Lt. Gov. Kim Guadagno said Thursday that Republicans are ready to fight for a property tax cut that Democrats insist the state still cannot afford.

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In what could be a preview to a 2017 governor's race, Guadagno and Senate President Stephen Sweeney sparred at the League of Municipalities convention in Atlantic City.

Guadagno in her keynote speech said "the next thing you are going to see us fight about" is a tax cut. "What a great conversation to have."

She was standing in for Gov. Chris Christie, a possible 2016 presidential candidate who is in Arizona, where he will become chairman of the Republican Governors Association.

Guadagno echoed the governor's proposal from a year ago for a phased-in 10 percent tax cut. Democrats in the Legislature killed the plan.

On Thursday, Sweeney said talk of a tax cut is still premature. He repeated last year's argument that New Jersey's revenue forecast is not strong enough to support a cut.

"We can afford it if we keep taking away from everyone else," Sweeney said. "It's a great sound bite."

Christie and Sweeney cut a deal to reduce taxes by 10 percent over four years, which property taxpayers would realize as credits on their tax bills, but other Democrats balked and the agreement unraveled.

Democrats based their argument then on revenue estimates from the Office of Legislative Services, the nonpartisan research arm of the Legislature.

For the fiscal year that ended June 30, the state's surplus was smaller than anticipated.

Republicans revived the tax cut proposal after the Nov. 5 election, in which voters handed Christie a second term and returned Democrats to majorities in both houses of the Legislature.

At a forum on Wednesday in Trenton, one of Christie's chief economic advisers reported that the state can afford the cut. New Jersey Council of Economic Advisers chairman Robert Grady reported at a state government-organized economic growth summit that revenue was up about 7 percent last year and is expected to rise about 5 percent this year.

"The economy is stabilized enough," Grady said. "It will assist in both job creation, job retention and business attraction."

Sweeney said the state should focus on other fiscal priorities, such as restoring property tax rebates, which have been eliminated for all but impoverished and disabled residents, and fully funding public schools. He also said it might be time for Democrats to resurrect talk of a surcharge on millionaires, which could raise more than $500 million a year but has been rejected as a nonstarter by Republicans.

Christie's latest proposal is expected to be a part of his budget proposal in February. Gray said it has not been decided whether the governor will push for a phased-in 10 percent reduction of all income tax rates, as he initially proposed; or cuts based on residents' property tax liability, as he later agreed to in the compromise with Sweeney; or some other method.


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