New Jersey Governor Chris Christie has approved the state budget for 2010 which effectively suspends the popular Homestead Property Tax Rebates. The budget, signed into law on June 29, however, appropriates funding for the Senior and Disabled Citizens’ Freeze and for the homestead property tax credit program.

The budget also includes the following tax measures:

Reduction of state earned income credit program benefit from 25% to 20% of the federal credit beginning in the 2010 tax year.

Reduction of the annual cap on corporate business tax benefit certificate transfer program for certain technology and biotechnology companies and temporarily suspends tax credits for certain film and digital media content production expenses.

Approval of up to $100 million in tax credits for the development of qualified wind energy facilities in wind energy zones. The budget also supplements the Urban Transit Hub Tax Credit Act of 2007 by establishing the offshore wind renewable energy certificate program.

Reduction of the tax levy cap for school districts, counties, municipalities, fire districts, and solid waste collection districts from the currently permitted 4% annual increase to a 2.9% permitted annual increase.

The budget also establishes the tax levy cap as a permanent mechanism for the calculation of the maximum allowable increase in the tax levy for local units and school districts that may occur between budget years.

Democrats expect to be hit hard with the suspension of the Homestead Property Tax Rebate are the state’s older residents and the working poor. However, State Treasurer Andrew Eristoff called the suspension of rebates the “loss of a benefit” and said the earned income tax credit change would mean a smaller refund for the working poor, not an additional tax.

The Office of Legislative Services released its revenue outlook projecting tax collections could be slightly weaker over the next 15 months. Their analysis showed that tax revenues could be off by $82 million for the final three months of this fiscal year, and down about $168 million from what the governor projected in his budget for the upcoming fiscal year.

Republicans, meanwhile, say the new governor is taking the necessary and overdue steps to curb New Jersey’s reckless spending habit.

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