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TRENTON | Gov. Jon S. Corzine acknowledged Wednesday that suspending rebates for most homeowners next year would be painful for residents, but said the state cannot spend money it doesn't have.

"It hurts them and we understand that, but we don't have the resources to be able to fund it," Corzine said Wednesday at a public event in Sayreville, N.J. "If you don't have the resources, you can't spend money you don't have. I know the public understands that."


State Treasurer David Rousseau announced Tuesday the one-year rebate suspension for all non-seniors would be needed to help close an unexpected $1.6 billion shortfall in the fiscal year 2010 budget, caused by plummeting revenues since the introduction of the spending plan in March.

New Jersey residents -- who have been receiving the rebate checks since 1977 -- pay the highest property taxes in the nation at an average of $7,000 per household. That's about twice the national average.

According to the state Treasury Department, eliminating the rebates would cost homeowners $950 on average, while renters would miss out on an average $75 rebate. Cutting the rebates is projected to save the state $943 million.

Corzine emphasized Wednesday that the rebate suspension would be temporary.

"We use the word suspension for a very real reason," Corzine said. "It will be one of the very first things that we do restore because I think property taxes are a challenge for people in this state."

Corzine already proposed scaling back rebates in March for homeowners making more than $75,000 a year, down from last year's $150,000 annual salary threshold.

GOP calls rebate cut a middle-class tax hike

Republicans criticized the move immediately, recalling the state shutdown in 2006 in which the state sales tax was increased by a penny, half of which was supposed to go toward property tax relief. Assemblyman Joseph Malone said the Democrats gave the impression that the relief was "set in stone."

On Wednesday, Republicans ramped up attacks on the proposal.

Lawmakers called the suspension a tax increase on the middle class and claimed the rebates would never come back "under a Corzine regime."


The Republican Governors Association launched a radio ad telling voters to "watch what he does, not what he says." And the Republican State Committee released a Web video showing clips of Corzine promising to increase rebates 40 percent over four years while campaigning in 2005.

'Political hit' for Corzine

Ingrid Reed, of the Rutgers Eagleton Institute of Politics, said while Republicans are taking political shots at the governor, it is difficult to tell how voters will respond to the elimination of most rebates for next year because public opinion varied on the checks.

Some called them a fiscal gimmick, she said, while others said they were needed relief.

Benjamin Dworkin, director of the Rebovich Institute for New Jersey Politics at Rider University, said slashing the rebates for most homeowners next year is a "huge issue" given the dominance of property taxes in the public arena.

"Any time you deny property tax relief, you're going to take a political hit," Dworkin said. "Jon Corzine, by virtue of being governor at this precarious time, has taken a lot of political hits because of the very tough and unenviable decisions he had to make in the budget. So this is just piling on top of everything."

The Legislature is debating the budget. It can amend the plan, but it must be passed by the Legislature and returned to the governor for his signature by June 30. The fiscal year begins July 1.

The Associated Press contributed to this report.

Trish Graber is Trenton correspondent for The Express-Times. She can be reached at 609-292-5154.