Christie Tax-Capping Plan May Test Strength of New Jersey Budget Victory

New Jersey Governor Chris Christie, a Republican who secured a $29.4 billion budget deal with Democrats controlling the Legislature, may face a tougher test as he presses to limit the highest property taxes in the U.S.

Rather than face the shutdown of state government without a budget agreement, Democrats will fight Christie’s push for a constitutional amendment capping annual real-estate tax increases at 2.5 percent, said pollster Patrick Murray of Monmouth University in West Long Branch, New Jersey.

Property-tax reduction “is the beginning and the end of how voters will evaluate the Christie administration,” Murray said. “He knows that and Democrats know that. They gave him the win on the budget in the hopes of him losing on property taxes.”

Christie, 47, won election in November on a pledge to balance the budget without raising taxes, amid voter anger over a 72 percent surge in real-estate levies in 10 years. He is the first Republican elected governor of the state since 1997.

The budget agreement, announced 10 days before the start of the new fiscal year on July 1, would close a record $10.7 billion deficit through spending cuts, including reduced aid to schools and local governments.

The governor got his plan to cut $820 million from aid to schools from kindergarten through 12th grade, trim $445 million from funding for municipalities and skip a $3 billion pension contribution. The budget also calls for firing about 1,000 employees, suspends property-tax rebates and counts on $50 million in savings through privatization.

‘Permanent Tax Relief’

“We need indelible, permanent property-tax relief,” Christie told reporters yesterday in Trenton, the state capital. “Voters are saying, ‘You’ve had 30 years to fix this.’

“It’s time,” he said in an appearance with mayors described as favoring his tax cap. “Ambulances will still come to pick people up. Police will still patrol our streets, and the garbage is going to continue to get picked up.”

The Senate scheduled debate on the budget bill to begin tomorrow. The spending plan will clear the lower chamber before the start of the fiscal year, said Assemblyman Joseph Malone, a Republican from Bordentown, the ranking member of his party on the budget panel.

“This is not the type of budget a Democratic administration would have come up with,” said Brigid Harrison, a politics professor at Montclair State University. “Christie can walk out of this claiming credit. He got what he wanted.”

New Jersey’s property-tax bills last year averaged $7,281, up from $4,239 in 1999, according to the state Department of Community Affairs.

Special Session

A 7.2 percent tax jump in 2005 bills prompted lawmakers to call a special session and set a 4 percent limit on annual increases. The law, which took effect in 2007, allows local governments to seek state permission to exceed the cap. About 70 towns have won permission to boost taxes more than 4 percent this year, said Lisa Ryan, a community affairs spokeswoman.

Christie’s proposed “hard cap” on property-tax increases could be exceeded only to cover debt payments or with voter approval. Passage by three-fifths of each legislative chamber is needed by early July for the issue to appear on the November ballot, Christie has said. Adoption requires a simple majority in the popular vote.

Harder to Change

Writing the tax limit into the state constitution is necessary because “anything we do by statute can be changed,” the governor said.

Senate President Stephen Sweeney, a West Deptford Democrat, introduced a competing plan that would cap increases at 2.9 percent, or 0.4 percentage point higher than Christie’s. The bill needs only a simple majority vote by Legislators.

In a sign of the resistance Christie faces, budget committees in both the Assembly and the Senate have announced they’re considering Sweeney’s measure. Neither has scheduled deliberation of the governor’s plan.

Relations between the governor and Democrats have been fractious since Christie entered office five months ago.

In May, Christie vetoed a tax increase on incomes over $1 million. Democrats failed to overturn the veto June 21.

Sweeney blocked the governor’s nomination of attorney Anne Murray Paterson to the Supreme Court after the governor chose not to reappoint Justice John Wallace. The only black member of the court, Wallace was the first sitting justice ever denied tenure.

Fight Forecast

Sweeney, 51, told reporters in Trenton that he expects a fight over the property-tax proposals during hearings.

Christie’s plan would be “devastating” to schools and local governments left unable to cover their bills, Sweeney said. Constitutional amendments are almost impossible to reverse, he said.

“If we make a mistake, we can’t undo it,” he said of the governor’s proposal. “This would destroy local governments and make it impossible for them to deliver public safety.”

Sweeney and Assembly Speaker Sheila Oliver agreed to the governor’s budget after concluding that they couldn’t win, said Ben Dworkin, head of the Rebovich Institute of New Jersey Politics at Rider University in Lawrenceville. Democrats will attempt to use the cuts against Christie in 2011, when voters elect all 120 members of the Legislature, he said.

“In any political fight, you stand up not just on principle but on those issues where you can win,” Dworkin said in an interview. “The budget was relatively easy for the governor. That cap is going to be a lot more difficult.”

To contact the reporter on this story: Terrence Dopp in Trenton, New Jersey, at tdopp@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.