The FY 2010 Budget: The Good, the Bad, and the Ugly
For Immediate Release
The FY 2010 budget is a mixed bag for New Jerseyans, the Better Choices Budget Campaign said today in its new evaluation of the $29 billion FY 2010 budget signed by Governor Corzine. Its analysis took into account how the budget provided for vital government services, whether it raised revenue to meet the state’s needs in a fair and fiscally responsible manner, and the budget’s ability to meet New Jersey’s long-term fiscal needs.
“Even though this budget takes promising steps towards fairly sharing the burden of this recession by enacting many of the revenue proposals endorsed by the Better Choices Campaign, it still contains far too many program cuts and one-shot solutions,” said Eva Bonime, Executive Director of the New Jersey Working Families Alliance and coordinator of the Better Choices Budget Campaign. “That is why we are going to keep up the pressure on legislators and fight for long-term solutions that will New Jersey to meet its needs and invest in its future.”
Below is a summary of the Better Choices Budget Campaign’s findings.
THE GOOD
Raising Critical Revenue
The FY 2010 budget protects several vital services relied on by New Jerseyans by raising more than $1.3 billion in new revenue to help fill a staggering multi-billion dollar gap. These new revenue measures go a long way towards sharing the revenue burden broadly, fairly, and based on the ability to pay. Many of the revenue proposals were endorsed last year by the Better Choices Budget Campaign, including:
* Asking a little more of the state’s wealthiest residents.
The budget increases the rate on residents making between $400,000 and $500,000 from 6.37% to 8%, those making between $500,000 and $1,000,000 from 8.97% to 10.25%, and those making more than $1,000,000 from 8.97% to 10.75%. The measures are projected to raise more than $1 billion.
* Curbing business tax breaks and loopholes, including repealing sunsetting provisions for minimum tax on corporations with gross receipts of $100,000 or more and 4% surcharge on corporate business tax liabilities.
The FY 2010 budget maintains the 4% surcharge on corporate business tax liabilities and preserves the minimum tax on corporations. The surcharge is estimated to bring in $80 million in FY 2010.
* Levying a 5 percent tax on lottery winnings.
The FY 2010 budget levies a new tax on lottery winnings over $10,000. This is estimated to raise $40 million.
* Increasing the alcoholic beverage tax.
The FY 2010 budget increases the tax on all alcoholic beverages except beer by 25%, yielding $22 million in new revenue.
Restoring Funding to Vital Services
The new revenue measures, in combination with a successful tax amnesty program, allowed the legislature to restore funding to proposed cuts outlined in the Governor’s initial budget first unveiled in March. These cuts would have dealt a devastating blow to vulnerable populations and working families, and the Better Choices Budget Campaign applauded the following restorations:
* Keeping Medicaid and HIV prescription drug programs copay-free.
Originally, the budget would have collected copays from 9,000 patients enrolled in the AIDS Drug Distribution Program and all New Jerseyans enrolled in Medicaid. . Health experts argued that the copays would have kept low-income patients from taking part in or fully complying with the program, leading to health risks, drug resistant strains, and increased mortality.
* Restoring $9 million in cuts to FamilyCare.
NJ FamilyCare offers free or low-cost health insurance to uninsured children and low-income parents. Cuts outlined in Governor Corzine’s proposed budget would have cut back enrollment for parents between 150% and 200% of the poverty line, which would have denied coverage to a family of four making on $33,000 per year.
* Maintaining the state’s $10 million Adult Education program.
Funding for Adult Education goes directly to programs that allow high school dropouts a second chance and the opportunity to learn the skills they need to get a good job in an unfavorable economic environment.
* Restoring Homestead Rebates for those making under $75,000.
The budget’s restoration of full property tax rebates to those making under $50,000 and the 75% restoration to those making between $50,000 and $75,000 provides significant relief to lower income homeowners and tenants who struggle under some of the highest property taxes in the country.
THE BAD
The FY 2010 budget makes $4 billion in cuts, and many of these reductions come at the expense of programs that provide aid to lower- and middle-income families and to vital services such as public health and environmental protection. The Better Choices Budget Campaign offered examples of dangerous cuts to critical services:
* New Jersey After 3: $4 million.
NJA3 is a public/private after-school program for children up to age 13. It serves predominantly lower- and middle-income families, keeping children off the streets and allowing parents to work more hours. The cuts are projected to put roughly 4,000 children out of the program and onto the streets.
* Grants from the Department of Community Affairs: 10% across the board.
Grants from the Division on Women fund social service providers and nonprofit programs that offer direct aid, job training, and outreach to help displaced or battered women around the state.
“While this budget takes some important steps towards shared sacrifice, we are appalled by cuts to nonprofits that serve vulnerable populations,” said Daniel Santo Pietro, Executive Director of the Hispanic Directors Association of New Jersey.
* Medicaid reimbursement for nursing homes: $72 million.
The cuts to nursing homes will place a major burden on institutions’ ability to take new Medicaid patients and offer the same quality of care to the patients they currently serve. Over 29,000 nursing home residents rely on Medicaid reimbursements, and 85% of them are over 75 years of age.
“During tough economic times our elected leaders need to protect and prioritize funding for the sickest, oldest, and poorest nursing home residents - It’s just the right thing to do,” said Milly Silva, Executive Vice President 1199 SEIU United Health Care Workers East. Silva added, “Anything less could put the most vulnerable at risk.”
* Department of Environmental Protection: $47 million.
Previous cuts to the DEP have already led the scuttling of a critical science department and Environmental experts warn that further reductions will lead to significant public health risks and a lengthier permit process for small business owners.
“These short-sighted cuts to the Department of Environmental Protection bring the agency right to the brink. The state is already compromising public safety by delegating toxic cleanups to polluters and undermining important scientific research into public health threats,” said David Pringle, Campaign Director of the New Jersey Environmental Federation. “We need to be asking polluters to pay their fair share, not compromising the quality of our air, water, parks, and open spaces.
* Municipal and local aid: $154 million.
Cuts to municipal aid will place further strain on local governments struggling with their own budgets. The result will be increased property taxes for millions of working families around New Jersey.
THE UGLY
The Better Choices Campaign also criticized the FY2010 budget for relying on one-shot solutions to fill the $7 billion gap between the state’s revenue and its projected expenses.
The budget relies on more than $2.2 billion in federal stimulus dollars from the federal American Recovery and Reinvestment Act of 2009. The funds will meet critical needs such as infrastructure maintenance & improvement and higher education for public colleges and universities. While the Better Choices Campaign welcomed the one-time federal aid from the Obama Administration, it noted that the nonpartisan Office of Legislative Services predicts that the FY 2011 budget gap will be as large as or larger than the current budget.
Further, much of the savings in the FY 2010 budget come from more than $900 million in deferred payments to the pensions of public employees and public school teachers that will have to be accounted for in later budgets.
“New Jersey has a long history of relying on quick fixes and deferring its responsibilities instead of making an honest attempt to meet the state’s long term needs. While we appreciate the special circumstances brought on by this recession, many of the funds we have benefited from this year won’t be available next year, and deferred expenses will pile up,” said Mary Forsberg, Interim President of New Jersey Policy Perspective.
BETTER CHOICES FOR THIS BUDGET AND THE NEXT
Offering its own alternative to dangerous cuts and one-shot deals, the Better Choices Budget Campaign continued its call on legislators to enact more than $240 million in additional revenue measures that could restore funding to vital services and meet our long term obligations. Among the Better Choices proposals still on the table are:
* Asking those making more than $300,000 to pay a little more.
In addition to the Governor's proposed new rates of 10.25% on incomes above $500,000 and 10.75% on incomes above $1 million, create a new bracket for people making between $300,000 and $500,000 a year, at a rate of 8.5%.
* Raising the surcharge on the corporate business tax.
Repeal the sunsetting provisions for the 4% surcharge on corporate business tax liabilities, and double the rate to 8%.
* Increasing registration fees for gas-guzzlers that pollute our environment and ruin our roads.
Triple fees on all SUVs weighing over 5,000 lbs, from $84 to $252 for vehicles less than 2 years old and from $71.50 to $214.50 for those more than 2 years old.
“These common sense, fiscally responsible and environmentally sound revenue proposals could have prevented $240 million in budget cuts, and they still can. That is why we are going to continue to fight for them and other revenue measures like them this year and next,” said Bonime.
The Better Choices Budget Campaign, formed last year, represents 44 organizations including the New Jersey Working Families Alliance, New Jersey Policy Perspective, New Jersey Tenants Organization, New Jersey Environmental Federation, and the Hispanic Directors Association of New Jersey, and is calling for increased investment in critical public services and long-term solutions to New Jersey's fiscal troubles.