Budget Winners and Budget Losers

Every budget has its winners and losers and the is no exception.

According to the governor, the winners are the state’s taxpayers who finally have someone in the Statehouse willing to put the state’s fiscal house in order. The only losers, in his mind, are those who deserve to lose – the unions who represent greedy state and local workers who are making the state unaffordable.

A closer look at the budget, though still cursory, reveals something else. It shows a different list of winners and losers than the one the governor has proclaimed. That’s no accident, of course. The governor is just doing what politicians always do – using a crisis situation to push a favored agenda.

And he’s willing to play “Let’s Make a Deal” with the budget. He is promising to make a payment into the state pension system for the current fiscal year instead of next year (which also pushes fiscal year 2012 spending down), but only if the Democrats who control the state Legislature bit on his ambitious but punitive budgetary reforms.

“If he wants to make a pension payment, he should have made the one he was obligated to make last year,” says Deborah Howlett, president of New Jersey Policy Perspective, the liberal think tank. “He decided not to make it. He’s trying to leverage (the payments) to do some of his policy stuff by making the payment early. But he’s going to make it early anyway because he needs to to say he’s reduced spending.”

Basically, she says, “he is holding hostage” much of what would be considered important by the middle class.

He says he will double property tax rebates, make the pension payment, do a number of things. The cost – his version of pension reform, other spending cuts, expanded charter schools.

Just as significantly, the choices included in this budget put numbers to the governor’s priorities, making it clear who the governor finds important and who he does not.

He proposes cutting public assistance and a state-backed after-school program; he wants to shift the poor on Medicaid into health maintenance organizations; and these are just the obvious ones.

“A lot of social safety net stuff is being cut,” Howlett said. “And not even just a little bit. They are being cut completely.”

At the same time, the governor is proposing significant cuts in the inheritance and estate taxes and he wants to slash business taxes – cuts that have nothing to do with balancing the budget.

And this is the key point: The governor is pitching his budgets – both the proposed 2011-2012 budget and the current fiscal year budget – as being about fiscal responsibility.

But there is nothing responsible about reducing revenues at a time when revenues are sorely needed. Instead of extending the millionaire’s tax (the marginal tax hike on those at the top of the income ladder), Howlett points out, Christie “wants to give millionaires an estate tax cut. He thinks they should be able to save some of that money and pass it along to their kids.”

“In big broad strokes,” Howlett says, “ there are a lot of people who are paying a heavy price. Most are the poor and middle class who do not have a voice with him. He is talking about how magnanimous he is for restoring school aid, but it still is not where it was when he took office. And we are going to provide $2.5 billion in tax cuts phased in over five years -- $199.9 million in this budget.”

Christie’s budget is built on the expectation of growing revenues, on an assumption that the state will experience an economic turnaround. It’s a dubious expectation.

“And yet, he’s already spending the surplus revenues,” Howlett said. “He’s already telling the corporations that whatever revenues we get from a recovery, we’re going to spend them on you.”

This amounts to a shift in who pays the taxes in the state, a shift that goes along with the changes in spending priorities.

“The people in New Jersey are upset about taxes,” Howlett says, “but the taxes they are really upset with are the property taxes. Nothing he is doing will alleviate that. A lot of what he’s doing is making it worse.”