New Jersey Governor Vetoes $15,000 State Tax Credit for Homebuyers

Bergen Record
Kathleen Lynn
July 28, 2010

A $15,000 state tax credit for home buyers was vetoed Friday by Governor Christie, who cited its $100 million price tag and the state's budget problems.

"This legislation will only briefly and artificially inflate home sales and consequently does not merit a $100 million revenue loss to the general fund," Christie wrote in a veto message. New Jersey, he said, "must learn to live within its means."

The bill had the support of builders and real estate agents, who had hoped a tax credit would boost sales. The bill's sponsors criticized the veto.

"We are now headed toward sharp cuts in home prices that will hurt our larger economy. Carpenters, bricklayers, pipefitters, builders and lenders will continue to struggle to find jobs," Assembly Budget Chairman Lou Greenwald, a Camden Democrat, said in a statement.

Greenwald argued that the cost of the credit would have been offset by tax revenues generated by the sales of appliances and furniture, as well as homes. But Christie disputed that, saying that the credits would be used by buyers who would have bought homes even without a tax break.

A federal tax credit of $8,000 for first-time buyers and $6,500 for repeat buyers expired April 30, and home sales have fallen since then.

The construction industry has been slammed by rising foreclosures, high unemployment and tighter credit for both builders and home buyers. Builders put up 12,421 new housing units in New Jersey last year, the lowest number since World War II, and this year's pace is no busier. As a result, construction employment in New Jersey declined by 11,800 jobs, or 8.6 percent, from June 2009 to June 2010.

The home buyer tax credit would have cost $100 million over three years. Home buyers could get tax credits worth up to 5 percent of the home purchase price, or $15,000, whichever was less.

Under the bill, $75 million would have gone to the buyers of newly constructed homes and $25 million to buyers of existing homes.