New Jersey Governor Jon Corzine proposed a record $30.9 billion state budget that includes an increase in the sales tax and new levies on alcohol and cigarettes.
Spending would rise by 9 percent, or $2.6 billion, over the current fiscal year. The budget reflects “already legislated, mandated, negotiated, and inflated” costs, Corzine said today in his first budget address before the state Legislature.
Under Corzine’s proposal, sales tax collections would rise by $1.43 billion, as rates climb to 7 percent from 6 percent and the tax is applied to more consumer services. Only California has a higher rate at 7.25 percent, according to the Federation of Tax Administrators. Cigarette taxes will climb by 35 cents to $2.75 a pack, the highest in the nation.
His budget calls for 1,000 job cuts through layoffs and attrition of non-union employees. It reduces support for state universities and colleges by $169 million to less than $2 billion, and keeps unchanged funding to cities and most schools, other than payments for employee pensions and increased aid for building new schools in the state’s poorest districts.
Corzine’s plan would raise almost $1.1 billion by boosting the sales tax, and $248 million by applying the tax to services that were exempt. New Jersey would raise $58 million with new taxes on alcohol, luxury cars, realty transfers greater than $1 million and water usage.
It is my honor and responsibility to stand before you today and offer my best ideas to meet our state’s recurring structural budget crisis. My administration’s work over the past two months has surely deepened my understanding of the challenge of fixing our broken fiscal policies.
I must say, Gov. Codey was on target when in November he jokingly said, his transition report can be summed up simply, “the state is pretty much broke.” Today more than in November, I realize he was pretty much right.
So what are your thoughts on how this new budget will affect the state economy and local housing?