Bloomberg News

Christie Locked in Budget Fight With Democrats on Tax Cut

June 26, 2012

New Jersey Governor Chris Christie and legislative Democrats got set for a budget showdown with less than a week before fiscal 2013 begins, as the Republican said their $31.7 billion plan holds “tax relief hostage.”

The Assembly passed the measure 48-31 in a party-line vote yesterday that drew no support from Republicans, following similar action in the Senate. Passage sends the spending plan to Christie, 49, who has objected to conditions put on tax relief for residential property owners.

The Democrats’ plan replaces the governor’s proposed 10 percent income-tax cut with a credit for property levies that would be delayed until midway through the fiscal year, to see if revenue growth meets Christie’s targets. The spending outline he proposed in February projected a 7.3 percent revenue gain for 2013, the most since before the last recession.

“We all want property-tax relief, but we will be responsible and patient in implementing it,” Senator Paul Sarlo, a Wood-Ridge Democrat who is chairman of the Budget Committee, said during floor debate on the measure yesterday in Trenton. New Jersey residents pay an average of $7,759 a year in property levies, the highest amount of any U.S. state.

Christie chided “Corzine Democrats,” a reference to former Governor Jon Corzine, who he defeated in 2009. In the eight years before Christie took office, he said the state raised taxes and fees 115 times, or an increase every 25 days. In a statement released yesterday, he didn’t say whether he plans to veto the budget or some parts of it.

‘Corzine Democrats’

“After two years without raising taxes, the only way to feed the Corzine Democrats’ obsession is to hold tax relief hostage,” Christie said, moments after the measure won final passage. “Tax relief for our hardworking families is long overdue and that is exactly what I will continue fighting for.”

Christie, who faces re-election in 2013, last week called the Democrats’ budget bill “a loud, resounding no to tax relief.” In a June 22 town-hall meeting in Readington, he said that the party’s lawmakers are “going to get one all long, hot summer until they cut your taxes.”

Assemblyman Declan O’Scanlon, a Little Silver Republican who serves as his party’s budget officer, said he anticipates Christie will veto $100 million in “phantom spending cuts” added by Democrats.

Relief Needed

“The folks on the other side of the aisle just have not gotten the message from the people of New Jersey that they need tax relief,” he said yesterday in an interview following the votes. “It’s going to be a good budget once the governor gets done with it.”

The budget unveiled by Christie in February is the largest in five years. His proposed spending increase was the biggest in the nation, according to the National Governor’s Association.

State Treasurer Andrew Sidamon-Eristoff has since said that revenue through June 2013 may be $700 million less than projected by Christie, while the Legislature’s chief budget analyst has said the gap may be twice as much.

The Democrats’ plan spends $62 million less than Christie’s, Sarlo said. It sets aside $183 million for property- tax credits until lawmakers are confident the state has enough revenue to fund the payments, he said.

His colleague on the Budget Committee, Senator Jennifer Beck, a Red Bank Republican, called the lack of a tax cut “a kick in the shins to our citizens” before she voted no.

Revenue Needed

“We’re not rooting for failure,” said Assemblyman Gary Schaer, a Passaic Democrat who is second-in-command of the budget panel. “We want to see that the revenue is coming in before we spend it.”

Bills to cut or raise taxes must be introduced separately from the budget. Assembly Democrats passed a measure that would boost income levies on those earning more than $1 million a year, to help pay for the tax credits. Christie has twice vetoed such increases and has said he’ll do so again.

The governor last year trimmed almost $1 billion in spending items added to the budget by Democrats in the week before the start of fiscal 2012.

Under the state constitution, Christie and lawmakers must put a balanced budget in place by July 1 or the state runs out of money and the government starts to shut down. Christie now has the ability to veto the spending plan outright, remove some provisions through line-item vetoes or to sign it into law.

To contact the reporters on this story: Terrence Dopp in Trenton at tdopp@bloomberg.net; Elise Young in Trenton at eyoung30@bloomberg.net

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


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