Bill would have given homebuyers tax credits of up to $15,000, but Christie said N.J. could not afford losing the tax revenue over 3 years
Gov. Chris Christie holds a press conference outside the Atlantic City boardwalk in this file photo.TRENTON — Gov. Chris Christie today vetoed a bill that would give tax credits of up to $15,000 to homebuyers, saying the state could not afford to forego $100 million in tax revenue over the program’s proposed three-year lifespan.
The bill, which passed with overwhelming bipartisan support late in the spring, would have provided three-quarters of the funding to buyers of newly built homes.
Christie has said that while he would support some economic development programs in other times, the state does not have the luxury of paying for them now.
Though the Republican governor did not specifically praise this program in his veto, he said he was “forced to cut many worthwhile programs from the fiscal year 2011 budget. ... I cannot approve legislation, no matter how meritorious, when the state simply cannot afford it.”
Proponents of the bill have said the attempt at stimulus would have helped bring the state out of the recession.
“The homebuyer’s tax credit program would have reinvigorated the building industry and provided a much-needed boost to the state’s slumping economy,” Sen. Paul Sarlo (D-Bergen) said in a statement. “This action the governor took today will only exacerbate our economic problems. It is beyond disappointing.”
But Christie argued in his veto the money would have been used by people already committed to buying homes and would “briefly and artificially inflate home values.”
Assemblyman Louis Greenwald (D-Camden) said the governor has an "alarming misunderstanding of how the tax credit works," saying it would be at least 18 months until new homebuyers began claiming the credit - meaning it would not affect this year's budget.
"If you want to stimulate the economy it's as simple as building a house," he said.
The credit would have stepped in where a federal tax credit left off. The federal tax credit, extended several times, gave up to $8,000 for some buyers.
New Jersey agents said the federal program created a frenzy, especially toward the June 30 closing deadline.
“I think I had six closings in June,” said Mary Petti with Prudential New Jersey Properties in Metuchen. “It was an added incentive for people who were on the fence.”
But Petti said there were mixed feelings about the state tax credit, with some people feeling rebates had to end at some point.
“There's still buyers out there, regardless of whether there's a rebate or not,” she said.
Yet another agent she knows, John Sacktig, of Orange Key Realty, in Freehold Borough, said the veto was a “big disappointment.”
“It would have spurred the market a little bit more,” he said. “But I do have faith in our governor. He must be trying to do something right.”
Jeffrey Otteau, an East Brunswick-based appraiser who studies the state’s housing market, said the market took a big hit when the federal tax credit expired.
“Absent a stimulus to the housing market, home prices will decline further, which will put additional downward pressure home prices,” he said.
Without the stimulus, homes values will dip even further, in the second half of the year, which could push more people into foreclosure, Otteau said.
The bill (A1678) passed 38-0 in the Senate in June, with two senators not voting, and 67-8 in the Assembly in May, with three members not voting and two abstentions.
Susan K. Livio contributed to this report.