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The Record: The state budget

Wednesday, July 1, 2015   (0 Comments)
Share | 06/29/15

THE STATE’S new budget became official last week in the way most observers expected — with Governor Christie quickly vetoing taxes Democrats had proposed on millionaires and businesses. Democrats, who control the Legislature, said new revenue was needed to help the state pay more into its beleaguered public pension system, but the governor said legislators wanted to overspend. His vetoes on Friday reduced the budget Democrats approved earlier in the week to $33.8 billion, a $1.5 billion reduction. The lack of suspense in finalizing the fiscal 2016 budget, which begins Wednesday, was not surprising. Democratic leaders and the governor knew in advance how the process would unfold. Amid this political gamesmanship, however, there was one surprising and welcome development. The governor’s conditional veto of the millionaire’s tax included a proposal to increase the Earned Income Tax Credit, which benefits low-income workers.

Still, the overall budget avoids some major issues. Notwithstanding the politics swirling around it, the fact remains the state’s contribution to the pension system next fiscal year will be much less than the required $3.1 billion. That fact is not changed by Christie taking credit for contributing more into the pension system ($4.4 billion) than any previous governor. The governor wants unions to be open to reducing benefits. A main problem with that approach is that the governor has not honored the deal he made with Democrats in signing a pension reform bill early in his first term. Successful negotiations are built on trust, and on this issue, unions do not trust the governor. The state also has not addressed the Transportation Trust Fund, which is projected to be out of money by next June. Christie said Friday that the fund was distinct from the budget because it is funded by the gas tax, not budget revenues. That technical distinction ignores the reality that more revenue is needed to deal with a deteriorating infrastructure.

While the state’s gas tax is among the lowest in the nation, the governor opposes increasing it. Perhaps because of the political games that helped produce it, the budget gives talking points to both parties. Democrats can tell public unions that they tried to increase pension payments. And Christie, who is expected to formally launch his campaign for the Republican presidential nomination on Tuesday, can talk about stopping Democrats from raising taxes. That can be good for the politicians, but for most residents, this is a budget that fails to address some pressing state problems that cannot be ignored indefinitely.

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