N.J. Democrats try a third time to introduce 'millionaire's tax'

Gov. Christie exhorted Democrats during a Thursday news conference to stop "dithering" and pass a tax cut. With him was Lt. Gov. Kim Guadagno. GEOFF MULVIHILL / Associated Press
Gov. Christie exhorted Democrats during a Thursday news conference to stop "dithering" and pass a tax cut. With him was Lt. Gov. Kim Guadagno. GEOFF MULVIHILL / Associated Press
Posted: June 15, 2012

TRENTON — Budget talks between Gov. Christie and the Democratic Legislature drifted farther apart Thursday after Senate Democrats indicated they might delay property-tax credits and Assembly Democrats said they still intended to propose a "millionaire's tax," a measure Christie has vetoed twice.

At a news conference Thursday morning to talk up the state's latest employment figures, Christie told Democrats to stop "dithering" and pass a tax cut. The Republican governor's proposed budget includes a 10 percent income-tax reduction, but he recently said he might instead support a 10 percent property-tax credit offered by Senate President Stephen Sweeney (D., Gloucester).

After state tax collections missed the mark in April and May and unemployment increased to 9.2 percent, Senate Democrats grew reluctant to pass an expensive tax-cut bill. Christie's and Sweeney's plans each would cost $183 million in fiscal year 2013, which begins July 1, the day the new budget would take effect. The total cost would increase to $1.3 billion by the end of the cut's three-year rollout.

Democrats worry the Christie administration is relying on overly optimistic revenue growth. The Assembly wants to put the $183 million Christie budgeted for the first year into an escrow fund to be used for property-tax relief when the state meets certain revenue benchmarks, Greenwald said Thursday. The Legislature will hash out those parameters in the next two weeks, before lawmakers break for summer.

Senate Budget Committee Chairman Paul Sarlo (D., Bergen) indicated the Senate may do the same, delaying a tax cut or tying it to financial benchmarks. He said details would come out when the Senate bill is introduced Thursday.

"If the revenues continue to come back — as the governor reports they will — we will provide the necessary revenues to support a tax cut," Sarlo told reporters after an hours-long Senate caucus meeting. "But we need to see that over the course of the next several months."

Spokesmen for Christie did not immediately respond to requests for comment Thursday evening.

The Assembly also will post a bill that would hike the tax rate for those earning $1 million or more, Greenwald said. The rate would increase to 10.75 percent from 8.97 percent, and would raise $800 million, he said. Proceeds would go toward property-tax credits for senior citizens who make less than $150,000 and other homeowners with incomes of less than $75,000 annually.

"The governor wants tax cuts. It's the quickest and most reliable way to get those tax cuts to the people," Greenwald told reporters after an Assembly caucus meeting.

During recent months, Christie has said repeatedly he would again veto a millionaire's tax if it reached his desk. State Treasurer Andrew P. Sidamon-Eristoff told lawmakers last month the state already was overly dependent on revenue from those taxpayers, whose incomes often depend on bonuses and investments. The volatility in that income bracket makes accurately predicting revenue difficult, he said.

The Legislature has offered enough breaks to high earners to help spur the economy, Greenwald said.

"Unemployment went up again today," he said. "These are the job creators — where are they?"

Though Greenwald said the Senate leadership now supported a millionaire's tax, a spokesman for Sweeney would say only that discussions about the issue were still going on. He has said he did not include a millionaire's tax in his plan for property-tax relief because he knew the governor would veto it.

Christie's budget proposal relies on 8.6 percent revenue growth in the coming fiscal year. His administration recently had to adjust the fiscal 2012 budget after revenue came in below expectations in April and May.

The nonpartisan Office of Legislative Services has projected a potential shortfall of up to $1.4 billion through July 1, 2013, under Christie's proposed spending plan.

"No other state in the country is showing growth of that magnitude," Sarlo said. "At the end of the day, the budget that will be adopted will be based on revenues that are certified by this governor. He is going to have to live with that going forward if the revenues do not produce."

New Jersey added 17,600 jobs in May, the largest one-month gain in seven years. But nearly 10,000 of those jobs were in the leisure-and-hospitality sector, which got a boost from temporary summer hires and the opening of the Revel casino in Atlantic City.

"If only we can find a way to keep our beach-tag checkers employed through December," joked Assemblyman John Wisnieski (D., Middlesex), chairman of the state Democratic Party.

Despite two recent reports that show New Jersey is recovering from the recession more slowly than other states, Christie said at his Thursday-morning news conference he was confident the Garden State was on the upswing and could afford a tax cut. He said Democrats were being "naysayers" because if they agreed with him, they would have to admit his policies had been a success.

"This is a very difficult pill for Democrats to swallow," he said.

Contact Joelle Farrell at 856-779-3237, jfarrell@phillynews.com, or follow on Twitter at @joellefarrell.

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