Federal squabble threatens N.J. budget

(From left) Gov. Christie, Connecticut Gov. Daniel Malloy, and Maryland Gov. Martin O'Malley at the National Governors Association winter meeting in Washington. The closing session was Monday.
(From left) Gov. Christie, Connecticut Gov. Daniel Malloy, and Maryland Gov. Martin O'Malley at the National Governors Association winter meeting in Washington. The closing session was Monday. (MANUEL BALCE CENETA / Associated Press)
Posted: February 27, 2013

TRENTON - The budget that Gov. Christie will present Tuesday could be thrown into turmoil by the end of the week - to the peril of the state's property holders - if President Obama and Congress fail to strike a deal on looming federal budget cuts.

The cuts scheduled to go into effect Friday would immediately reduce the size of the $60 billion Hurricane Sandy relief package for New Jersey, New York, and Connecticut, and would cut funding for preschool education, special education, transportation, and other programs and services.

"In my calculations, this would set our state back at least several billion dollars, when you take into account everything," said U.S. Rep. Bill Pascrell, a Democrat who was in Moonachie on Monday to discuss how the federal budget cuts could affect cities and towns up and down the New Jersey coast that are struggling to rebuild after the worst natural disaster in state history.

Pascrell said the jolt would be felt immediately in New Jersey, where the first $1.8 billion in Sandy relief money, which is due in April, would be reduced by $100 million; the state could receive $3 billion less overall.

Christie's budget counts on Sandy funding to stimulate the state's still-sluggish economy and help municipalities along the coast whose revenue base was upended by the late October storm.

The Republican governor has told residents of hard-hit towns whose homes survived the storm to expect to pay higher property taxes.

Budget Officer Declan O'Scanlon, who represents some of the Shore towns, said a portion of the Sandy aid was earmarked to cushion the blow.

"Regarding Sandy and property taxes, the way we're going to hopefully resolve that is with federal money," said the Republican from Monmouth County. "That's been done before in other jurisdictions where they've had massive storms like this."

"There are billions of dollars coming from the federal government," he added. "The administration has as a top priority dealing with the gaps, the gaps in insurance coverage, the gaps in people's ability to elevate their houses and what they can afford they're getting from insurance; another key gap is property tax gaps."

With less Sandy money to go around, municipalities reeling from the storm could be squeezed further.

New Jerseyans pay the highest property taxes in the country, averaging $7,870 per household. The Division of Local Government Services estimated last month that up to 25 municipalities lost at least 5 percent of their tax base to Sandy.

Bill Holland, executive director of New Jersey Working Families Alliance, said New Jersey was unprepared financially to deal with an emergency like Sandy because Christie gave $2 billion in tax breaks to corporations and allowed a tax surcharge on millionaires to expire during his first three years in office.

Holland said he expected to hear "more of the same" on Tuesday but would like the governor to address New Jersey's high unemployment rate and increase funding for higher education.

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