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Democratic Budget Plan Likely to Raise Christie’s Ire – and Veto Pen

Friday, June 26, 2015   (0 Comments)
Share | 06/23/15

For the second straight year, Democratic legislative leaders are putting forward a budget that spends more on public-employee pensions, backed with increased revenue from proposed tax hikes on high earners and corporations. That puts them back on a direct collision course with Gov. Chris Christie. This year, with Christie seriously considering a run for president in 2016, there’s no reason to believe he’ll change his mind on the tax hikes or the Democrats’ attempt to push state spending to over $35 billion for the fiscal year that begins July 1. Still, the Democratic leaders said there’s a reason they’re repeating the exercise. They insist that it’s important for them to craft and advance a budget they believe better represents the priorities of New Jersey’s residents. “A lot of work, a lot of time was put into it,” said Senate President Stephen Sweeney (D-Gloucester).

A key to the Democrats’ budget is a proposed $3.1 billion payment into the chronically underfunded state pension system, which is more than double the $1.3 billion contribution Christie proposed in his $33.8 billion budget he put forward in February. The Democrats are also seeking to hike funding for higher education and family-planning clinics, and to restore Christie’s cut to a tax-credit program for low-wage earners. “With this plan, we are cutting debt, meeting our obligations, and protecting core values such as healthcare for women, quality education, tax relief for hard-working families, job creation, and tax fairness for everyone,” said Assembly Speaker Vince Prieto (D-Hudson). But the Democrats’ proposal right now includes no funding to prevent a proposed 9 percent New Jersey Transit fare hike that’s looming later this year. Also left out was revenue from a rewriting of corporate-tax policy that liberal groups and public-worker unions have been pushing for to address a loophole that benefits multistate corporations. The introduction of the Democrats’ budget bill comes with only about a week left in the state’s fiscal year. The current legislative schedule calls for budget committees in both the Assembly and Senate to take up the Democrats’ proposed $35.3 billion spending plan today. Final legislative approval could come as early as Thursday.

Under the Democrats’ plan, a new income tax rate on earnings over $1 million would be established for the next four years, upping the current rate of 8.97 percent that kicks in on earnings over $500,000 to 10.75 percent on earnings over $1 million. The corporate tax rate would also be hiked from 9 percent to 10.5 percent for one year. The two changes would generate a little over $1.1 billion, according to the Democrats’ projections. “The current course has led to credit downgrades and increased state debt, and is unacceptable,” said Assembly Budget Chairman Gary Schaer (D-Passaic). The Democrats, meanwhile, are also banking on tax collections to increase during the next fiscal year by more than $400 million above the Department of Treasury’s most recent estimates. And they’ve also proposed a budgeting maneuver that would see a projected $300 million tax windfall generated during the current fiscal year applied to the larger state-pension contribution they’re planning for the next fiscal year. After having criticized Christie in recent years for relying on optimistic revenue projections, the Democrats defended their own higher projections yesterday. “We think a good portion of it will” carry over, said Senate Budget and Appropriations Committee Chair Paul Sarlo (D-Bergen).

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