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New Jersey Cuts Pension Contribution And Cuts Aid To Schools

March 17, 2010 By Chuck

The newly seated Governor Chris Christie is taking hard steps to curtail costs. His plans won’t be popular to say the least.

New Jersey Governor Chris Christie proposed a $29.3 billion budget that would suspend property-tax rebates, skip the state’s $3 billion pension contribution and fire 1,300 workers next year. […]

The plan would reduce aid to schools by $820 million, towns by $446 million and higher education by $173 million. […]

Christie said he will ask lawmakers to institute an immediate 2.5 percent spending cap on state and local governments. The legislation would be used until a permanent, constitutional amendment can be approved. […]

[…]“All this is doing is pushing the state’s budget problems down to the local property taxpayers,” Assembly Budget Committee chair Louis Greenwald, a Cherry Hill Democrat, said in an interview yesterday. “I get the argument that the wealthiest New Jerseyans have options, but I wish they would get the message that many middle-class taxpayers don’t.” […] (Business Week)

Here in the State of New Jersey we have the highest property tax of any state in the nation. The property tax rebate (aka homestead rebate) was, albeit not much, at least something to offset the record high property taxes in New Jersey. Without the tax rebate to offset property taxes it amounts to a property tax increase for New Jersey home owners.

A reduction in aid to municipalities has a deep trickle down impact. Towns of all sizes, who are already facing their own budget problems will be forced to either raise local taxes, or curtail services even further, thus increasing those who are forced out of a job.

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Filed Under: Market Updates, Taxes, budget Tagged With: , ,

Credit Rating Of The United States At Risk Says Moody’s Ratings

March 14, 2010 By Chuck

Moody’s is going to fire a shot across the bow of the USS Obama administration on Monday. The warning shot will state that even the current budget plan that the Obama administration has laid out may still not be enough to save the the AAA rating of the United States.

[…] unless the country gets public finances into better shape than the Obama administration projects there would be “downward pressure” on its triple A credit rating.

Examining the administration’s outlook for the federal budget deficit, the agency said: “If such a trajectory were to materialize, there would at some point be downward pressure on the triple A rating of the federal government.” […]

[…] Pierre Cailleteau, head of sovereign ratings at Moody’s, said: “The size of debt makes the US vulnerable to an interest rate shock . . . but the level of fiscal ambition is not one that secures for sure the [triple A] rating.”

Moody’s worries that the government will struggle to get political agreement either to raise tax revenues significantly from their current low of 14.8 per cent of national income, or to cut federal spending far from its high of 25.4 per cent of national income.

The report follows concerns recently expressed about the US public finances from the other large rating agencies. Standard & Poor’s warned last week the triple A status of the US was at risk unless the country adopted a credible medium-term plan to rein in fiscal spending. Fitch Ratings issued a critical report on the US in January.[…] (The full article can be found at the FT)

Now all three of the ratings agencies have put the United States on notice. Either cut spending by significant amounts, or raise taxes significantly. Which way do you think the administration will go?

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Filed Under: Debt, Market Updates, Taxes, budget Tagged With: , ,

Tax Refunds – Some States Will Be Forced To Delay Payments

March 13, 2010 By Chuck

The economy is doing so good now that some states can’t afford to pay tax refund checks. Yes, that was intended sarcasm.

Residents eager to get their state tax refunds may have a long wait this year: The recession has tied up cash and caused officials in half a dozen states to consider freezing refunds, in one case for as long as five months.

[…] "It’s an indicator of how bad it is," says Scott Pattison, executive director of the National Association of State Budget Officers. "You know things are bad when you have to do that."

New York, hit with a $9 billion deficit, may delay $500 million in refunds to keep the state from running out of cash, says Gov. David Paterson. […]

Hawaii’s Department of Taxation says some residents may not see state income tax refunds until the end of August, The Honolulu Advertiser reported. It was part of a plan by Gov. Linda Lingle to deal with a revenue drop-off by pushing costs into the next fiscal period, which begins in July. […]

[…]The delays come as some states continue to face deep budget holes, even as economists say the nation as a whole has begun recovery. In a recent report, the budget officers group and the National Governors Association said state fiscal conditions "have continued to worsen," and that state revenues can be expected to lag one to three years behind a national recovery from recession.

This fiscal year, the report said, 36 states have cut nearly $56 billion in spending, and 30 states have cut funding to public and higher education. (USAToday)

State and local budgets are suffering greatly.

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Filed Under: Market Updates, Taxes Tagged With: ,

Taxes Increase – Tax Revenues Decline By Record $87 Billion

March 8, 2010 By Chuck

Taxes go up in 33 states in response to declining tax revenues.

States raise taxes Taxes Increase Tax Revenues Decline By Record $87 Billion The tally for 2009 is in and it is historic. State tax revenues declines by $87 Billion, the steepest decline on record. This decline is attributed to lost jobs, reduced wages, and lower economic activity.

As tax revenues decline some states have responded by eliminating tax exemptions, increasing fees, and broadening tax bases.

Who said that the middle class would not see their taxes increase before the election?

The full report from the Center on Budget and Policy can be read below.

State Tax Changes

More on this topic (What's this?)
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Debunking Bush Tax Cut Myths (naked capitalism, 7/31/10)
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Filed Under: Market Updates, Taxes Tagged With: , ,