paterson
William Paterson University YDS Chapter
 

Originally available at: http://www.newjerseynewsroom.com/commentary/state-needs-new-funding-sources-to-avert-damaging-budget-cuts