Gov. Chris Christie’s administration has warned Wall Street that New Jersey’s unemployment and Medicaid costs are expected to rise while revenues are not as high as expected and therefore there may be mid-year budget cuts. Assembly Majority Leader Louis Greenwald told NJ Today Managing Editor Mike Schneider that he wasn’t surprised by the announcement because Christie’s revenue projections were overly optimistic.
Greenwald said through the end of last fiscal year and the beginning of this fiscal year, revenues continue to collapse. He said it’s been challenging for the state in the current economic climate but that officials need to know the data. “Unfortunately the governor’s reaction is to attack those numbers,” he said. “It kind of comes along the lines of we’re not going to let fact checkers destroy our story, but we need to use those facts so that we have a clear picture of what we have to address and what we have to deal with.”
Greenwald isn’t too optimistic that the state’s budget will remain as it is. “The problem we’re having is we’re losing such traction because the projections were so wildly estimated and really borderline reckless as you saw from the rating agencies, that we now have to gain somewhere between 9.9 and 11 percent growth in revenues in order to make the governor’s projected targets,” he said. “And in this economy with the unemployment rate where it stands — stagnant here in New Jersey — it’s going to be a challenge, almost an insurmountable task.”
While Greenwald said he hopes he’s wrong and that the revenues come in over Christie’s projections, he said officials need to budget and prepare in a very conservative manner. Funds can be added to the budget at a later date if revenues come in higher than expected, Greenwald explained. “We’re on a reckless course right now,” he said.
Christie and Republicans have been pushing for a tax cut in New Jersey while Democrats have said they should wait to see if there’s enough money to pay for it. Greenwald said the legislation he drafted gives officials more time to decide on a possible tax cut, with the bill not having to be implemented until April 2013.
“It allows us the luxury of time to see if the governor’s numbers actually materialize. If they don’t materialize, we have taken the position as the Democratic Party we need to be fiscally responsible. We shouldn’t spend money we don’t have,” Greenwald said. “And the real catastrophe would be if you’re giving people what the governor has proposed as a nominal tax break and not be able to pay for it or to give them a nominal tax break and cut the funding to municipal aid or school aid which would only drive property taxes up higher.”
While Greenwald admitted New Jersey’s unemployment rate moved down from 9.9 percent to 9.8 percent, he considers that stagnant and added that the state is still falling behind others in the country. “We’re not gaining any ground. When you look at the national [unemployment] average plummeted from 8.1 to 7.8 [percent] and we went from 9.9 to 9.8 [percent] we continue to lose ground with that national average,” he said. “We remain one of the four worst employment rates in the country.”
Greenwald criticized two of Christie’s decisions that he said cost the state construction jobs. Christie vetoed the Homebuyer Tax Credit and eliminated funding for the ARC Tunnel between New Jersey and New York.
“Those would’ve created construction jobs that would’ve lowered our unemployment rate, it would’ve had a ripple effect into the economy. But the governor did those things because he didn’t want to face the real problems around our transportation trust fund,” Greenwald said. “He doesn’t want to really tackle the most difficult issue which is how do we restructure a system that over relies on property taxes?”