New Jersey Democrats advanced their party’s $35.3 billion budget out of committees Tuesday with party-line votes that reflected Republican opposition to the plan’s proposed tax increases and Democrats’ commitment to making a larger pension payment than what Gov. Chris Christie proposed.
Democrats on the Assembly Budget and the Senate Budget and Appropriations committees carried the votes needed to advance the alternative budget and corresponding legislation from the committees.
The full Assembly and Senate are scheduled to vote on the budget and corresponding tax increases Thursday.
If both chambers approve the budget, as expected, Christie will have until July 1 — the start of the new fiscal year — to review and sign the plan as written or use his line-item veto power to eliminate spending and language in the legislation. He does not have the authority to make additions to the proposed budget.
The most significant difference between the Democrats’ plan and the $33.8 billion budget Christie put forward in late February involves the state pension payment.
Christie’s plan called for a $1.3 billion payment, the largest in state history but still well short of the $3.1 billion promised under the 2011 pension and benefits reform law he signed. The law required most public employees to pay more for their pension and health benefits, but mandated that the state no longer could skip or skirt its payments.
The Democrats’ plan includes the full pension payment, with additional revenue raised from a proposed tax increase on corporations and millionaires.
Among the other changes, the Democrats’ budget would restore the state’s earned income tax credit and boost state funding for higher education and women’s health clinics.
Republicans on the budget committees blasted the proposed tax increases, arguing that they would hurt businesses and the state’s economy.
Assemblyman Chris J. Brown, R-8th of Evesham, said the proposed increases would not cure the state’s pension problems, and that only additional pension and benefit reforms would address the underlying issue of the state’s unfunded pension liability.
“It’s not a $3 billion problem. It’s an $82 billion problem,” Brown said during the Assembly Budget Committee hearing. “We can talk about what (tax increases) will do to the small-business community or what it’s going to do to whoever has to pay these taxes. But at the end of the day, the problem isn’t going to go away.”
Assemblyman Troy Singleton, D-7th of Palmyra, said he agreed that additional benefits reforms are required to keep public employee pensions solvent, but that the state must fulfill its 2011 promise.
“We do need real reform; this current model won’t work,” Singleton said. “But we can’t walk away from commitments everyone signed up to do.”
The Democrats’ proposed tax increases also were opposed by leaders of the New Jersey Chamber of Commerce and the New Jersey Business & Industry Association.
Michael Egenton, senior vice president of government relations for the chamber, said the so-called millionaire’s tax would impact many small businesses whose owners file personal income tax returns. Egenton claimed that raising the tax would discourage owners from investing profits for business expansions.
“The income tax essentially becomes an employment tax increase,” he said.
Assembly Budget Chairman Gary Schaer, D-36th of Passaic, said he wasn’t pleased with proposing a budget that relies on tax increases, but that it was the best possible solution for meeting the state’s obligations.
“It’s easy to say no to new tax increases, but how does one pay the bills unless one walks away and says we simply don’t pay them?” he said.