The New Jersey State Senate yesterday passed all five bills that would allow Gov. Jim Florio's $2.8 billion 1990 tax package to expire.
The action, however, did not raise the hackles of bond rating agencies, who said the vote will not have an immediate impact on the state's bond ratings.
The state Assembly failed to get the required quorom on Monday needed for lawmakers to act on the tax repeal. The repeal movement in that chamber will have to wait until Jan. 6, when the Assembly is scheduled to meet again.
The bills would repeal increases in the sales tax, personal income tax, petroleum gross receipts tax, alcoholic beverage excise tax, and cigarette tax that were enacted last year.
Three amendments were added to the bills after the state Senate Finance Committee voted on them last week. The amendments extend from July 30 to Jan. 1, 1993 the effective date of the income tax sunset; commission a study of the need for the taxes over the next six months; and link all the various tax repeals so that lawmakers can only vote yes or no on the entire package.
Hyman Grossman, a managing director with Standard & Poor's Corp., said, "We don't see any impact."
"In the end the governor will have to provide a balanced budget," he noted. "In the final analysis, whether the final plan is soundly established or not will determine the future ratings considerations and that won't be known until late in June," he said.
Last year, Standard & Poor's lowered the state's rating to AA-plus from AAA because "in our opinion the final financial plan adopted fell short of triple-A requirements," Mr. Grossman said.
He noted that "extending the taxes to the middle of the school fiscal year as well as the middle of the fiscal year for many local governments would compound their budget preparation process."
Steven Hochman, vice president at Moody's Investors Service, said, "There would not be a reaction because basically" the New Legislature still "would have ample opportunity to restore the taxes or shape a new budget or some combination of the two."
He noted, however, "That is not to say that there might not be other circumstances that would affect the ratings."
The state's weakening tax revenues and the potential for complications generated by a tax repeal could impact the state's triple-A rating, he said.