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Acting Governor Codey Introduces 2006 State Budget

Mar 03, 2005

Acting-Governor and Senate President Richard J. Codey introduced a $27.4 billion State budget for fiscal year 2006 this past Monday.The proposed budget is 2.2% lower than the FY2005 budget.The budgets of every Cabinet Officer and the Governor’s Office have been reduced by 10%. As introduced, the budget has no major impact on businesses or auto retailers specifically, although many proposed changes under consideration by the Legislature may raise concerns.Acting Governor Codey’s plan does not boost sales or income tax rates, but does strive to raise additional revenue by various means, including: ·$500 million is expected to be realized as the State examines its assets and determines any holdings that can be sold. ·$325 million is expected to come from extending the State’s 6% sales tax to currently untaxed services, including limousines, charter planes, massage parlors, tanning salons and other areas. ·$85 million would come from ending the property tax deduction for those taxpayers who earn more than $200,000. ·$40 million will be realized by enacting legislation that will simplify the sales tax structure.If enacted, the streamlined sales tax structure will benefit both the State and the business community. ·$9 million would be raised by requiring Medicaid recipients to make co-payments. NJ CAR will be reviewing the budget in detail, to see if there are any specific areas of concern for auto retailers.The Legislature will begin reviewing the acting Governor’s proposed budget later this month, and it is expected that additional pressure to raise spending will lead to serious debate about new or increased fees or taxes.A budget must be adopted by the Legislature and signed by the Governor by July 1, 2005.