TRENTON — A $32 billion state budget that contains money for tax relief and a provision to hold the funds for at least six months cleared its final committee hurdle Friday and heads to the Assembly and Senate for showdowns next week.
Meanwhile, nine Democrats in the Assembly threatened to tie up the budget unless the speaker agrees to delay a vote on legislation to overhaul higher education.
The proposed budget, which advanced along party lines in Democrat-led legislative committees Thursday and Friday, sticks closely to the budget Gov. Chris Christie proposed in February. One key difference is that the Democrats’ plan sets aside $183 million for a modest tax cut, but holds up the money at least until January to see if the governor’s optimistic growth projection pans out. Christie and the Republicans want the tax cut implemented now.
“After 855 days without a tax increase and the reality of tax relief for New Jersey families on the horizon this year, they couldn’t help but re-emerge to hold tax relief hostage and press ahead for another tax increase,” Christie said Friday after the Assembly Budget Committee advanced a tax increase on millionaires for the third straight year.
The nearly 2 percent tax surcharge on the 16,000 wealthiest filers would be used to restore property tax rebates for the elderly, disabled and those making less than $100,000 a year. The Republican governor has vetoed the tax measure twice before and has vowed to do it again.
The budget the Democrats advanced relies on the same optimistic revenue projections as the governor — an ambitious growth rate of more than 7 percent in the fiscal year ahead that many economists, and Democrats themselves, believe is too rosy to be realized.
Christie’s estimates are also at odds with revenue collections through the first 11 months of the year and projections by the research arm of the Legislature, which warns the shortfall could grow to $1.4 billion by next July.
The Democrats have added $130 million in spending to their budget, which includes increasing a tax credit for the working poor and providing additional aid to nursing homes. Corresponding spending cuts have been offered.
Sen. Kevin O’Toole, R-Bergen, Essex, Morris, Passaic, said it was ironic that Democrats are relying on the governor’s revenue forecast to build their budget while insisting the state delay Christie’s tax cut over fiscal concerns.
On Friday, Assemblyman Gary Schaer, D-Bergen, Passaic, pointed out many pitfalls of the governor’s budget — it contains $260 million in additional transportation fund borrowing and funds only a fraction of the state’s obligation to employee retirement funds, for example — before voting to approve it.
Monday’s budget vote in the Assembly could be contentious. With 48 Democrats in the Assembly and 41 votes needed to pass legislation, the nine North Jersey votes are needed for party-line passage of the budget. But the nine have told Speaker Sheila Oliver they would not vote to approve the budget unless she delays a vote on an ambitious plan to combine Rutgers-Camden and Rowan University and dismantle the University of Medicine and Dentistry, transferring most of the medical/dental school to Rutgers.
The speaker scheduled an initial hearing for the university-merger bill Monday morning.
Without cooperation from the nine, or a willingness to hold the higher education bill, she could try to peel off the two needed votes from among the faction, or seek the needed votes from Republicans. Either strategy would come with a price.