Christie and Democrats Reach Budget Accord; Tax Caps Next

The budget battle almost over, Gov. Christie and Democratic legislators Square Off Over Property Tax Cap: 2.5 vs. 2.9

On the same day that Gov. Chris Christie and the Democratic leadership reached agreement on a new state budget for 2010, it was no accident that both sides were drawing the line in the next point of debate: how to cap local property taxes.

In the morning, it was Christie standing in Newark’s South Ward with Mayor Cory Booker to tout the Republican governor’s proposed Constitutional amendment to limit local property taxes to no more than 2.5 percent increases each year.

Booker’s support for Christie’s “Cap 2.5” proposal is notable, since he has been named as potential Democratic challenger to Christie in three years. But he said yesterday that the need to control property taxes and especially public employee costs was not a partisan issue.

“This is an issue that is bigger than any individual or party,” Booker said. “This is an issue affecting every citizen in our state, in all 21 counties, and particularly felt here in the city of Newark.”

Proposing a Higher Cap

But in the afternoon, Democratic legislative leaders had their own ideas. In his Statehouse office, state Senate President Stephen Sweeney (D-Gloucester) held an impromptu press conference of his own to detail a competing proposal to cap taxes at a higher rate of 2.9 percent.

His proposal is far more flexible that Christie’s, allowing for a host of exclusions and exemptions for items such as health insurance and energy costs. Christie’s cap would only exclude debt service, and could be exceeded with approval of a super-majority of voters.

Sweeney’s cap would impose the cap by statute, not Constitutional amendment, which requires three-fifths vote of the Legislature and then a ballot referendum.

“In two years, we have reduced tax increases from 7 percent down to 3.3 percent,” Sweeney said of Democratic-led limits. “Going to 2.9 is a very attainable goal, without going to the Constitution where if we make a mistake and can never correct the problem.”

Still, Sweeney said he would also be willing to hold legislative hearings on both plans, a prospect that would all but eliminate the chance that Christie’s amendment could make it onto this November’s ballot.

“I suspect there will be a [legislative] vote on his and a vote on mine, and we’ll see how it shakes out,” Sweeney said.

Budget Compromise Reached

The two announcements punctuated what was a busy day in Trenton behind the scenes as well, as the governor’s office and legislative leaders announced separately in the late afternoon that a compromise had been reached on the contentious 2010 state budget. A final vote is expected early next week, beating the June 30 deadline.

Christie’s proposed $29.3 billion spending plan for next year had drawn loud cries and criticism since it was presented in March, especially over its steep spending cuts in everything from public libraries to school aid.

As of yesterday afternoon, the reinstatement of the so-called “millionaires tax” was still under debate in both the Assembly and Senate chambers, and a coalition of school advocates was dropping off a petition of more than 5,200 names against the cuts.

But Sweeney in his press conference hinted an agreement was near, and by the time the administration officials detailed it at about 7 p.m., the legislators had by and large left the Statehouse and Christie’s spending plan by and large appeared intact.

“The governor’s objectives were to close the $12 billion shortfall, and to do without raising taxes and keeping appropriations about $29.3 billion,” said Richard Bagger, Christie’s chief of staff. “The [budget] legislation being submitted is completely consistent with that framework.”

Christie did reinstate about $74 million in various programs and accounts, less than 1 percent of the overall budget. The vast bulk of the changes were in welfare and disabilities assistance, including reinstatement of $6.4 million to the Hagedorn Psychiatric Hospital, saving about 200-300 jobs, administration officials said.

In education, $3 million was restored from a $10 million cut in after-school programs, $1 million in the New Jersey STARS scholarships for community colleges and $1.3 million in the Education Opportunity Fund.

Sweeney and Assembly Speaker Sheila Oliver (D-Essex) issued a joint press release.

“The improvements we’ve made make this budget plan the best it can possibly be amid this difficult economy,” Oliver said in the release. “No one is excited about what this budget does, but it at least has taken several steps toward protecting working class New Jerseyans. I appreciate the willingness of all sides, including Gov. Christie, to make the changes needed to improve this budget.”