Bloomberg News

New Jersey Democrats Likely to Pass Christie Budget Plan

June 20, 2012

Democratic lawmakers in New Jersey will hew closely to Governor Chris Christie’s $32.1 billion spending plan in a counter-proposal that will have the votes to pass, Assembly Budget Committee Chairman Vincent Prieto said.

Budget panels in both houses of the Democratic-led Legislature scheduled hearings on the plan tomorrow. The alternative budget, which has not been introduced yet, will stick with Christie’s revenue and spending levels, while substituting his 10 percent income-tax cut with a property-tax credit later in the year, Prieto said in an interview.

Christie, a 49-year-old Republican who faces re-election in 2013, said on June 8 that he would support Senate President Stephen Sweeney’s plan to give residents a 10 percent credit against their income taxes. The governor and lawmakers must approve a budget by July 1, the first day of the fiscal year.

“We have to stay mindful that he has to sign it, so why do something that jeopardizes a government shutdown?” said Prieto, a Democrat from Secaucus. “He gets to certify the revenue and to say what the numbers are.”

The budget proposed by Christie in February projected a 7.3 percent revenue gain, the biggest of any U.S. governor and the most since before the last recession began in December 2007. His treasurer has since said revenue through June 2013 may be $700 million under targets, while the Legislature’s chief budget analyst has said the gap may be twice as much.

Tax-Cut Hinge

Christie’s budget is “structurally unbalanced” because it is built on “optimistic” revenue assumptions, Standard & Poor’s said in February. The plan increases the use of one-time revenue to $1.6 billion, or 5 percent of the total, from 4 percent in fiscal 2012, S&P said. Christie has promised to wean the state off such temporary budget fixes, which totaled more than $3.5 billion in 2010.

Democrats plan to set aside money for a tax cut, and won’t introduce legislation to disperse the money until they can determine if there is enough revenue to fund it, said Derek Roseman, a spokesman for Sweeney, and Tom Hester, a spokesman for Assembly Speaker Sheila Oliver.

“The numbers are going to be very close,” Assemblyman John Burzichelli, a Democrat from Paulsboro who is on the budget panel, said of revenue. “Can the state afford a tax cut? If his numbers materialize as he says they will, then we can.”

2006 Shutdown

The last time the state government shut down was in 2006, when Democratic Governor Jon Corzine ordered non-essential services, including casinos and parks, closed for about a week after lawmakers balked at his proposal to balance the budget through a sales-tax increase.

Christie, who ousted Corzine in 2009, froze $2.2 billion in spending to close a midyear deficit in 2010, and then cut $10 billion in projected new spending for schools, pensions and towns. This year he sought a 10 percent income-tax cut over 36 months, which he said was needed to spur growth.

Assembly Majority Leader Louis Greenwald, a Democrat from Cherry Hill, said his party will present plans to raise income taxes on those earning more than $1 million. Christie has twice vetoed such increases and said he’ll do so again. Bills to cut or raise taxes must be introduced separately from the budget.

Michael Drewniak, a spokesman for Christie, declined to comment today on budget talks. During a town-hall meeting yesterday in Cedar Grove, Christie called those seeking the so- called millionaire’s tax “Corzine Democrats,” and compared them to vampires that he said won’t die even in the third year of his administration.

2010 Battle

Christie last year cut almost $1 billion in spending items added by Democrats in the week before the budget deadline. That move may have prompted Democrats to stay close to the lines Christie laid out, said Assemblyman Declan O’Scanlon of Red Bank, the ranking Republican on the budget panel.

“Last year that Democratic effort backfired to paint the governor into a corner,” O’Scanlon said. “This is a reaction to that, and it’s also a recognition that the governor’s budget is a good one.”

Prieto declined to further specify changes in the Democrats’ budget, which he said is still being drafted and won’t be released until its introduction tomorrow. Votes in both houses are planned for June 25.

The budget needs 21 votes in the Senate and 41 in the Assembly to pass. Democrats control the Senate, 24-16, and the Assembly, 48-32. Sweeney, during a June 18 interview in Trenton, said that his party has enough votes to pass the budget bill in his house.

Christie’s income-tax cut would have cost about $180 million its its first phase next fiscal year. Sweeney, a Democrat from West Deptford, proposed replacing that reduction with a credit against residents’ income taxes equal to 10 percent of their property-tax bills. New Jersey has the highest real-estate levies in the nation, averaging $7,576 in 2010, according to the state Department of Community Affairs.

To contact the reporter on this story: Terrence Dopp in Trenton at tdopp@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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