Democrats to Christie: Show Us the Money

Mark J. Magyar | July 3, 2012 | Budget
Legislative leaders reject governor's plea to enact tax cut until revenues come in

Credit: Governor's Office/Tim Larsen
Gov. Chris Christie calls for tax relief during a special session in the Assembly Chambers.
In a speech aimed simultaneously at New Jersey legislators and at a national audience via ABC’s Nightline, Gov. Chris Christie yesterday urged immediate passage of a four-year, $1.4 billion income tax cut originally proposed by Democrats to provide relief to middle-income property taxpayers.

“The people of New Jersey deserve a tax cut,” Christie urged in a speech to a joint session of the New Jersey Legislature he had used his constitutional authority to summon.

But Assembly Speaker Sheila Oliver (D-Essex) and other Democratic legislative leaders made it clear that they would approve no tax cut until the “New Jersey Comeback” Christie proclaimed almost six months ago produces the 7.3 percent revenue growth that the governor has promised — and that vote will not come before December.

“This is pure theatrics,” Senate Budget Committee Chairman Paul Sarlo (D-Bergen) fumed.

“We set aside $183 million in the surplus for a tax cut, and if the revenues come in, we’ll approve it,” Sarlo said. “Whether we vote today or six months from today, nobody will get a tax cut until they file their income taxes in April 2013, and the governor knows it. This is all aimed at a national audience.”

For the second time in seven weeks, Christie emphasized that he was willing to abandon his own 10 percent across-the-board income tax cut — which would have primarily benefited wealthy “job creators,” as he put it — in favor of a plan advanced by Senate President Stephen Sweeney (D-Gloucester) to provide property tax credits up to $1,000 on the income taxes of all those earning up to $400,000. As an additional inducement to Democrats, he offered to include funding for the increase in the Earned Income Tax Credit for the working poor that he had vetoed on Friday.

“I have come to the center of the room and agreed to the Senate Democratic tax plan,” Christie said. “Will you join me? Will you act today to guarantee a summer of tax relief, job competitiveness, and increased confidence in state government for our citizens?”

Taxing the Wealthy

As expected, Christie rejected the Democrats’ “millionaire’s tax,” which would have increased the top income tax rate on the state’s 16,000 millionaires from 8.97 percent to 10.75 percent in order to fund expanded property tax credits for senior citizens making up to $250,000 and homeowners up to $150,000. Using his conditional veto powers to propose revised legislation, Christie transformed the “millionaire’s tax” into the Sweeney property tax credit program, and asked the Legislature to approve it.

Christie noted that the spending cuts he made in the $31.7 billion budget last Friday increased the state’s surplus to $650 million — up from a scant $300 million in Christie’s original proposed budget and $486 million in the budget passed by the Democratic-controlled Legislature on a party line vote last week.

“Can’t we afford to send just one-third of that surplus back to our citizens? I say yes. We have the money available to fund a tax cut that gives relief to middle-class New Jerseyans,” he insisted.

What Christie didn’t mention in his 17-minute speech was that his conditional veto not only would have required the state to provide a $183 million property tax credit on income taxes for this year, but also would have locked in an additional three years of tax cuts that would have cost the state an estimated $575 million in Fiscal Year 2014 and would have grown to $1.4 billion by Fiscal Year 2016.

“The governor is putting this state on a fiscal precipice,” said Assemblyman John Wisniewski (D-Middlesex), the state Democratic Party chairman. “Nobody in this chamber is against tax relief. But everybody is against borrowing $261 million for 30 years in order to pay for tax relief, which is what this governor is doing to balance his budget. We have billions of dollars in future pension obligations, a transportation program that will ultimately cost $900 million out of the budget, and the governor has loaded this budget with so many one-shot revenues that we don’t know how we’re going to replace them next year. We need to be fiscally responsible.”

Wisniewski and Assembly Majority Leader Lou Greenwald (D-Camden) both noted that Christie’s expanded surplus was smaller than the $724 million to $824 million shortfall that David Rosen, budget officer for the non-partisan Office of Legislative Services, is projecting in Christie’s revenue projections for the fiscal year that began Sunday.

Underlying Motive

Like Sarlo, Wisnewski questioned Christie’s underlying motive for calling the Legislature back into session when he knew that Democrats were united in their determination not to vote for a tax cut until they could be sure that the revenues would be there to pay for it.

“Today wasn’t about tax relief for New Jerseyans. It was about Governor Christie’s need to be before a television camera as he auditions for another job,” Wisnewski said, nodding up at the ABC Nightline camera that was being taken down in the Assembly Gallery after filming Christie’s speech for a segment on the governor to be broadcast the following night.

Interestingly, the Chris Christie who took the podium yesterday was not the angry Jersey guy who parlayed his mastery of the YouTube smackdown into national political stardom and consideration for the vice presidency or the keynote speaker’s role at the Republican National Convention in Tampa next month.

The no-holds-barred Christie who last week called Democrats “liars” and a reporter an “idiot” was gone, replaced by a kinder, gentler Christie, who extolled a proud litany of bipartisan achievement ranging from the new pension and health benefit law and the 2 percent cap on local government spending to the tenure reform and Rutgers-Rowan medical education overhaul.

As he has in speeches to Republican fund-raisers and to conservative think tanks nationwide, Christie yesterday held out New Jersey as a model of bipartisanship.

“This is a moment,” Christie said. “But it’s not a moment where we should take a cue from Washington, D.C., and begin emulating the politically shameful performances we see down there. Washington, D.C., has been paralyzed because people talk at one another, not to one another. No one stops for a second to think about how what they fail to do today will lead to failure for our citizens tomorrow. Instead, it’s a constant fight to see who wins the next 24-hour news cycle.

“Is that really what we aspire to be here in New Jersey?” he demanded.

Christie’s main target in the Legislature with his bipartisan pitch was clearly Senate President Sweeney, whom the governor has repeatedly praised for his willingness to work with him to pass controversial pension and healthcare legislation, the 2 percent cap on local government spending increases, and most recently the Rutgers-Rowan realignment of higher education.

But Sweeney was unmoved by Christie’s argument that New Jerseyans need to see immediate action on tax cut legislation.

“I’m rooting him on the revenue projections. I’m hoping they come true because if his revenue projections come true that means that people have gone back to work,” said Sweeney, an Ironworkers Union leader who has repeatedly pointed out that many of his members are among the 9.2 percent of New Jerseyans who are out of work.

But like Sarlo, Sweeney asserted that Christie’s demand that the Legislature come in for a special session was “completely unnecessary because we’ve already placed in the budget the money for a tax cut.”

Sweeney, who had persuaded Christie in May to shift from an income tax cut weighted toward the wealthy to his middle-class property tax credit plan, has stressed that the Legislature could wait until December or even later to approve his legislation because the income tax writeoff would go into effect when taxpayers file their income taxes next April.

A Call for Bipartisanship

Sweeney and Greenwald both dismissed Christie’s call for bipartisanship as just a partisan ploy in the governor’s national political strategy. “Obviously there is a national election going on and there is an open spot on the vice president’s page right now,” Sweeney noted.

As to Christie’s dismissal of Washington politicians fighting to win 24-hour news cycles, Greenwald said, “This governor moves from 30-second sound bite to 30-second sound bite because he needs media attention like you and I need oxygen.”

While the Democrats’ refusal to go along with Christie’s demand for an immediate tax cut most likely ends the legislative battle over tax cuts for at least several months, Christie is promising to wage a political campaign over the issue all summer.

Before his address to the Legislature yesterday, Christie already had taped a new radio ad taking credit for vetoing the millionaire’s tax and calling upon Democrats to cut taxes.

Meanwhile, the Republican State Committee launched a robocall attack ad campaign against Senators Richard Codey (D-Essex) and Barbara Buono (D-Middlesex), both of whom are considered potential Democratic candidates for governor next year, and Senator Robert Gordon (D-Bergen), whose 38th District battle was the most hotly contested Senate race in 2011 and is likely to be again next year. The robocalls charge the Democrats with voting to raise income taxes by $800 million — without mentioning that the income tax hike would only apply to millionaires, of course.