Democratic legislators voted last week to approve the state $29 million 2010 state budget, despite Republicans in the Senate and Assembly voting against it.
The budget is $4 billion less than last year, and $2 billion less than three years ago.
The budget also reflects a minor tax increase to the state’s highest wage earners, as well as an increase in taxes on cigarettes and alcohol.
Assemblywoman Joan Quigley, who represents a portion of Jersey City as well as all of Secaucus and North Bergen, called it the ugliest budget process she’s ever encountered, and charged that state Republicans played politics in voting against it.
Democratic Gov. Jon Corzine is being challenged in a November election by Republican Christopher Christie.
“This is understandable since this is an election year,” said Assemblyman Anthony Chiappone, a Democrat from the 31st District representing the southern portion of Jersey City and all of Bayonne. “The Republicans are taking a political stand.”
Although the budget reduces the size of the state rebate program to households earning less than $75,000 per year with the exception of seniors and disabled residents, deeper cuts had been planned, but were restored as a result of a surprisingly successful tax amnesty program that generated $404 million this year, the bulk of which is being used for the rebates.
The tax on alcohol and cigarettes is expected to generate $400,000 more this year, and the state will impose for the first time a tax on lottery winnings in excess of $10,000.
This budget raised income taxes on families earning more than $500,000 per year by one quarter of a percent and eliminates the tax deduction on property taxes next year for families with an earned income of $250,000 annually.
“This is the worst budget process I have experienced, and I’ve been on the budgeting committee for six years and in the state legislature for 16 years,” Quigley said, but added that the public will likely see very little negative impact. “We tightened our belts, but kept everything that was essential.”
Flat tax for most
For most people, the property tax will be flat. Furloughs of state employees may slow some services down for several days, but the services will still be provided.
Charity care, needed to support the hospitals, saw no cuts.
Quigley and Chiappone both said they were relieved when the state restored funding for adult education, which is needed throughout the state.
“The $10 million was the last item restored,” Quigley said. “We begged and pleaded for it.”
Chiappone said the $650 million allocated for charity care is important for helping to keep open hospitals such as the Bayonne Medical Center.
“Of this budget, $15 billion goes to property tax relief,” Chiappone said. “Schools and municipalities will see $12.9 billion, and $1.7 billion goes directly to relieve property taxes.”
One of the key elements for Chiappone was the expansion of the Senior Freeze Program, which saw an increase of $173 million in the budget.
“When municipal taxes go up, this makes seniors exempt from the tax increase,” Chiappone said.
Quigley said this year’s budget leaves the state in a good position to bounce back once the national economy turns around.
“Despite the doom and gloom the Republicans are projecting, this budget streamlines government.” – Anthony Chiappone
Cuts are part of the solution for future budgets, but Quigley said the state could benefit significantly if the federal government moves on setting up a way for states to collect sales tax from Internet sales.
“It could bring us billions,” she predicted.
Another source of future revenue will come from the use of federal stimulus funds to generate redevelopment, Chiappone said.
The federal stimulus contains $2.2 billion that goes directly into various items in the budget – much of it for education.
“Despite the doom and gloom the Republicans are projecting, this budget streamlines government,” Chiappone said. “I have always advocated for our reducing the cost of operating government. We are in the toughest economic times I’ve ever seen. The state is putting forth a responsible budget that doesn’t cut back on those who need funding the most, our seniors and our children, and those who need medical care.”
“This is not going to be as bad as people think,” she said. “Most people won’t even notice.”