Chris Christie Proposes State Budget, Democrats Blast The Plan
Yesterday, before a joint session of the State legislature Governor Chris Christie delivered his Fiscal Year 2013 State Budget Address.
It includes a modest increase in state aid to schools and the largest ever payment into the public workers' pension system, but it's two tax-related proposals that are garnering the most attention and Democrats are bashing both of them.
The $32.1 billion spending plan is more than $2 billion above the current budget. It provides $213 million more for schools over last year. The Christie Administration is projecting revenue growth of 7.3% in the coming year. It is with that revenue that the Administration hopes to fund the first phase of the 10% state income tax cut which is expected to cost $183.3 million in the first year. The legislature would need to approve the tax cut.
"The people have spoken, and they want lower taxes," says Christie. "So in this budget, I have included the proposal I outlined for you a few weeks ago in the State of the State address. I propose to reduce personal income tax rates, across-the-board, for every New Jerseyan, by 10%, and I propose to begin the three-year phase-in of the cut with this budget. A 10% tax cut for every working New Jerseyan will help families to keep more of what they earn. It will make us more competitive with other states and attract more new jobs to New Jersey. Every New Jerseyan deserves a tax cut. Lower tax rates will relieve over- burdened middle class families. They will keep job creators here.
The Governor also proposes increasing the earned Income Tax Credit from 20% to 25% to provide help for New Jersey's working poor. Christie explains, "Some hard working, low-income New Jerseyans pay no income tax at all. In this budget I am proposing relief for them, too. In 2010, our disastrous budget situation forced us to trim the Earned Income Tax Credit. With this budget, I propose to increase it, from 20% to 25% over the next two years. With my proposed increase, New Jersey will have one of the most generous state tax programs for the working poor in the nation - with an average annual benefit of 550 dollars."
Christie's tax cut and tax credit plans drew huge applause from those in attendance yesterday, but if he was planning a victory lap, he probably doesn't need to go all the way around the track. The tax reduction proposal requires legislative approval, but Democrats who control both houses are essentially saying it is dead on arrival. They also say Christie is taking credit restoring the Earned Income Tax Credit after he was the one who slashed it in the first place.
Video by Dino Flammia
The Democratic Reaction
Asked his thought son the income tax cut plan, State Senate President Steve Sweeney said, "He's wrong and we're not going to stand back and support an income tax cut that's only going to benefit the wealthy and give crumbs to the middle class."
Assembly Speaker Sheila Oliver says "No matter how the Governor dresses it up, a 10 percent across-the-board income tax cut is still a disproportionately generous gift for the wealthiest among us, one that will have little-to-no impact on the lives of working class New Jerseyans. Even more puzzling is the lack of details on how the Governor intends to pay for his millionaires' gift. The most glaring omission in his speech, however, was the complete and utter absence of a plan to address property taxes."
"The governor's budget plan is just more of the same - tax cuts for the rich at the expense of the middle-class," says Assembly Democratic Leader Lou Greenwald. "Governor Christie just doesn't get it. His zeal for tax breaks for the rich while middle-class families struggle with the highest property taxes in the nation is wrong."
Democrats agree with Christie that the people of New Jersey want lower taxes. They just think he picked the wrong tax to cut. They feel the focus should be squarely on property taxes. They say the average Jersey resident would be lucky to see $100 in savings from the income tax cut plan while millionaire's would receive over $7,000.
As expected, Christie's fellow Republicans are very supportive of his spending plan. Senate GOP Leader Tom Kean says, "Reducing the income tax is an investment in our state just like education, state colleges and universities, property tax relief, and support for the disadvantaged. It is a needed investment in job creation for the still far too many workers seeking employment. The Governor's budget presents us with a choice: continuing to do what has been working for New Jersey's economy and job market, or return to the days when unchecked taxes, spending, and borrowing turned our state into an economic disaster."
Assembly Republican Leader Jon Bramnick says, "Governor Christie outlined a fiscally responsible budget that will advance the New Jersey recovery for taxpayers and businesses. The Governor's budget increases state educational aid to its highest level in history, makes the required pension payment of $1.1 billion, and cuts income taxes by 10 percent. As a result of Governor Christie's leadership, we have a budget that funds core priorities and provides tax relief for every New Jerseyan."
Municipal aid is down slightly, but the Governor proposes increasing property tax relief aid by nearly $50 million. He plans to reduce transitional aid to the state's distressed cities by over $56 million. There will be no changes to homestead rebate programs or eligibility for the Senior Freeze program.
Funding for higher education will increase $107 million over the current year. Funding for the state's hospitals will remain flat at $986 million.
The budget plan includes a payment into the public employees' pension system of $1.1 billion, the largest single payment in New Jersey history. In the current fiscal year the payment was $484 million.
The spending plan calls for $1 million to recruit and select two State Police training classes. There's $89 million to support Christie's $1.6 billion Transportation Capital Plan. $2.5 million would be allocated to establish a mandatory drug court for non-violent offenders all 21 counties. Almost $35 million would be set aside for new community placement for New Jerseyans with disabilities. The State Rental Assistance Program would get $21 million in funding.
The spending plan also includes the continuation of business tax cuts and job growth incentives.
The budget proposal anticipates a $300 million surplus, but State Treasurer Andrew Eristoff says Christie expects to be able to add to the surplus as the year goes on.