From the APP:
By calling for a 10 percent income tax cut, Gov. Chris Christie must believe boom times are coming to state finances.
Because with the scheduled increases for pension payments and transportation funding, it will take tax revenue jumps of 4 percent or 5 percent a year — or smaller increases combined with further state budget cuts — to pay for the proposed tax cut that would eventually reach some $1.2 billion or more.
It was hard for most analysts and experts to see that scenario on Wednesday as the state reported that tax collections for the current budget were $325.7 million, or 3.2 percent, under the administration’s own expectations.
Meanwhile, New Jersey is required by law, under reforms Christie enacted, to pay $484 million toward its pension system by June 30, and then dramatically increase that contribution to $1 billion in the next fiscal year and $5 billion by fiscal year 2016.
“The governor set out a laudable goal of reducing the tax burden, but I would caution that we do it in a prudent way,” said Raphael J. Caprio, a professor of public administration at Rutgers University who was part of a group that issued a dire report on state finances last year.
“As we phase in tax cuts, we will be phasing in pension liabilities and other obligations. We need to careful of undermining one at the expense of the other,” Caprio said.
In addition to pension costs, the state plans to spend $8 billion, through 2016, for the Transportation Trust Fund, which pays for large-scale bridge and road repairs, new trains and rail, and other major projects.
Private estimates Wednesday pegged the Christie tax cut as a $150 million cost to the upcoming budget, then grow to $350 million in fiscal 2014 and $950 million in fiscal 2015 before being fully implemented at $1.2 billion a year later.