Corzine cuts, tax hikes likely to stick
Friday, April 7, 2006

By JOHN P. MCALPIN
TRENTON BUREAU

Governor Corzine's financial experts warned legislators Thursday that they shouldn't be hoping for a windfall that will derail the administration's proposed tax increases and budget cuts.

Those tax increases -- expected to raise $1.8 billion -- and the proposed cuts to programs, services and grants are needed to right staggering state finances, Treasurer Bradley Abelow said.

But many lawmakers hope income tax payments and other tax collections over the next few months will surprise experts by far exceeding estimates. Such windfalls saved the popular property tax rebate program after it was cut from the budget this time last year.

But Abelow and the Legislature's research team said Thursday that the revenue figures are not likely to grow beyond Corzine's estimates for his proposed $30.9 billion budget.

"My finger-in-the-air estimate is that I'm going to remain an optimist," Abelow said of the coming tax collections.

Still, the Assembly Budget Committee and other lawmakers should not be banking on any major windfall, he said.

Lawmakers, however, remained guarded on the revenues.

"It's not as if we are counting on it. We'd welcome it," said committee Chairman Louis D. Greenwald, a Camden County Democrat.

Committee members demanded that Abelow identify programs that were cut and why Corzine needs over $1.8 billion in tax increases, most of which will come from raising the 6 percent sales tax to 7 percent. Abelow promised to forward a list of the 75 items eliminated from the budget.

"The combination of cuts and revenue enhancements, while dramatic in size and wide in scope, underscores the true message of this budget and this approach to budgeting," Abelow said

Lawmakers pressed Abelow, saying they would reconsider several proposed cuts, including a $1.1 million business development initiative that generates well over 10 times that in fees from clients and from matching federal funds.

Abelow agreed that lawmakers will find room to restore programs and make cuts themselves.

"We aren't so arrogant to think that in the short time we've had to work on this budget that we have gotten it all right," Abelow said.

The Legislature's research office on Thursday offered a slightly more pessimistic outlook on New Jersey's fiscal future than Corzine's administration.

The Office of Legislative Services said Corzine can expect to collect $186 million less in revenue over the next 15 months.

The OLS report said the state should expect to collect $345 million less in income taxes in the final months of this budget year and in fiscal year 2007, which begins July 1.

The OLS also predicted that New Jersey will collect $50 million more in sales tax over Corzine's estimates and $108 million extra from an assortment of other taxes.

Republicans said those estimates mean the state should cut more from the budget proposal.

"If we are going to be successful in rolling back the governor's tax hike proposals, we need to start cutting wasteful spending from this budget immediately," said Assemblywoman Alison Littell McHose, R-Sussex.

The budget proposal, as well as the tax increases, must be approved by the Legislature and signed by Corzine before July 1.

E-mail: mcalpin@northjersey.com