Gov. Jon S. Corzine is proposing a $29.8 billion state budget for the upcoming fiscal year that includes tax hikes of more than $1 billion, including the suspension of most homeowners’ ability to deduct property taxes from their income taxes.

Corzine said the deep recession requires difficult choices, including ending property tax rebates for households with incomes over $75,000 and more than a half-dozen increases in taxes. He said the budget’s $7 billion structural deficit is addressed mostly through $4 billion in spending cuts and $2.2 billion in federal stimulus aid.

“Make no mistake: Because of where the world is right now, we must move in directions we might not otherwise choose,” Corzine said.

The tax changes include raising the tax rate on incomes over $500,000, taxing lottery winnings over $10,000, extending a 4 percent surcharge on corporate taxes, increasing cigarette taxes 12.5 cents a pack and boosting taxes on liquor and wine by 25 percent.

Most surprising was Corzine’s proposal to suspend, except for seniors, taxpayers’ ability next year to deduct their property taxes from their income taxes. The one-year move would cost taxpayers an estimated $400 million, the administration says. 

Businesses will face an increase in payroll taxes:

Payroll taxes would be increased on businesses, despite deposits by the state and federal governments into the depleted unemployment fund. New Jersey will put in $150 million, not the $270 million announced last month. Corzine said it would take a deposit of $500 million or more to avoid a payroll tax increase but that the money being put in will help limit the increase.

State workers will have to contend with one of two scenarios:  

Corzine said he wants to reduce personnel costs by $400 million by freezing state workers’ wages and furloughs throughout fiscal 2010. The alternative, he said, would be to lay off as many as 7,000 workers. College employees’ salaries would also be frozen.

A number of other tax hikes on various goods were also mentioned. In regards to the homeowner’s rebate cuts NorthJersey.com’s article posted this analysis:

Although many budget details had leaked in advance, the lost tax write-off caught many off guard. Corzine would remove the property tax deduction on income taxes for all but senior citizens, and eliminate property tax rebates for non-senior households making more than $75,000 a year. Non-senior households earning $50,000 to $75,000 would see their rebate check from last year slashed by a third. Last year’s program offered staggered rebates for households making up to $150,000.

That could translate into a double whammy for non-senior homeowners earning $75,000 to $150,000. They lose their rebate and hundreds of dollars from the deduction.

A homeowner earning $95,000, for example, would not only lose a $1,000-plus rebate. Scrapping the property tax deduction would take away another $350 or so, according to state figures.

“The loss of the deduction would make homeownership even harder for New Jersey residents who are struggling to make ends meet during this recession,” said Senate Minority Leader Tom Kean Jr., R-Union.

The revenue raised by eliminating the property tax deduction would help pay for the preserved rebates, Corzine said, adding that he wants to restore rebates to higher income families “as soon as the recovery of state revenues allows.”

If it passes would the unintended consequences be actually forcing stuggling homeowners into selling their homes (increasing inventory even more) or foreclosure which would then result in even less revenue generated for the state?  These changes would also impact future home buyers ability to afford to purchase a home and as a result home sellers would be forced to reduce home prices further to make up for the additional tax expense for the state. 

What are your thoughts on Corzine’s budget proposal? 

Notes on Statistics

• All statistics are from TREND’s monthly Residential Activity Reports. Due to the fluid nature of MLS data, insignificant statistical variations may occur with regard to sales activity between the various TREND reports.
• Mobile homes and condominiums are excluded from these statistics.
• This report includes information on listings and transactions facilitated through TREND and does not reflect the total number of listings and transactions of a given market area.
•  All monetary statistics are rounded to the nearest $10.
• Percent Change is the change in value as compared to the same month of the previous year. Indicated by +/-0.0%.

Burlington County - Single Family - Total Inventory
The number of active single-family listings on the market on the last day of the specified month.

YOY January Active Listings Comparison:

• 2008: 3,474
• 2009:  3,321  (-4.4%)

Burlington County – Single Family – Inventory Accumulation
The number of months it would take to exhaust the current supply of single-family listings at the current absorption rate.

YOY January Inventory Accumulation Comparison:

• 2008: 9.4 months
• 2009: 11.5 months (22.3%)

Burlington County – Single Family – Pending
The number of single-family listings with Pending dates during the specified month. Settlement could be scheduled that month or in the future.

YOY January Pending Contracts Comparison:

• 2008: 289
• 2009: 196  (-32.2%)

Burlington County – Single Family – Settled Units
The number of single-family listings with Settled dates during the specified month.

YOY January Settled Units:

• 2008: 233
• 2009: 162 (-30.5%)

Burlington County – Single Family – Median Settled Price
The median price that single-family listings settled for during the specified month. Determined by arranging all Settled Listings in numerical order by price and then selecting the middle value.

YOY January Median Settled Price:

• 2008: $234,000
• 2009: $225,000 (-3.8%)

Burlington County – Single-Family – Average Settled Price
The average price that single-family listings settled for during the specified month. Determined by dividing the Total Settled Volume by the number of Settled Listings.

YOY January Average Settled Price:

• 2008: $275,000
• 2009: $257,000 (-6.5%)

Burlington County – Single Family – Average Settled Price / Original Listing Price
The average percentage of the Original Price that single-family listings settled for during the specified month. This number is determined by dividing the Settled Price by the Original Price for every listing, summing them and then dividing by the number of settled listings. TREND excludes listings if the Settled Price is greater than 150 percent or less than 50 percent of the Original Price. This ensures the percentage is more representative of listings in the market area.

YOY January Average Percentage of Original List Price on Settled Units

• 2008: 91.3%
• 2009: 88.7% (-2.8%)

Southern NJ Builders Honored: Two South Jersey based homebuilders were honored by new buyers for their commitment to quality products and exceptional customer service. Bruce Paparone, Inc. of Stratford and D’Anastasio Corporation of Pennsauken garnered the Commitment to Excellence awards from the Builders League of South Jersey at the association’s annual Major Achievements in Marketing Excellence Awards gala, recently.

The Commitment to Excellence Awards was established to recognize builder members of the Builders League who demonstrate outstanding customer service and quality as perceived by home buyers. The annual awards are based on the results of a survey mailed to new home buyers. The Builders League which is comprised of firms from Burlington County, Camden County, Gloucester County, Salem, Cumberland, Cape May and Atlantic counties, is an affiliate of the New Jersey Builders Association and the National Association of Home Builders. Source

NJ Subprime Forclosure Rates:  The Federal Reserve Bank of New York issued a report Friday stating that the foreclosure rate on subprime adjustable rate loans nationwide was 7 percent, compared with New Jersey’s 9 percent. Adjustable rate subprime loans are among the types of loans most likely to go bad because borrowers often have had trouble with debt in the past and because their monthly payments will rise over time. And in a real estate market where home prices are falling, it is often impossible for financially distressed borrowers to refinance or to sell at a price that would pay off the balance of the mortgage. Nine percent of 63,000 loans represents about 5,670 homes in foreclosure.  Source

NJ Income vs Housing Costs: New Jersey’s 2006 median household income ($64,470) remained 33 percent higher than that of the nation ($48,451). While NJ now ranks second in median household income among the 50 states and District of Columbia, NJ unfortunately maintained it’s No. 1 ranking in housing costs. The state’s median monthly housing costs (for owner-occupied housing units with a mortgage) were 52 percent higher than those of the nation ($2,130 versus $1,402).  Source

March 2009 Update:  Corzine’s Budget Proposal Cuts Rebates

The deadline for filing your New Jersey Homestead Rebate, previously known as the Fair Rebate Program, has been extended to October 31, 2007.  Home owners and tenants that are eligible may file to receive their homestead rebate.

 The press release announcing the extension was made on July 30, 2007 along with the announcement of the the first batch of checks to be mailed to 1.2 million households in New Jersey.  For those seeking additional information you can read the homestead rebate Q&A which provides eligibility information.  The New Jersey Department of Taxation has also included additional information on their homestead rebate online filing page. 

The website  http://www.njhometax.com includes an indepth explanation of the Realty Transfer Fee, it’s purpose and history, along with a petition so you can voice your concerns. In addition, you can also read the economic analysis report which shows the possibility of not only increased costs to home sellers and home buyers but a decrease in homes sales in New Jersey as a result.