June 26 (Bloomberg) -- New Jersey’s Democratic-controlled legislature sent Republican Governor Chris Christie a $34.1 billion spending plan that he intends to strip of tax increases on millionaires and corporations.
The budget, passed along party lines in the Senate and Assembly today, restored the record $2.25 billion pension payment that Christie had promised and then cut last month as revenue fell short. The pension money was to come in part from temporary tax increases: on residents with incomes exceeding $1 million, for three years, and on a corporate rate adjusted to 10.35 percent from 1 percent for one year.
The governor said he would veto the tax bills.
“What are we going to do -- raise taxes every year by a billion or a billion and a half to pay for pensions?” Christie, a 51-year-old in his second term, said yesterday at a town-hall meeting in Haddon Heights. “We cannot afford the promises made by politicians before me.”
The Democrats’ spending plan was no solution, Assemblyman Declan O’Scanlon, the Republican budget officer from Little Silver, told his colleagues before the vote in Trenton.
“We’re ending up with a document that in mere hours will be irrelevant,” O’Scanlon said. “The governor is going to veto these massive tax increases and line-item veto out the extra spending.”
The state must have a budget in place by July 1, the start of the fiscal year.
Christie yesterday scored support for his pension maneuver when a court ruled that he had authority to cut payments because he faced a fiscal emergency.
Superior Court Judge Mary C. Jacobson, ruling in Trenton on a lawsuit filed by unions for police, firefighters, teachers and other public workers, allowed Christie to make the adjustment for fiscal 2014, which ends June 30. She didn’t issue a decision on the fiscal 2015 decrease.
Before the vote, Democrat Paul Sarlo, the Senate budget chairman from Wood-Rige, said Christie was too focused on attributing the state’s financial condition to “past governors, past legislatures.” A party colleague, Senator Linda Greenstein of Plainsboro, said Christie turned his back on public workers and rewarded businesses with tax breaks, to no effect.
“Where are the jobs that were supposed to be generated?” she said in a speech on the Senate floor.
Christie in February introduced a $34.4 billion budget whose new spending, he said, was restricted by rising costs for pensions and debt.
Last month, he lowered the spending plan to $32.7 billion after his administration failed to hit revenue projections for three straight years. The shortfall led him to backtrack on promises to make pension payments of $1.58 billion for this year and $2.25 billion for the next.
The New Jersey Public Employees’ Retirement System, with about 770,000 active and retired members, is underfunded by $38 billion. Christie signed legislation in 2010 to make the required payments, plus seven years of extra contributions. His plan now is to skip those infusions and add just the actuarily required state shares: $696 million this year and $681 million in 2015.
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