Christie, Buono Differ Sharply on Tax Cuts, Fiscal Challenges
Governor presses immediate tax cut, while Democrat favors millionaire’s tax to fund property tax relief
This is the seventh in a series of articles exploring the critical policy challenges that the next governor and Legislature will face, as well as their positions on these issues.
Four years ago, Gov. Chris Christie inherited a state with a massive built-in budget deficit, a millionaire’s tax about to expire, and $2 billion in federal stimulus funding about to go away. Property taxes were rising, as was state debt. The state’s long-term unfunded liability for pension and retiree healthcare costs for teachers, police, and state and local government employees was a staggering $100 billion. The Unemployment Insurance Trust Fund was broke, and a new $8 billion plan would soon be needed to pay for highway, bridge, and mass transit capital projects.
The policy choices that Christie made to address those fiscal crises, the tax and budget votes that his Democratic challenger, Sen. Barbara Buono (D-Middlesex), cast in her 18 years in the Legislature, and the sharply divergent approaches they would take to the state’s future funding challenges are the most critical differences they have laid out in their year-long campaigns:
While Christie rules out any tax increase and has been pushing the Legislature to implement an immediate tax cut to be funded out of future revenues, Buono questions whether the money will be there to pay for it. Instead, she favors reimposition of a millionaire’s tax to pay for property tax relief for lower- and middle-income taxpayers.
While Buono charges that net out-of-pocket property tax costs for the average family have risen 18.7 percent since Christie took office because of rebate cuts, Christie touts two years of near-record-low increases in actual property tax bills because of legislation he championed that imposed a 2 percent spending cap, limited arbitration awards, and required public employees to pay more for their pensions and health benefits -- a bill Buono opposed.
While Christie calls Buono a “tax-and-spend liberal” who does not regret voting for 154 tax and fee hikes, Buono has been calling for the state to spend billions more on preschool, K-12 education, property tax relief, tuition aid, transportation, and higher education. Christie criticizes Buono for not saying exactly how she would pay for the new spending, which Buono says she would phase it in using normal year-to-year revenue increases.
While Buono criticizes Christie for cutting $7.5 million a year in funding for family-planning clinics that would have drawn down $67.5 million annually in federal matching funds and for cutting the Earned Income Tax Credit for the working poor as he was paying out billions in subsidies to corporations, Christie charges that Buono would favor public employee unions over the tax-paying public.
And while Buono charges that Christie cancelled a needed rail passenger tunnel to New York and borrowed heavily to fund the Transportation Trust Fund, and relied on one-shot revenue gimmicks and overinflated revenue estimates to fund his budgets, Christie says the bottom line is that he has balanced four budgets without increasing taxes -- unlike Buono and Democratic Govs. Jon Corzine, Richard Codey, and Jim McGreevey, with whom she worked with when she chaired or served on the Senate Budget Committee.
“The question is not only whether Chris Christie made the right policy choices, but what would have happened if a Democratic governor and Legislature were reelected together in 2009,” said Joseph Seneca, university professor at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy. “Would the state have made the structural changes needed?”
Seneca and David Rousseau, Corzine’s former state treasurer who is currently serving as budget analyst for the liberal New Jersey Policy Perspective think tank, both warned that the governor and Legislature elected November 5 will face at least four more years of tight budgets as the state completes a seven-year phase-in to full funding of the its pension obligation, which will increase by an estimated $600 million each year through the Fiscal Year 2018 budget.
Nevertheless, if Christie and a Democratic legislative majority are reelected, as the polls indicate, it will be hard for Democratic legislators to avoid voting for a 10 percent property tax credit on the state income tax that was originally proposed by Senate President Stephen Sweeney (D-Gloucester) and is being pushed by Christie -- not after so many Democrats have been running campaign ads saying they would work with Christie to enact it.
Paying for a property tax credit program that would rise in cost from about $250 million in the first year if implemented as a part of next year’s budget to $1.4 billion by FY2018 would severely strap a state budget whose pension bill is projected to go up from $1.7 billion this year to at least $4 billion by FY2018 and whose cost for retiree health benefits is projected to rise another $600 million to $1.7 billion by that summer budget year.