New Jersey Governor Chris Christie, a first-term Republican seeking re-election, revived his proposal for a 10 percent tax cut that Democratic lawmakers had blocked when revenue fell short of his expectations.
Homeowners earning $400,000 or less would get an income-tax credit equal to 10 percent of their property taxes, capped at $10,000 and phased in over four years. The governor made his proposal a condition of his increasing a separate tax credit for low and middle-income workers.
Democrats, who control the legislature, said no decision will be made on Christie’s tax cut until they are sure revenue for the fiscal year ending June 30 will meet his goals. So far, collections haven’t been high enough to justify the move, said Senate President Stephen Sweeney. Revenue missed the governor’s forecasts for five straight months before starting a rebound at the end of 2012.
“No one wants to do a tax cut more than I do,” Sweeney, a West Deptford Democrat, told reporters at the Statehouse. “If the revenues work out, we’ll do a tax cut. If they don’t, we won’t.”
Christie, 50, is seeking a second term in November, when all 120 of New Jersey’s legislative seats also are up for grabs. The state is showing signs of recovery and can afford to reduce taxes, he said in a radio interview today on WKXW-FM in Ewing.
New Jersey residents paid an average of $7,759 in property levies in 2011, the highest of any U.S. state. Christie’s tax cut would save the average household $775, according to the governor’s office.
“The big excuse for not doing this before was they weren’t sure if we had the revenue,” Christie said. “Four months in a row we’ve exceeded our projections on revenue, and the economy’s really starting to come back here in New Jersey.”
For this fiscal year from July through March, collections of all major taxes are above projections by about $25 million, or less than 1 percent, according to the treasurer’s office.
Christie made approval of his tax cut a stipulation of him signing a Democratic-sponsored bill that would restore the state’s earned income-tax credit to 25 percent of the federal credit. The governor reduced it to 20 percent in 2010.
Christie said a “circuit-breaker” provision in his proposal would allow the Democrats to stop the tax cut if they don’t believe there is enough revenue to pay for it. They would do this by passing a resolution in both houses that wouldn’t need his signature.
The legislature, Christie wrote in his message to lawmakers, could approve his idea or make “new excuses conclusively proving that, under no circumstances, will the Senate and General Assembly ever agree to return to the people even a single dollar of their income.”
“With this circuit-breaker, there are no more excuses,” said Assemblyman Declan O’Scanlon, a Republican from Little Silver who serves as his party’s budget officer. “I don’t know what other option my friends on the other side of the aisle have but to say they are standing in the way of tax cuts.”
Assembly Republican Leader Jon Bramnick, from Westfield, issued a statement calling for a special session to consider the tax cut. Assembly Speaker Sheila Oliver, a Democrat from East Orange, called the proposal “election-year posturing.”
Sweeney said lawmakers will have a better picture of the state’s finances after May revenue collections are reported. Democrats set aside $183 million in this year’s budget for tax credits and have refused so far to release it.
“Everyone’s hoping things improve in this state,” Sweeney said. “We placed the money in the budget and didn’t implement the tax cut for one reason: We want to make sure the dollars are there. It just can’t be smoke and mirrors, it’s got to be real.”
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