Details on Governor's Fiscal 2010 Budget Proposal
Earlier this afternoon, Governor Jon S. Corzine presented his fiscal 2010 state budget proposal to members of the legislature. The $29.8 billion proposed spending plan contains spending reductions, tax increases, and relies on federal assistance to make up for the projected $7 billion shortfall for the new fiscal year that begins July 1. The Governor was able to present a balanced budget proposal by suggesting $4 billion in spending cuts, utilizing $2 billion from the federal stimulus funds and proposing $1 billion in tax increases. Governor Corzine said his plan contains $1 billion less in spending than the fiscal 2006 budget. The average annual growth rate of the four budgets presented by Governor Corzine is about 1.6 percent.
The proposals most important to the employer community include:
- Imposing a one year 3/4 of a percent rate increase on the gross income tax for those earning more than $500,000 per year. This will increase revenue by $380 million.
- Extending the 4 percent surtax that was imposed on businesses in 2006 as part of their overall corporate business tax (CBT) liability. This is expected to raise $80 million. This surtax was due to expire at the end of the fiscal 2009 year. The Administration has committed to a one year only extension of the CBT surcharge.
- Providing $270 million to the Unemployment Insurance Trust Fund, which needs approximately $500 million to remain solvent. The deficit in the fund is expected to trigger a payroll tax increase of between $70 to $85 per employee. The Governor has also committed to forwarding legislation that would require a payroll tax decrease when the fund replenishes and the economy improves, which was a recommendation of the New Jersey Chamber of Commerce.
- Funding charity care at the same level as last year ($640 million) but slightly decreasing funding for the Health Care Stabilization Fund, the Hospital Relief Offset, and Graduate Medical Education.
Other highlights include:
- Eliminating property tax rebates, except for seniors, disabled residents and those making less than $75,000 per year. This will save $400 million. To help pay for the rebates, the Governor proposed eliminating the property tax deduction next year on state income taxes for everyone but seniors.
- Imposing additional taxes on liquor (25%), wine (25%), and cigarettes (12.5 cent increase) to raise $48 million.
- Freezing state worker and college employee wages and requiring them to take unpaid furlough days for savings of nearly $420 million.
- Decreasing aid to municipalities by 2 percent. The proposal still includes incentive dollars to encourage more government consolidation and shared services.
- Increasing direct aid to school districts by $300 million to $8.8 billion. This increase includes $52 million more for existing preschool programs and $25 million in new funding for the newly-created Preschool Incentive Aid program. School aid for all districts in the state will remain the same as last year or will increase.
- Increased funding for the Family Care/Kid Care programs ($193 million).
*Information provided by the NJ State Chamber of Commerce
