The nonpartisan New Jersey Office of Legislative Services (OLS) released estimates on Wednesday predicting that New Jersey revenues will fall a staggering $1.3 billion short of Governor Chris Christie’s previous estimate through fiscal year 2013. The estimated revenue shortfall is bad news for Christie because it makes his ten percent across the board income tax cut proposal appear that much more reckless. Even the bean counters at Moody’s and Standard and Poor’s are worried.
The discrepancy between Christie’s previous revenue predictions and the estimated shortfall is due to the wildly unrealistic revenue estimate put out by the Christie administration in March, which an analysis by the New Jersey Star Ledger found to be the most optimistic in the country. In fact, Christie’s promised 7.4 percent in revenue growth was more than 2.5 times the national average of 2.8 percent.
For the moment, Christie is standing by his income tax cut plans, saying that the budget gap is actually only $676 million – and he is proposing to fill it by cutting $295 million in transportation funding next year. The Governor’s reduced gap estimate is derived from his faith in the millions in tax breaks his administration has given to the state’s wealthiest residents and corporations already being at work, unleashing unprecedented economic growth. This is what he’s been calling the “New Jersey Comeback.” Unfortunately, his predictions are based on the same old myths that have proven to be wrong time and again across the country.
The failure of Christie’s approach is borne out by New Jersey’s wobbly economy. As New Jersey Policy Perspective points out, the reality is the state is actually lagging behind the rest of the country, with its unemployment rate increasing slightly, to 9.1 percent in April 2012, higher than the regional rate of 7.9 percent. Rather than helping drive a recovery, it looks like Christie’s policy of favoring expensive tax breaks over critical government services has actually driven up joblessness by putting tens of thousands of public sector employees out of work.
The Governor is doubling down on tax breaks and service cuts when he should instead protect New Jersey’s basic quality of life and embrace, rather than veto, a millionaire’s tax -- which his constituents love, his Assembly passed, and would generate $500 million in desperately needed revenues for the Garden State.
Making matters worse, the Democratic Senate President Stephen Sweeney continues pushing his caucus to pass a compromise tax cut he says is for the middle class. For interested readers, there's a politics to all of it.
(Photo courtesy of Center for American Progress.)