TRENTON — Democrats in the New Jersey Legislature are gearing up for two end-of-month showdowns: one with Republican Gov. Chris Christie over whether the state can afford to give residents a tax cut, the other over an ambitious plan to overhaul public colleges.
The major budget battle in the next two weeks will be over Christie’s insistence that Democrats include $183 million to fund his proposed tax break despite a lagging economic recovery here, persistently high unemployment and disappointing revenue collections.
Christie’s budget phases in a 10 percent income tax cut over three calendar years. Democrats countered with plans to trim property taxes, but some have become reluctant to forge ahead with a proposal that would hand Christie a victory to take to the Republican National Convention.
May revenue collections released Friday show the shortfall is continuing. Tax collections are running 1.8 percent below expectations 11 months into the fiscal year.
Assembly Democrats announced a plan to include money in the budget to fund the first phase of the tax cut, but hold it in escrow for six months or longer to see if the revenue picture improves. In other words, residents will get a tax break — if New Jersey can afford it.
Sen. Paul Sarlo, D-Bvergen, Passaic, who chairs the Senate Budget Committee, said every lawmaker wants to reduce taxes, but Democrats worry that the Christie administration’s ambitious revenue forecasts through next year won’t be realized and New Jersey will face a midyear budget hole. The state requires a balanced budget be maintained, which means spending can’t outpace tax collections.
Christie has said he would not negotiate a budget deal with the Democrats if the tax cut were omitted.
Assembly Democratic leader Lou Greenwald added another wrinkle on Friday by announcing that Democrats would make a third attempt at raising the income tax rate for millionaires and would use the revenue — roughly $800 million — to restore the gutted Homestead Property Tax Rebate program.
Democratic leaders in the Senate and Assembly are on board with the plan, but support is reportedly tepid among rank-and-file Senate Democrats.
Christie has vetoed a millionaires’ tax twice previously, and has promised to do so again if the bill reaches his desk.
The plan to reconfigure Rutgers, Rowan and the University of Medicine and Dentistry is shaping up to be a North-South legislative battle, with support for the plan from South Jersey Democrats whose region stands to gain the most, and opposition from North Jersey Democrats, who worry that Newark — and University Hospital, in particular — is being shortchanged in the deal.
Sen. Ron Rice, D-Essex, made a passionate argument for holding the bill Thursday before it was unanimously voted out of the Higher Education Committee. He said there hasn’t been enough discussion on its merits, and no price tag is attached. He said legislators are “being duped” by proponents of the bill, who include Christie and South Jersey Democratic power broker George Norcross III. Norcross, whose brother, Sen. Donald Norcross, D-Camden, Gloucester, is a sponsor of the bill, chairs Cooper University Hospital, which acquired a medical school in partnership with Rowan in 2009.
Cost figures are expected today, when the Senate Budget Committee takes up the college restructuring bill. Essex County lawmakers have voiced concern for the future of University Hospital if it is disassociated financially from UMDNJ. The scandal-tainted medical-dental school is set to be transferred to Rutgers under the restructuring plan. The Essex lawmakers are seeking guaranteed fiscal support from the state for University Hospital to ensure that safety-net health care continues to be available to Newark-area residents and that no layoffs occur there.
Rutgers-Camden and Rowan administrators remain opposed to a provision in the bill that gives a new joint board ultimate authority over both campuses. Faculty have also expressed concerns about Rutgers’ credit rating if it takes on UMDNJ’s debt, whether the Rutgers-Camden Law School’s accreditation would be affected and whether the proposed realignment would actually reduce the number of New Jersey high school students who attend college out of state.
Lawmakers will consider an accompanying higher education bond issue that would provide money for capital projects at all of New Jersey’s colleges and universities. It would be the first time voters have been asked to approve such an expenditure in more than 20 years.