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Sweeney Pushes Tax Hikes On Millionaires, Corporations To Fund Pensions

While even Sweeney conceded yesterday that Christie had little choice but to reduce pension payments to balance the FY14 budget, he said he hoped Jacobson would order the state to make the full FY15 payment.

Sweeney’s Democratic budget plan could clear the Senate Budget Committee as early as Monday, providing Jacobson with a credible alternative-funding plan for the state’s FY15 pension obligation to consider when she hears the case.

Interestingly, however that was not the thrust of the motion that lawyers for the Senate and Assembly filed yesterday, seeking to have the Democratic-controlled Legislature dismissed as a defendant in the union’s pension lawsuit.

Not surprisingly, the Democratic-controlled Legislature argued that it should not be held responsible as a defendant in the unions’ lawsuit challenging Christie’s unilateral decision to use an executive order to cut the FY14 pension payment.

But what was significant was that the Senate and Assembly sided with the Christie administration in arguing that the court did not have the authority to order the executive and legislative branches to increase pension funding in the Fiscal Year 2015 budget once a budget for next year is approved and signed into law.

The state attorney general’s office also filed its brief on behalf of the governor yesterday, asserting that Christie had no choice other than to cut the FY14 pension payment because no previous governor had ever faced “such a staggering shortfall so late in the fiscal year.”

Christie’s lawyers argued that the cuts in state contributions to the pension system in FY14 and FY15 would not imperil pension payments to retirees, despite the massive long-term unfunded liability in the pension funds that pay out retirement checks to one out of every 12 New Jersey residents.

Yesterday, the trustees for one of those funds, the Public Employees Retirement System, voted to join the unions’ lawsuit, after Christie’s appointees to the board recused themselves on conflict-of-interest grounds.

Hetty Rosenstein, state director of the Communications Workers of America, praised both the decision by the PERS Board of Trustees and the Senate budget proposal put forward by Sweeney.

"We applaud Senate President Steve Sweeney for agreeing that the law is the law and that the pension payment must be made," Rosenstein said. "We are in agreement that everybody has to pay their fair share -- including millionaires and corporations.”

Sweeney’s Senate budget plan would raise $565 million by imposing a 10.75 percent tax on income above $1 million and another $155 million by taxing income between $500,000 and $1 million at a 10.25 percent rate. Both brackets represent increases from the current 8.97 percent top bracket that were included in former Democratic Gov. Jon Corzine’s 2009 income-tax surcharge, and both were included in the tax plan offered last week by Sen. Raymond Lesniak (D-Union). Sweeney did not include the increase from 6.37 percent to 8 percent on income between $350,000 and $500,000 or the repeal of the estate tax that were included in Lesniak’s plan.

But Sweeney’s proposal did mirror recommendations by public employee unions and progressive coalitions to increase corporate taxes and cut tax subsidies to corporations, which have received $4 billion in tax abatements since the beginning of the Christie administration.

Sweeney’s surcharge on the corporate business tax, which would go up from 9 percent to 10.35 percent, would raise $375 million, while a one-year suspension of grants from the Business Employment Incentive Program would save another $175 million.

“The current shortfall is the result of four years of wasteful tax breaks for the wealthy and corporations that have helped the fortunate few but left 95 percent of New Jerseyans behind,” said Analilia Mejia, director of New Jersey Working Families, a labor-progressive coalition. ‘We commend the Senate leadership for putting working families first and hearing the call for corporations and the wealthy to pay their fair share.”

Charles Wowkanech, president of the New Jersey State AFL-CIO, said “the Senate President’s plan makes sense -- suspend a portion of the $4 billion in corporate welfare Gov. Christie has doled out, and instead make it a priority to fund the pension, keep the state’s promises, and follow the law.”

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