Democratic Budget Bill: More for Social Programs, No Major Tax Hikes

John Reitmeyer | June 24, 2016 | Budget
Bill adds just $275 million to Christie plan, so budget battles of previous years may not be in the offing, but line-item vetoes are almost certain

Senate Budget and Appropriations Committee Chairman Paul Sarlo (D-Bergen)
Democrats who control the Legislature introduced and advanced their own budget bill yesterday, but unlike some prior years, their additions were modest and even gained some praise and votes from Republicans along the way.

Whether that means Gov. Chris Christie will hold back his line-item veto pen or even put it away altogether next week remains to be seen. But it does seem to indicate there will be far less drama in the State House over this budget than there has been in recent years, when Democrats and the Republican governor feuded over the size of contributions to the public-employee pension system and whether taxes on millionaires should be increased.

This time around there are no proposed tax hikes, and Democrats are adding just $275 million to Christie’s overall $34.5 billion spending plan. The bulk of their new spending goes to senior property-tax relief, education, and safety net and social-service programs — additions that could be difficult for Christie to delete.

Democrats praised those additions as their bill easily advanced through legislative committees in both the Assembly and Senate yesterday, putting it on course for final passage on Monday. Some Republicans, however, raised concerns about the budget becoming riskier after the Democrats’ revisions, pointing to a slightly a more optimistic revenue projection than the governor’s and a whittled down surplus account.

It’s Christie who will have the final say since the state constitution gives the governor the power to certify revenues and use the line-item veto to remove language and spending out of the budget bill. The constitution also requires that a new budget be in place when the state fiscal year begins on July 1.

“I would hope that the governor, when he receives the bill in the coming days, that he works with us on the bill, looks at some of the initiatives and priorities that have been put into the bill,” said Senate Budget and Appropriations Committee Chairman Paul Sarlo (D-Bergen).

“Many of them he has supported in the past,” Sarlo said.

The last two state budgets have also been written in late June by Democrats, only to be enacted by Christie with liberal use of the line-item pen. But each of those budgets also relied on raising more than $1 billion in new revenue from proposed tax hikes, including increasing the income tax rate on earnings over $1 million.
Much of the increased revenue that would have come in from those tax hikes was earmarked by Democrats to larger contributions to the public-employee pension system. But Christie on each occasion reduced that spending using the line-item veto, including last year when his cuts totaled $1.6 billion.

This year, however, Democrats and Christie are on the same page when it comes to the pension contribution, with both sides agreeing on a $1.86 billion payment, about $550 million more than what’s budgeted for the current fiscal year.

And the proposed spending increases that are included in the Democrats’ $34.8 billion spending plan are far more modest than in prior years, when they added more than $1 billion to Christie’s own total. Among the larger items in their budget this year is a $45 million increase in funding for the senior freeze property-tax relief program, which will allow the program’s income ceiling to rise from $70,000 to just over $87,000.

The Democrats’ budget would also reverse a $25 million cut in charity-care funding for hospitals that Christie announced in May in the wake of a projected revenue shortfall. Another $25 million would go to help fund preschool education.

The Democrats’ budget also includes a total of $5 million in additional funding for the Educational Opportunity Fund for low-income college students. Other smaller spending increases will pay for increased temporary assistance for the needy, provide for more lead abatement and cancer research, and fund new Zika-virus prevention programs.

Assembly Budget Committee Chairman Gary Schaer (D-Passaic) conceded during yesterday’s hearing that the Democrats’ spending plan isn’t perfect, but he said it also represents an improvement over the version proposed by Christie back in February. After the hearing, he said the changes proposed by Democrats, though a small percentage of overall spending, would be meaningful to those who are impacted by the programs that will see more funding, such as the senior-freeze recipients.

“It’s a huge issue and it delivers back that relief to seniors that we keep postponing away,” Schaer said. “We forget it’s more than simply a budgetary matter.”

Assemblyman Declan O’Scanlon (R-Monmouth) took issue with the added risk that would be taken on if Christie ultimately accepts the Democrats’ version of the budget unchanged. In addition to adopting a slightly more optimistic revenue forecast, the Democrats are also reducing the planned surplus account by more than $100 million, and possibly by as much as $200 million. That account is used to hedge against missed revenue projections, and Democrats have criticized Christie for not padding it enough in prior years.

“We have to have a responsible surplus,” O’Scanlon said.

He also said $250 million in savings from employee healthcare changes that are baked into the budget but not yet agreed upon by the special committees that are charged with designing healthcare plans for public employees adds to the risk.

“This budget leaves us way too close to the edge,” O’Scanlon said.

No Republicans on the Assembly Budget Committee voted for the Democrats’ budget bill yesterday, but in the Senate Budget and Appropriations Committee it picked up two votes from the GOP, including from Sen. Tony Bucco (R-Morris).

He praised members of the panel for their close scrutiny of the administration’s proposed spending and said because they’ve acted responsibility the state is now in a better financial position.

“We look forward to having this budget passed so we can provide for the citizens of the state of New Jersey,” Bucco said.