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Who Wins, Who Loses After Christie Wields His Line-Item Veto Pen?

Thursday, July 7, 2016   (0 Comments)
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NJspotlight.com 07/07/16

Winners 

Retired public workers – Much of the increased spending authorized by Christie for the 2017 fiscal year will be earmarked for the state’s grossly underfunded public-employee pension system, pushing the pension contribution up to $1.86 billion. That’s a record-setting amount. And though the figure is less than the full payment calculated by actuaries, Christie was able to keep the increased pension payment in the budget even after the state dealt with a $1 billion revenue shortfall in late May. That will make it harder for him to question the affordability of a proposed constitutional amendment calling for similar annual pension-contribution increases that’s likely to go before voters this fall.

Millionaires – There have been five attempts in recent years to increase the state’s income-tax rate on earnings over $1 million, and Christie met each one with an immediate veto. This year, a bill seeking to establish a millionaire’s tax never got off the ground. And it could soon become an even better year for the state’s millionaires. As lawmakers remain deadlocked on the best way to renew state funding for transportation projects, a proposed estate tax cut that would benefit the state’s wealthiest residents still remains very much on the table.

Losers

Current public workers – While they can take some solace in seeing Christie and lawmakers agree to boost the funding for the pension system, the budget as enacted also banks on $250 million in undefined savings from employee healthcare plans that now have to be worked out between union officials and the administration. To add pressure, Christie says he will hold back funding for distressed cities and legislative add-ons until the savings materialize. Also, a proposed sales-tax cut that the Assembly passed last week in a broader plan to replenish the state’s Transportation Trust Fund with a 23-cent gas-tax hike should give public workers more cause for concern. The sales-tax cut could take away so much revenue from the budget in coming years that more drastic healthcare changes may become inevitable.

Homeowners – Property taxes continue to rise, but thanks to language that was again inserted into the budget affecting the Homestead benefit program, the state will continue to calculate tax credits using outdated bills from 2006. The budget language impacts approximately 650,000 homeowners making $75,000 or less. Also taking a hit are many seniors and disabled homeowners who qualify for Senior Freeze, another popular property-tax relief program. Language seeking to restore inflationary adjustments to the program’s income ceiling was removed at the last minute by Christie, along with a $45 million boost in funding. That means the program’s income ceiling will remain at $70,000 instead of rising to $87,007.

Local governments – Whether it’s mayors or school-board chairs, local-government leaders will argue that flat state funding is really a cut, since their own costs continue to go up each year. The new state budget year increases aid to local school districts and municipalities only slightly. Adding to the hit is uncertainty about state aid for local road and bridge projects that will only build as the transportation-funding stalemate continues into July. And thanks to Christie’s call for $250 million in employee-healthcare savings, some aid for distressed cities is being held back until a deal is reached.


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