Daily Archives: January 4, 2010

Scharfenberger Admits "… a budget shortfall of several million dollars in the coming year."

Not many surprises happened yesterday at Re-Organization day in Middletown other than re-appointed mayor Gerry Scharfenberger admitted during his address that the Township was facing “… a budget shortfall of several million dollars in the coming year.”

This statement is really quite out of character for our mayor because for the past couple of months Committeeman Sean Byrnes and former Committeeman Patrick Short have been warning everyone about this on coming problem,while Scharfenberger and his fellow GOPer’s have accused the Democrats of playing “Chicken Little” .

Last months workshop meeting received a lot of headlines in local papers because Byrnes and Short would not vote for borrowing money from 2010 ‘s budget for an emergency appropriation to pay for medical claims in 2009 without first seeing a plan on how the township planned on closing, in Byrnes’s estimation, a $5 million budget shortfall 2010. Byrnes stated during the workshop meeting that layoffs throughout all departments would be necessary without some type spending plan for the coming new year.

They ultimately voted to approve $800,000 of the emergency appropriation to pay the medical claims and deferred the remainder to discuss at the next meeting with the stipulation that the township needed to come up with some sort of spending plan before than.

At the December 21st Township Committee meeting Byrnes and Short once again refused to borrow money from 2010 to pay for the outstanding claims because nothing was presented during the two week period since the previous meeting to show them that the township was taking seriously the looming budget crisis.
Now upon his re-appointment as mayor he admits that there is a looming crisis and wants to assure everyone that he will do everything in his power to make the best of it by “…a continued freeze on all township salaries, the potential sale of unneeded township assets, increased worker contributions to health benefits, new interlocal agreements and the sale of the township swim club.”
We’ve heard all this before from Scharfenberger and his GOP buddies, the only new proposal here is to sell the swim club and that was proposed 3 years ago by Patrick Short.
Last February Patrick Short and Sean Brynes submitted budget cutting ideas to the Township Administrator and the CFO and many if not all were rejected out of hand.
Last week Sean Byrnes issued a press release to highlight some additional proposals that he believes would save the township money for 2010 and years to come. They are practical and make sense. Maybe the Committee can use these proposals as a starting point when they begin to formulate the 2010 budget and not let partisan politics get in the way of doing what’s right for the residents of Middletown.

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Filed under Asbury Park Press, Budget Battle, budget cuts, Budget Shortfall, Democrat, Gerry Scharfenberger, Middletown, Middletown Republicans, Sean F. Byrnes, tax increase, the Independent

NJPP Monday Minute: 1/4/10

Every year, New Jersey gives away billions of dollars through tax credits, deductions, exemptions and cooperative agreements that – once enacted – seldom get reviewed. No one knows how much money the state forgoes because few people have been interested – until now.

Despite not being found in any appropriation line in the state budget, these “spending initiatives” represent spending. Unlike the spending that takes place in the budget, which must be reauthorized each year, these credits, deductions and exemptions – collectively known as tax expenditures – are part of the tax code. Because this form of spending is largely invisible, it gets little scrutiny.

Every program that receives no scrutiny has the potential to crowd out more important programs. That is because every dollar the state doesn’t collect is a dollar that must be raised by increasing an existing tax rate, taxing something else or providing fewer services.

Like traditional spending, tax expenditures are policy decisions that reflect government’s priorities. They cost state treasuries money in much the same way as direct spending for schools, health care or road construction. The only real difference is that instead of collecting and paying out money, this money isn’t collected at all. One might think this is more efficient than collecting and redistributing revenues. That is the case only if the benefits of these programs are reviewed annually along with programs requiring a direct appropriation.

Some tax expenditures are good and reflect taxpayers’ beliefs. In New Jersey, for instance, we do not collect sales tax on food, clothes or prescription medicine. These policy decisions cost the state hundreds of millions of dollars a year in revenue, however most New Jersey residents would agree with those choices. There would be less agreement about the decision to grant special interest tax credits to a specific business, especially if that business costs the state a lot and there was no proof of its overall benefit to every resident, not just to the few recipients of those credits.

Another costly example of a tax expenditure is the long-standing agreement between New York and New Jersey that taxes residents’ income based on where they work instead of where they live. New York State actually tracks and publishes this information. Based on their reporting, in 2004, that agreement cost New Jersey about $1.5 billion a year, a number that is likely higher now. Under this agreement, most people who live in New Jersey but work in New York pay more to New York than they would to New Jersey. New Jersey has a different agreement with Pennsylvania. As a result of that agreement, New Jersey and Pennsylvania incomes are taxed where a person lives, not where he or she works. Whether that is a benefit or a cost to New Jersey is unknown because we don’t collect and analyze the information.

Although most states track this information and make it public, New Jersey does not. This would change if a bill introduced by Sen. Barbara Buono, chairwoman of the Senate Budget and Appropriations Committee, becomes law. Sen. Buono’s bill would require the governor’s annual budget message to include a tax expenditure report, which would list each tax expenditure and its cost to the state.

In all likelihood, the totals would be significant. Washington State, for example, has reported that its 567 state and local tax expenditures cost nearly $99 billion a year in lost revenue; Oregon reports that its 362 expenditures cost nearly $29 billion; and Illinois’ 214 cost nearly $7 billion.

The idea of reporting this information is nothing new, even in New Jersey. In January 2006, Gov. Corzine’s transition team recommended that the state produce a tax expenditure report. Later that year, the state Division of Taxation developed a basic framework for a report, identifying 121 sales and use tax exemptions and exemptions, 44 gross income tax exclusions and 28 corporate business tax exclusions. Then, in November 2007, Gov. Corzine signed a bill into law requiring the state treasurer to produce an annual report with information on development subsidies. This report has yet to be produced.

Understanding how much the state spends through its tax code is even more critical now, as declining revenues will force New Jersey lawmakers to make more difficult decisions about how to spend taxpayer dollars. A tax expenditure budget is not a panacea. It will not automatically provide all the money the state needs to resolve its precarious fiscal situation. But, it will lead to more information, which can only lead to better choices, more appropriate spending and more accountability.

It is time for New Jersey to join the 41 other states, the District of Columbia and the federal government in recognizing that informed choices, whether they are direct appropriations in the annual budget or revenues foregone through the tax code, are ultimately better choices.

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Filed under Gov. Jon Corzine, Monday Minute, New Jersey Policy Perspective, Taxes

The Washington Post – Editorial: Soft on terror? Not this president

Hat tip to my Facebook friend Jorge Santos-

The Washington Post
Sunday, January 3, 2010

THERE IS, it seems evident, more than enough blame to go around in the botched handling of the botched Christmas bombing. Not for some Republicans. With former vice president Richard B. Cheney in the lead, they have embarked on an ugly course to use the incident to inflict maximum political damage on President Obama. That’s bad enough, but their scurrilous line of attack is even worse. The claim that the incident shows the president’s fecklessness in the war on terror is unfounded — no matter how often it is repeated.

These critics have set up a straw Obama, a weak and naive leader who allegedly takes terrorism lightly, thinks that playing nicely with terrorists will make them stop, and fails to understand the threat that the United States faces from violent extremists. Mr. Cheney said that the incident had made “clear once again that President Obama is trying to pretend we are not at war.” Likewise, Republican Study Committee Chairman Tom Price (R-Ga.) called on Mr. Obama to “recognize that we are at war with a murderous enemy who will not relent because we heed political correctness, acquiesce to international calls for deference or close the detention facility at Guantanamo Bay.” Rep. Peter Hoekstra (R-Mich.), the ranking Republican on the House Intelligence Committee, said that Homeland Security Secretary Janet Napolitano “and the rest of the Obama administration view their role as law enforcement, first responders dealing with the aftermath of an attack. And we believe in a forward-looking approach to stopping these attacks before they happen.”

There are two ways to show how baseless these attacks are: examining Mr. Obama’s words and examining his actions.

Words first. “Evil does exist in the world,” Mr. Obama said in accepting the Nobel Peace Prize. “Negotiations cannot convince al-Qaeda’s leaders to lay down their arms.” In his weekly radio speech Saturday, he disposed of the war-vs.-law-enforcement canard, pointing out that in his inaugural address he made it clear that “0ur nation is at war against a far-reaching network of violence and hatred and that we will do whatever it takes to defeat them and defend our country, even as we uphold the values that have always distinguished America among nations.” “

But actions speak louder, and Mr. Obama’s actions — often at the cost of enraging his party’s liberal base — have also demonstrated tenacity and pragmatism blended with a necessary reassessment of the flawed policies of his predecessors and a recommitment to the rule of law. He wants to close the Guantanamo Bay prison, which is all to the good given its stain on the national character, but he has delayed that goal until acceptable alternatives can be found. He has brought criminal charges against some terrorists, but he has also sent others to be tried by military tribunals. He has invoked the authority of the executive to have lawsuits dismissed because they risk exposing state secrets. In addition to the new troop deployments, he has aggressively used predator drones to strike at terrorists, including outside Afghanistan. Even before the failed attack, his administration has been working aggressively with Yemeni authorities to deal with extremists there.

It is possible to disagree with the administration’s decision to bring criminal charges against the suspect in the failed airplane bombing, Umar Farouk Abdulmutallab, although we think that was the proper course. It is possible to fault, as we have, some of the administration’s public statements in the immediate aftermath of the attack. And as the president has acknowledged, the incident revealed failures in intelligence and in security screening that must be urgently identified and corrected. The country would benefit from a serious and bipartisan effort in Congress to ensure that the lessons of the Christmas attack are learned. A groundless campaign to portray Mr. Obama as soft on terror can only detract from that effort.

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Filed under editorial, Nobel Prize, President Obama, terrorism, Washington Post