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Gov. Chris Christie recently took the budget battle to the airwaves, touting his $29.7 billion spending plan for fiscal year 2012 as a model of fiscal responsibility.
In a radio spot sponsored by the New Jersey Republican State Committee, Christie said the budget "doubled property tax credits for seniors and middle class New Jerseyans" and included "no tax increases for any New Jersey family for the second year in a row."
PolitiFact New Jersey found that the new budget is projected to double the average Homestead property tax credit. The question of tax increases is not as clear-cut, however: the state’s major tax rates have stayed the same, but tax credit programs, including Homestead, were reduced last year.
First, let’s tackle the Homestead credits.
The governor’s office did not respond to multiple requests for comment. A Republican Party spokesman cited the Homestead program to back up the governor’s claim.
According to a budget analysis by the state’s nonpartisan Office of Legislative Services, Christie is right that Homestead credits are set to double under the state budget for fiscal 2012.
The fiscal 2012 budget increased funding for the Homestead program from $268.2 million in fiscal 2011 to $458 million.
According to OLS, the "$189.8 million funding increase is slated to pay for a doubling in (fiscal) 2012 of homestead credits beneficiaries received in (fiscal) 2011."
The analysis, citing estimates from the governor’s office, said the average credit for 938,500 homeowners would increase to $476 in fiscal 2012 from $238 in fiscal 2011, when credits were cut significantly.
So, Christie technically doubled credits in fiscal 2012. However, the average Homestead benefit would still be less than half of the $1,035 average in fiscal 2010, according to OLS estimates.
Also, in fiscal 2012, Christie is maintaining the eligibility requirements for homeowners set by his predecessor -- up to $150,000 in income for senior and disabled homeowners and up to $75,000 in income for all other homeowners.
But the fiscal 2011 reduction in the Homestead credits work against the governor’s argument that there have been no tax increases for two consecutive years.
It is true that the rates for the state’s three major taxes -- gross income, sales and corporation business -- have not increased under Christie.
But it’s also true that the state has reduced funding for some tax credits, which could leave people with less money to offset their tax bills.
Between fiscal 2010 and fiscal 2011, the state reduced funding for the Homestead and senior freeze programs as well as the State Earned Income Tax Credit. Individuals can receive the earned income tax credits even if they don’t owe taxes. Senior freeze provides additional property tax relief for senior citizens and the disabled.
Four experts with different political persuasions and a Rutgers University professor told us that cutting one or all of those payments could be considered tax increases.
Josh Barro, a fellow at the right-leaning Manhattan Institute, said a reduction in the earned income tax credit was not a tax hike, because it’s a welfare payment through the tax code. But reducing the property tax credits could be considered tax increases, since they’re meant to offset property tax burdens, Barro said.
Curtis Dubay, a senior policy analyst at the conservative Heritage Foundation, said a reduction in the earned income tax credit could force a recipient to pay more taxes if his credit still falls short. For example, an individual may owe $1,000 in income taxes and then receive a credit for $800, but still owe $200 in taxes, Dubay said.
But Alan Berube of the centrist-to-liberal Brookings Institution’s Metropolitan Policy Program said in an email that a reduction would affect earned income tax credit recipients with no remaining income tax liability. "For all, it will increase their total tax bill when you consider all state and local taxes together (i.e, not just income taxes)," he wrote.
Andrew Pratt, a spokesman for the state Treasury Department, argued in a series of emails that the earned income tax credit is just a payment to low-income individuals, not a tax break. Pratt pointed out that nearly 75 percent of recipients in 2010 did not owe income taxes.
Individuals don’t have to file income tax returns if they earn less than $10,000 annually for single filers or less than $20,000 for married couples filing jointly.
Pratt added, "The Senior Freeze and Homestead credits are payments from the Treasury. You cannot classify a reduction or a freeze in the payment or eligibility as a tax increase, unless you are doing so to score political points."
Christie said in a radio ad that the fiscal 2012 budget doubles property tax credits and includes no tax increases for the second consecutive year.
The governor’s right about the property tax credits being doubled, even though they’ll remain below the fiscal 2010 average. It’s true that the rates for the state’s three major taxes have remained the same.
But three tax credit programs were reduced in fiscal 2011, and several experts said at least one of those reductions could represent a tax hike.
We rate the statement Half True.
To comment on this ruling, go to NJ.com.
New Jersey Republican State Committee,NJGOP Announces Statewide Radio Campaign: New Jersey Comeback, July 12, 2011
New Jersey Office of Legislative Services,Analysis of the Department of Treasury’s Fiscal 2012 Budget, accessed July 15, 2011
Gov. Chris Christie,Governor Christie Keeps Commitment to New Jerseyans with Balanced Budget, Increased Education Spending and Job Creating Tax Cuts, June 30, 2011
Gov. Chris Christie,Video and Transcript: Governor Christie Approves a Constitutionally Balanced Budget for FY2012, June 30, 2011
New Jersey Department of Treasury,Homestead Benefit Program,accessed July 15, 2011
New Jersey Department of Treasury,The Governor’s FY 2012 Budget Budget Summary, Feb. 22, 2011
New Jersey Legislature,Fiscal 2012 Budget
New Jersey Department of Treasury,Fiscal 2011 Budget
New Jersey Office of Legislative Services,Analysis of the Department of Treasury’s Fiscal 2011 Budget, accessed July 18, 2011
Interviews with Curtis Dubay,Heritage Foundation, July 14 and 18, 2011
Interviews with Erica Williams,Center on Budget and Policy Priorities, July 14 and 18, 2011
Email interviews with Alan Berube,Brookings Institution’s Metropolitan Policy Program, July 14 and 18, 2011
Phone and email Interviews with Josh Barro,Manhattan Institute for Policy Research, July 18, 2011
Email interviews with Andrew Pratt,New Jersey Department of the Treasury, July 15, 18 and 20-21, 2011
Email interviews with Leonard Goodman,Rutgers University Business School, July 15 and 19, 2011
Email interview with Rick Gorka, spokesman for New Jersey Republican State Committee, July 13, 2011
Fiscal 2011 Citizens’ Guide to the Budget, accessed July 18, 2011
New Jersey Office of Legislative Services,Fiscal Estimate for Assembly Bill A-4204, July 11, 2011
Gov. Chris Christie’s veto of Assembly Bill A-4204, June 30, 2011
New Jersey Division of Taxation,2009 Annual Report, accessed July 2011
New Jersey Division of Taxation,2010 Annual Report, accessed July 2011
New Jersey Division of Taxation,Summary of 2010 Tax Legislation, accessed July 2011
New Jersey Division of Taxation,Summary of 2011 Tax Legislation, accessed July 2011
New Jersey Department of the Treasury, Gross Income Tax Overview, accessed July 2011
New Jersey Office of Legislative Services, Analysis of the Department of Treasury’s Fiscal 2010 Budget, accessed July 20, 2011
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