New Jersey Legislature approves $30.6 billion budget

Assemblyman Louis D. Greenwald (D., Camden) said the income tax bill "reflects the values of true shared sacrifice."
Assemblyman Louis D. Greenwald (D., Camden) said the income tax bill "reflects the values of true shared sacrifice." (RICH SCHULTZ / Associated Press)
Posted: June 30, 2011

TRENTON - The New Jersey Senate and Assembly approved a $30.6 billion spending plan before the sun went down Wednesday, but just because lawmakers avoided their traditional midnight marathon doesn't mean the budget battle is over.

The spending plan - crafted by Democrats, who control the Legislature, as an alternative to the one that Republican Gov. Christie introduced in February - is unlikely to survive in its current form largely because of disagreements with Christie over how much money is available to support it.

The governor is expected to reject at least part of the budget, which would give $1.1 billion more to schools and restore some of his cuts to health-care and social programs. Or Christie could shoot the entire bill back to the Legislature for revisions. Either way, Democrats lack the votes to override a veto.

"At this time, the governor can't be certain if the remedy is the line-item veto or whether he needs to consider sending it back to the Legislature," his spokesman, Michael Drewniak, wrote in an e-mail just before 7:30 p.m.

The state constitution requires the adoption of a balanced budget by July 1, so the Legislature and executive office must come to an agreement by the end of Thursday to avert a potential government shutdown.

Both houses of the Legislature also approved a bill to raise the tax rate to 10.75 percent, up from 8.97 percent, on income over $1 million. Proceeds from the tax would be used to fully fund every public school district in the state after cuts to education aid in recent years.

The so-called millionaires' tax, which Christie has promised to veto, would expire after two years. Not taxed would be most retirement income up to $100,000 for residents 62 and older.

The administration and Republican legislators criticized Democrats for drafting a budget larger than the $30.3 billion Christie certified last week was available.

The bipartisan cooperation that led to passage of historic pension and benefits changes for public employees last week did not carry forward into Wednesday's budget debate, as Democrats and Republicans squabbled and voted along party lines.

In a year when all 120 legislative seats are up for grabs, Democrats sought to portray their plan as one that bolsters schools, restores cuts to programs essential to the social safety net, and brings tax relief to burdened residents while asking more of the wealthy.

The Democrats' plan "reflects the values of true shared sacrifice," said Assemblyman Louis D. Greenwald (D., Camden).

Republicans countered that Democrats were rushing to spend money the state doesn't have and questioned whether the budget was legal.

Assemblyman Jay Webber (R., Morris) suggested that lawmakers had violated their oath to uphold the state constitution by even considering the plan. Democrats crafted their budget for political purposes, he said.

Assembly Speaker Sheila Oliver (D., Essex) ruled Webber and several other Republicans out of order and maintained that the Democrats' actions were constitutional.

Christie can change his revenue certification any time before signing the budget, and observers said it was unusual for the governor to make such a determination before receiving legislators' plan.

The Democrats' budget is $1.2 billion more than the one introduced by Christie. The administration had planned to expand spending after the state treasurer and nonpartisan Office of Legislative Services forecast an unexpected income tax windfall through fiscal 2012. Democrats' budget reflected the higher revenue estimate of the OLS.

Nearly half of the Democratic budget's $1.1 billion in additional education aid would go to the 31 needy former Abbott school districts that the state Supreme Court last month ruled were underfunded in 2010.

Democrats allocated an additional $574.3 million to dozens of other districts that spend less per pupil than the state says was needed to deliver a thorough and efficient education. An additional $85.8 million would replenish districts that spend more but were not fully funded.

Also, $412 million outside the budget would go toward fully funding every district and would be paid for with the millionaires' tax revenue.

The Democrats' budget also restores a proposed cut in the reimbursement rate for treatment of the uninsured by federally qualified health centers, and reverses the elimination of certain low-income adults from the FamilyCare health insurance program.

It includes $50 million for police in many high-crime cities, including Camden, and allocates about $61 million for a property-tax freeze program for seniors. Democrats also restored $7.5 million for women's health centers.

It terminates proposed co-payments for adult medical day care, removes a proposed $25 million cut to Medicaid reimbursements for nursing homes, and restores $47 million to the Urban Enterprise Zone program.

Property tax rebates in the form of credits would be restored to half of what they were in fiscal 2010, before they were eliminated.

The budget appropriates roughly $400 million, or about 1 percent, more than was allocated in the current fiscal year. The budget for fiscal 2011, whose last day is Thursday, included $876 million in federal stimulus money that will be made up for next year with state funds.

A letter sent by Treasurer Andrew Sidamon-Eristoff to Democratic leaders Tuesday said that the alternative proposal failed its constitutional obligations. Among the administration's objections was the insertion of additional education spending in a separate bill.

The administration also took issue with the budget's claiming $323 million in savings from the recently passed employee health and pension changes. Though that amount was anticipated by Christie when he delivered his February budget message, the final legislation was less stringent and the treasurer said the savings would be $165 million less.

Both houses passed a bill to restore a 20 percent cut made last year to the earned income tax credit for the working poor.

The millionaires' tax, vetoed by Christie last year, again generated debate.

Noting the retirement-income provision, Assemblyman John Burzichelli (D., Gloucester) said one of the reasons seniors chose not to stay in the state is because of its tax structure. Passing the bill would make the state more hospitable to them, he countered.

Republicans countered that the richest 1 percent of New Jerseyans already pay 40 percent of the income taxes, and wealth, jobs and philanthropic power will leave the state if taxes increase as a neighboring state, New York, lowers its income tax rate.

Both houses voted to urge the federal government to reject provisions in the Christie administration's waiver to change Medicaid provider reimbursement rates and eligibility for low-income parents.


Contact staff writer Maya Rao

at 609-989-8990 or mrao@phillynews.com.

Inquirer staff writer Matt Katz contributed to this article.

 

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