Bloomberg News

Christie Asks N.J. Lawmakers to Turn Tax Increase Into Cu

July 03, 2012

Christie Asks N.J. Lawmakers to Turn Tax Increase Into Cut

Chris Christie, governor of New Jersey, in New York. Photographer: Scott Eells/Bloomberg

Whether it takes a day, a week or months for New Jersey lawmakers to pass a tax cut, the outcome would be the same: no relief until at least 2013, if then.

Governor Chris Christie, a Republican, conditionally vetoed a measure backed by Democrats to raise the income-tax rate on those earning $1 million or more a year. He sent the bill back and convened a special legislative session yesterday with an appeal to produce a levy rollback.

“A bipartisan tax-cut plan is on all of your desks right now,” Christie said in remarks to lawmakers yesterday. “Let’s show our state we can work together and finish the job before we leave.” Tomorrow is a U.S. holiday, Independence Day.

Democrats who run the Legislature had a deal with Christie, 49, over a tax reduction. While they set aside $183 million for refunds based on property levies, Democratic leaders said they won’t consider implementing the plan until the revenue picture clarifies and questioned the need for a special session. That prompted Christie to say they’re holding a tax cut “hostage.”

The Legislature hasn’t passed proposed tax reductions or credits for fiscal 2013. Assembly Speaker Sheila Oliver of East Orange and Senate President Stephen Sweeney of West Deptford, both Democrats, said they’re in no rush to act on a rollback. Democrats won’t agree to one until they know revenue will meet forecasts, Oliver told reporters after Christie’s remarks.

No Rush

“This is not an issue of emergent concern,” Oliver told reporters in Trenton, the state capital. “If we agree upon revenue projections, if we see that revenue roll in, the Legislature is more than prepared to put forth a piece of legislation to effectuate a tax reduction.”

The governor has touted what he calls a “Jersey Comeback” that will cover tax cuts and higher spending. His proposed fiscal 2013 budget counted on a 7.2 percent revenue gain compared with 2012, second only to a 7.7 percent jump projected by California Governor Jerry Brown, a Democrat, according to an analysis of a National Governors Association report by the New Jersey treasurer’s office.

Treasurer Andrew Sidamon-Eristoff, a Christie appointee, has said that revenue through the June 2013 end of the fiscal year may trail the governor’s target by $700 million, while the Legislature’s chief budget analyst has said the gap may be almost twice that size.

Democrats have said they will wait at least until December, halfway through the fiscal year, to evaluate the revenue picture. They may act to implement a tax rollback at that time.

‘Big Hole’

“We’re giving him the benefit of the doubt here and saying the money is in the budget,” Sweeney said in his statehouse office after Christie’s remarks. “Why would we jump and do something today, then come December, we may have a big hole in our budget.”

Sweeney called the special session unneeded and “political theater” aimed at boosting Christie’s profile among national Republicans ahead of their August convention in Tampa, Florida. While average residential property taxes in New Jersey are the highest in the nation, Sweeney said Christie’s proposed 10 percent income-tax rollback is designed to appeal to voters nationwide. The governor flirted with a presidential bid last year before rejecting a run, saying he wasn’t ready for it.

Christie, who faces re-election in 2013, had wanted to spread his across-the-board cut over three years. Democrats said that plan favored the wealthy and ignored residents’ property- tax burdens. Their proposal would provide credits for 10 percent of residential property levies for those households earning less than $400,000 annually.

Millionaire Tax

Christie and Senate Democrats agreed on a 10 percent property-tax credit. The Assembly doubled its size and added a surcharge on residents making at least $1 million to pay for it. The bill Christie conditionally vetoed provided that funding.

“New Jersey has gotten an image over the past decade of being a place where the first answer to everything is higher taxes,” Assemblyman Declan O’Scanlon, a Republican from Little Silver and his party’s budget officer, said by telephone. A rollback, he said, “sends a message that the people running New Jersey realize tax relief is important.”

Christie is trying to avoid increasing taxes. He said last month he would back Sweeney’s 10 percent credit.

After the Legislature passed the budget and failed to cut levies, the governor said the Democrats were holding “tax relief hostage.” He signed the spending plan June 29 after vetoing $361 million added by Democrats, such as $50 million of credits for the working poor.

Governor’s Appeal

“Let’s open the board, vote for a middle-class tax cut and show that bipartisanship is alive and well in New Jersey,” Christie told lawmakers yesterday. “I have come to the center of the room and agreed to the Senate Democratic tax plan. Will you join me?”

Peter Woolley, who leads the PublicMind poll and teaches politcs at Fairleigh Dickinson University in Madison, New Jersey, said Democrats are partly right in that a tax cut would boost Christie’s national stature. Closer to home, it would also let him keep a campaign pledge for a rollback.

“Both sides have some risk here but ultimately the object for either side is to get what you want or be in a position to blame somebody else,” Woolley said by telephone. “And nobody is going to be asking Steve Sweeney to speak at the national convention.”

Christie’s calls for smaller government and lower taxes have helped to make him a national figure. The governor’s office has used videos of his speeches and town-hall style meetings on Google Inc. (GOOG:US)’s YouTube.com website to spread his message.

“This was a YouTube moment -- that’s all,” Sweeney said.

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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