TRENTON — Gov. Chris Christie announced Monday that he is again vetoing Democratic lawmakers’ plans to raise taxes on millionaires and cut property taxes for others – but this time with a twist.
The Democrats were not buying it.
The Republican told the Democrat-controlled Legislature in a special session that he had issued a conditional veto of their plan. He would approve an alternate concept that would offer property tax relief with no tax hikes attached to it. He said he also would expand the earned income tax credit for the working poor – the exact same measure he cut on Friday using his line-item veto power.
“There is one greater thing left to do,” Christie said Monday in a speech touting bipartisan cooperation but also taking Democrats to task for not delivering a tax break in their budget. “Lock in tax relief today that will help create more jobs tomorrow for the people of New Jersey.”
Democratic dismissed Christie’s speech and said they would not vote on Christie’s proposal.
State Senate President Stephen Sweeney said Christie’s proposal and speech was “theater for the national stage” – language similar to what Assembly Speaker Sheila Oliver said in a separate news conference.
Sweeney said it was unnecessary. The Legislature last week passed – and Christie signed – a nearly $32 billion state budget plan that calls for property tax relief starting next year – if the state has enough money to afford it.
Christie signed the bill even though he had been pushing for firm promise to begin the cuts next year.
He said that the line-item vetoes he exercised last week on the budget will create a $650 million surplus. He said his tax-cut plan would use only about one-third of that.
Back in 2009 – just before Christie took office – the Legislature let a surcharge on high earners expire. Ever since, Democratic legislators have been trying to get Christie, who says he is not interested in raising any taxes, to agree to bring it back.
In 2010 and 2011, the governor vetoed the millionaire’s tax bills that lawmakers passed.
This year’s version was adopted in two parts: One would raise the tax on earnings over $1 million to 10.75 percent from 8.97 percent. The second would use the projected $800 million in revenue from the increase to fund property tax credits.
This year, Christie has been determined to offer a tax cut – he says as a reward for taxpayers who have been sacrificing for years through a slow economy and tight state budgets.
His initial plan was to cut everyone’s income tax by 10 percent, but to phase the reduction in over three years, starting in 2013. High earners would have benefited far more than middle-class and lower-income workers.
The cut was part of Christie’s proposed budget, in which he projected the state’s tax revenue would grow by more than 7 percent due to an improving economy. Democrats and some independent economists say those revenue forecasts are too rosy.
The Legislature agreed to tax cuts in the nearly $32 billion budget that they passed last week, and which the governor signed after exercising his line-item veto power to cross out $361 million worth of spending.
In their budget, lawmakers made two big changes to the governor’s tax-reduction plan. One makes the cuts be for property taxes, which average a highest-in-the-nation $7,700. The governor has since embraced that approach.
The other wrinkle added by the Legislature was one the governor has criticized passionately: Making the tax cuts conditional on the state being in good enough financial shape to deliver them. The money to pay for the cuts – $183 million – would be set aside, but lawmakers would have to pass a separate bill to enact the cuts.
The latest plan Christie unveiled Monday echoes the one put forth earlier by Sweeney, a Democrat from West Deptford, before Sweeney and Assembly Democratic leaders agreed to push the more ambitious property tax cut funded by the millionaires tax. Sweeney and Christie were on the verge of announcing a compromise tax cut in May, but a joint appearance was cancelled about a half-hour before it was to be made.
Christie says he wants to phase in the 10 percent property tax reduction over four years, and that it would go only to households with earnings below $400,000. Once the cut is fully implemented, the maximum benefit would be capped at $1,000. It was not immediately clear how deep the tax cuts would be in the first year under Christie’s plans.
Christie said he would agree to expand New Jersey’s earned income tax credit program to 25 percent of the federal amount, from 20 percent. About 500,000 families would see their tax credit rise, with the average jumping from about $430 to $545 per year.
Earlier this year, Christie said he wanted to expand the program, which he had scaled back during a budget crunch two years ago. But when he proposed his budget, he was no longer calling for the expansion.
And last week, he vetoed a bill passed by the Legislature to grow the tax credit.