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PA/NJ Tax Filing Agreement Restored After Garden State Budget Deal Reached

WEST DEPTFORD, NJ (CBS) -- New Jersey has reinstated an almost four decade accord with Pennsylvania that allows residents who work in one state and live in the other to file their state income taxes only in their home state.

South Jersey Democratic legislative leaders gathered at the Riverwinds complex to celebrate the deal reached with Governor Chris Christie that puts the state pharmacy program into a reverse auction, cutting costs by at least 200 million dollars a year. That addresses a budget hole Christie was ready to fill by rescinding the bi-state agreement.

State Senate President Steve Sweeney

Now that the threat's been pulled back, State Senate President Steve Sweeney is among those breathing a sigh of relief. "A person making less than 100 thousand dollars a year living in New Jersey working in Pennsylvania would be paying a thousand dollars more in income tax on top of the city wage tax," Sweeney told KYW Newsradio.

Higher income Pennsylvania commuters into New Jersey would have faced higher taxes given New Jersey's sliding tax rate.

Governor Christie, in a press release announcing his reversal, offered praise to his staff for being "able to work with elected officials from both sides of the aisle and many labor union representatives to achieve these savings."

Assembly Majority Leader Lou Greenwald said rescinding the bi-state agreement, which was put in place in 1977, would have potentially unraveled budget progress made on a number of fronts in New Jersey.

"We need agreements like this," he said. "We need that type of thoughtful public policy in a bipartisan fashion to help rebuild this state."

Congressman Donald Norcross said he had worked to ease concerns of several major businesses wondering how they'd fare if the accord were cancelled. He said Subaru had halted construction of its new corporate headquarters in Camden because of the uncertainty. Norcross says he's been assured that work has now resumed.

The South Jersey Chamber of Commerce was also credited with helping to keep political pressure on Christie to reverse the cancellation of the accord, which was announced just before Labor Day.

Sweeney was asked if the accord should be put into law, rather than a written agreement that can be changed by either state's Governor with 120 days notice. Sweeney says he'll look into that.

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