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The HeraM »n<< The Lantern

Wednesday, February 18, 1M1

Proposed State Budget Up 9%

ky'N J.T.A. TKKNT()N - In Ihe lait ,y>ar ot P* eight year ad ministration, .Governor 'Byrne ^a* propoa^da fiacal year J98i «2 state budget . totaling nearly IS 6 billion , for all furKta, an increase of |4&5 million or 9 per cent 'over appropriations for the current fiscal’ year ending June 30 In marked contrast to a year ago when he presented a budget needing 1210 million in new revenues to balance, in this election year the governor has called for no new taxes although he .characterized the budget as .‘too tight' and failing in many areas to meet real needs' Increases in college tuition and bus and

rail fares may be necessary to finance higher cost of those services THE PROPOSED fiscal 19ft2 budget contains an additional 953 million for the current Medicaid liability, but reefntjy enacted legislation permitting transfers from other accounts, into thO Medicaid account during fiscal J9B1 eliminated the need for fhat recommended ap propriation. This action also reduced estimated fiscal 1982 beginning surplus in the general fund from $1% million to $143

million. •

Proposed fiscal 1982 appropriations in the general fund the Stale’*-prin-cipal fuhd — total $4:131 billion, an increase of $164

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million or 4 per cent over the current year. After adjusting for an accounting change shifting Medicaid appropriations ($403 million) from the direct state services category to the state aid category, direct. state services in creases $211 million or nearly 12 per cent, while state aid in the general fund declines $48 million — reflecting a shift in education aid funding from the general fund to the property tax reli^iund , DEfTtysERVICE on state bonds is up more than $6 million while capital outlay declines more than $5

million.

* Proposed fiscal i982 pro'perty tax relief fund spending — funded by the personal income ta$, — totals $1 261 billion, an increase of $181 million or nearly J7 per cent. Transfer Of education aid funding is major reason for the in-

crease.

Entire . cost of senior citizen and disabled regular homestead rebates $63 million) is shifted to the casino revenue fund. Total spending for-fiscal 1982 in the casino funds is $188 million, including $30 -^million for licensing and regulation. Casino revenue fund appropriations are up

$101 million.

OF THE TOTAL coam bined funds budget, $2,120 billion or 38 per cent is for direct state services, $3,242

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billion, an inlrease of $173 million or 4.5 per cent over revised revenue estimate© for the present fiscal year. The state’s largest general fund revenue source — the sales and use tax — is expected to^yield $1,350 billion in fiscal^, an increase of $100 million or 8 per cent over the cur-

rent year.

TAXES ON corporate net income and net worth are projected to rise only 135 million to a total of $815 million, reflecting expected recessionary impact on business profits and $53 million credit against prepayment of the tax increase enacted last year. r Other general fund major taxes — including, motor vehicle fees ($280 million), motor fuels and fuels use taxes ($279 .million), cigarette tax ($l7t million), and inheritance tax ($123 million) — are expected to produfce little significant growth in fiscal 1982, although the Insurance premiums tax is expected to risej$18 million as the result of legislation to change thUschedule of collection anm disbursement of the ta)Tnonies. LOSS OF FEDERAL general revenue sharing funds of $19 million is anticipated in fiscal 1982; in the current year, $57

million was lost.

In the property tax relief fund, the personal income

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billion (58 per cent) is for 1 '! tax is expected to produce state aid, $38 million, less $1,230 billion ln‘the next

than 1 per cent, is for capital outlay and nearly $180million (3 per cent) for

debt service.

Total arfticipated revenue for fiscal 1982 in the general fund is $4

fiscal year, an increase of $145 million, up $22 million or over 13 ^>er cent. The casino revenue tax is estimated to yield $104 million, ufr $22 million from the current year. The 24-member legislative Joint Appropriations Committee h will begin early in March to review the Governor’s recommendations. In an election year, it can be expected that the Committee will not significantly increase total spending, but may reaTraBEe priorities within the bu^et. N.J.T.A. is the nonpartisan N.J. Taxpayers

Assn.

Reagan presidency

Wildlife

Workshops TRENTON-The New Jersey Division of Fish, Game, and Wildlife today announced plans for the 1981 Teachers Wildlife Workshops. The first workshop will be held at the Marine Science Consortium, Seaville May 8,9, and 10 and will focus on the wildlife resources in the marine and wetlands environmemt. The second workshop, to be given at the state School of Conservation in Stokes State Forrest, Branchville, June 5,6, and 7, will emphasize upland and freshwater wildlife. For information and registration forms contact; Wildlife Education Unit, New Jersey Division of Fish, Game, and Wildlife. P.O.Box 327, Hackettstown, N.J. 07840

The stock market* is historically a Republican animal and Reagan represents a true conservative Republican. We do not wish to overstate this premise — that a Reagan presidency is “Euphoria Unlimited." One can argue, that the Reagan economic game plan is more speculative than Carter’s was. <,, The economic impact of .President Reagan will not be felt immediately. We assume that ihtax cut will take effect by mid-year, thus enhancing the secondhalf outlook. But Reagan began his term last month during a period of economic decline. We expect a mini-recession in the first quarter, 'and than a, more definitive improvement in the second half. BY THE SPRING 6f 1981. we should have interest rates down to a level where housing will be revived and the ifhpact of the Social Security tax at the beginning of the year should begin to be assimilated. The big question is whether Reagan modifies his tax plan, which now calls for a 30% cut over three years, as well as a sharp increase in defense spending. The tax-cut proposal is founded on the belief that allowing workers and investors to keep more of what they earn would cause an outpouring of both investment and work effort. GROWTH WOULD result from freeing the supply side, rather than from Keynesian management of demand. By giving individuals bigger tax cuts than business, Reagan is optimistic that the extra after-tax income will lead to a spurt in consumption. The third pillar of the Reagan plan is to balance the budget, making up the shortfall in revenues by reducing government waste. This is much too vague and we would expect some modification of his

plans.

ABOUT THE^ONLY group that can be identified closely with Reaghn is the defense industry. On both an immediate term basis as well as a linger term basis, the defet.'e stocks should benefit under Reagan. It is the type of defense expenditures that will really make the ^distinguishing effect here; Reagan emphasizes combat ships and tactical aircraft as opposed to the Essays Sought

former administration which favored rapid deployment forces, Strategic weapons, and tac : tical missiles REGARDLESS OF the political rhetorlq,. our energy policies over the next couple of years are pretty well In place. Although Reagan has called for th£ elimination of the windfall profits tax, there is little possibility that Congress would disturb this tax as the revenues are need-

ed.

Given the continued strife in the Middle East and the unlikelihood of prolonger peace, energy stocks with a domestic bias remain attractive. IN THE YEARS ahead, re-industrialization, control of our energy destiny, and stronger defense will be the major economic themes. Therefore, the post election strategy would be to buy the more popular trading stocks (energy and technology)* Fron an investment standpoint, it is a bull market and once the necessary technical adjustments are completed! 1 we feel the bull market will reassert itself. ^ > THE REALITY IS the flow of institutional money. Bonds are ho longer satisfactory. Common stock are inexpensive. That is where the cash flow is going and that is why it’s a bull maihet. Vince Fulginiti of Wildwood, is an account executive with Bache.

On Erosion The Cape-Atiantic Soil Conservation District is currently sponsoring an essay contest in conjunction with the N.J. Assiociation of Resource Districts, the State Soil Conservation Committee, and Rutgers University. This year’s subject is “Soil Erosion and Water Pollution In My Community - How Can We Control Them?” Local awards will be presented by the district for grades 4 through 6; 7 and 8; and high school categories. There will be three prizes awarded for each group.

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