Governor Christie Proposes Budget and Reform Package

On February 22, Governor Christie introduced his proposed budget for the 2011-’12 Fiscal Year. The governor’s “Budget in Brief” can be downloaded at this link or viewed below, and a text of the budget address is available here.

Budget highlights,

• The proposed budget would spend $29.4 billion, and assumes tax collections would grow by 4.3% because of the slowly improving economy.
• Contribute more than $500 million to the state’s pension program, which is one-seventh of what actuaries urge this fiscal year. The contribution would be made early if the legislature passes a pension reform plan by mid-March
• Double property tax rebates for senior earning less than $150,000 annually and non-seniors earning $75,000 annually, assuming the legislature adopts proposed health benefit reforms for public employees
• Move Medicaid beneficiaries into a managed care system
• Increase aid to hospitals by $20 million more than FY’10 levels
• Increase school aid to all districts by a total of $250 million more than FY ’10 levels

The governor also proposed almost $200 million in tax credits and cuts. Specifically, the introduced budget would (FY’12 Budget impact in parentheses),

• Allow small businesses use losses to offset profits in other lines of business or carry the losses forward into future years. ($23 million)
• Change the tax formula to benefit companies with large portions of their employees and assets in New Jersey ($24 million)
• Reduce the minimum tax paid by S-Corps by 25% ($13 million)
• Double research and development tax credit so that it can be used to offset up to 100% of tax owed ($33 million)
• Exempt “non-exempt” agricultural cooperatives to preserve jobs in New Jersey ($0.15 million)
• Exempt installation and support of electronically delivered business software (such as accounting) from the state sales tax ($2.5 million)
• Raise the exemption on the estate tax from $675,000 to $1 million ($11.5 million)
• Phase out the Transitional Energy Facilities Assessment, which was created as a temporary tax resulting from energy deregulation ($62 million)
• Restore cuts to the Technology Business Tax Certificate Transfer Program ($30 million)

The legislature and governor must approve of a budget by June 30 to avoid a government shutdown. The state is constitutionally forbidden from operating at a deficit.