The Case Of The Missing Income Tax Revenue
The income tax in New Jersey was enacted to provide property tax relief in two ways; direct aid to local school districts and through property tax rebates to homeowners. By law, the revenue the state receives from income taxes may not be spent for any other purpose.
The Acting Governor put the local school districts on notice that they would not be receiving any increases in state aid for 2006 and to homeowners he announced the property tax rebates would be eliminated or considerably reduced. Based upon the governor’s statements one would assume income tax revenue had fallen or at best, remained flat. If that’s what you thought, you would have assumed wrong.
Let’s take a look at the income tax revenue the state received in 2004 and the state’s projections for 2005 and 2006.
Notice New Jersey’s income tax revenue is up $1.7 billion for 2005 and up $600 million for 2006, for a total of $2.3 billion. So where did the additional money go? Did your local school district receive more in state aid? More than likely not, and that’s why your property taxes continue to increase. It’s certainly not coming to you in the form of a property tax rebate; after all they can’t find the money to fully fund the program. Your tax dollars obviously went to the usual special interests.New Jersey Income tax Revenue
So the Democrats have been casting about looking for ways to save the rebate. In usual fashion, the Democrats hatched a plan to increase sales taxes to fund the property tax rebates. Rebates may come and go, but the new taxes are forever.
Other Democrats, hoping to keep their seats in this year’s election for state assembly, have taken the unusual step of looking for ways to cut spending. The Star-Ledger reports today the hunt for cuts isn’t going too well:
The Codey administration has rejected about 80 percent of the budget cuts proposed by Assembly Democrats, forcing a scramble to find nearly $400 million in other savings to fully restore taxpayer rebates.
Treasurer John McCormac said yesterday he can endorse only about $85 million of the $467 million in spending cuts and funding ideas proposed by the Assembly leadership because the rest were not realistic.
How bad is the problem? Consider this statement from the Assembly Budget Committee Chairman:
"I find it laughable that out of a $27.4 billion budget we can't find half a billion dollars in greater efficiencies and cuts," said Assembly Budget Committee Chairman Louis Greenwald (D-Camden).It’s not laughable Assemblyman Greenwald, it’s pathetic.