Bloomberg News

N.J. Senate Panel Clears $31.7 Billion Plan Assembly May Derail

June 22, 2012

New Jersey’s Senate Budget Committee advanced a $31.7 billion spending plan that includes almost $1.9 billion in one-time revenue measures proposed by Governor Chris Christie. Lawmakers in the Assembly threatened to derail the accord, and Christie signaled he may resist as well.

The Democratic-dominated Senate panel approved the bill 8-5 yesterday along party lines; the full chamber is to consider it June 25. In the lower house, Assemblyman John McKeon said he and eight other lawmakers signed a letter withholding support unless Assembly Speaker Sheila Oliver, a Democrat from East Orange, agrees to delay a plan to merge state universities.

The budget proposed by the Republican governor 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. Christie’s 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.

“The governor is the only one who can set revenue numbers,” Budget Chairman Paul Sarlo, a Democrat from Wood- Ridge, said today. “They are quite optimistic, but at the end of the day, this governor has made it quite clear those are his numbers.”

The bill sticks with Christie’s revenue and spending levels, while replacing his 10 percent income-tax cut with a property-tax credit later in the year, subject to revenue growth, Assembly Budget Committee Chairman Vincent Prieto said yesterday.

Christie’s Response

Christie blasted the Democratic measure as “just more of the same when it comes to their addiction to raising taxes and holding tax relief hostage,” in a statement issued by his office. He called the budget bill “a loud, resounding no to tax relief for hardworking New Jerseyans.”

McKeon, a Democrat from West Orange, said he and others won’t back the budget unless Oliver delays voting on Christie’s proposal to merge Rutgers University’s Camden campus with Rowan University in Glassboro and fold the state-run medical school into Rutgers. The plan should be put off until lawmakers fully vet it, rather than meeting Christie’s July 1 deadline, he said.

Assemblyman Reed Gusciora, a Democrat from Trenton, also said he wants the vote delayed. Democrats control the Assembly 48-32, and the defection of 10 members may leave them short of the needed 41 votes.

“This is the most important thing we’ll do in the Legislature, and it’s going to last a long time after we’re done serving here,” McKeon said in a telephone interview. “To do anything on a fast track as we currently are on is just irresponsible.”

Tax Cuts

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 balanced budget by July 1.

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.

In May, he said the state would also seek to close the revenue gap for the new budget in part by canceling $260 million in funding for road work and saving $20 million by limiting raises.

Democrats plan to set aside $183 million for property-tax credits, and won’t introduce legislation to disburse the money until they can determine whether there is enough revenue to fund it, Sarlo said.

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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