N.J. budget may snag on controversy over colleges

Posted: June 23, 2012

TRENTON - The state's proposed $32 billion budget got caught up in anxieties over the overhaul of New Jersey's universities Thursday, as a group of Democratic lawmakers threatened to buck their party unless adoption of the university plan was postponed.

Nine Democrats, led by former Assembly Majority Leader Joseph Cryan of Union County, told their leaders they wanted to vote on the reorganization of the state's higher education system in the fall instead of next week. Otherwise, they said, they would vote against the budget that the party's leadership introduced Thursday.

"This legislation is three weeks old and is going to be the biggest change in higher education since the Rutgers Act of 1956," Cryan said in the middle of a marathon day at the Statehouse. "We need a full understanding of the implications of this bill."

The threat emerged after days of closed-door meetings as Democratic legislators tried to create a budget for the next fiscal year, which begins July 1, while trying to find common ground on the sweeping university restructuring.

The budget that Democrats introduced is similar to Gov. Christie's proposal, particularly because it uses the governor's revenue projections.

Christie is projecting a 7.2 percent increase in revenue next fiscal year, which Democrats have criticized as an overly optimistic ploy to enable to him to pay for a tax cut. Since Christie can certify the revenues when the fiscal year begins July 1, though, Democrats said they had no choice but to use his numbers.

Still, Democrats did not give Christie the across-the-board 10 percent tax cut he has sought for months. Instead, separate legislation is moving through the Legislature that sets aside $183 million for a credit on property taxes that would go into effect in January only if the state reaches the governor's revenue projections.

Also, in a party-line vote in the Senate budget committee, Democrats passed an increase on income taxes for millionaires, to pay for $789 million in property-tax relief.

Christie has vetoed the so-called millionaire's tax twice before, and would undoubtedly do it again.

In a statement, Christie linked legislative Democrats and former Gov. Jon S. Corzine: "After months of promising to deliver critical tax relief to the people of New Jersey, Corzine Democrats today proved it's just more of the same when it comes to their addiction to raising taxes and holding tax relief hostage."

Yet for all of Christie's talk of fiscal conservatism, the Democrats' $31.7 billion budget proposal is actually $62 million less than a revised plan Christie offered in May. Savings come in part from not filling some state worker positions and banking on the state's collecting a great percentage of outstanding debts.

There are also reductions reflected in the Democrats' plan. It cuts $9.4 million in spending on welfare, although Democrats said most of the cuts are based on recent recommendations from Christie's Treasury Department.

The Democrats added $59 million in spending, including $25 million for nursing homes, $3.5 million for cancer screening, $3.6 million for community health centers, and $5 million for legal services for the poor. There's also a $50 million increase in the earned-income tax credit for the working poor.

"As New Jersey's economy continues to grow," said Sen. Paul Sarlo (D., Bergen), chairman of the Senate budget committee, "we should give money back to the taxpayers."

The hunger for tax cuts was evident on several levels Thursday. The Assembly Budget Committee approved a bill that increases the amount it can borrow for transportation projects. That allows Christie and the Legislature to move $260 million into the state's general fund.

The proposal contradicts Christie's transportation capital program, which intended to increase fiscal responsibility by paying more up front and borrowing less.

Even as they voted for the bill, legislators from both parties expressed concern about burdening future taxpayers.

"I am appalled by its fiscal irresponsibility," said Assemblyman Gary Schaer (D., Passaic), who nonetheless voted yes. The vote was 10-2, with the two dissenters, both Republicans, saying the plan was unconstitutional.

The budget contains other items that could be problematic. For example, even as Sarlo acknowledged that a pending state Supreme Court decision might forbid absorbing $200 million from towns' affordable housing trust funds into the budget, that line item remains in both Democrats' and Christie's plans.

The ink was barely dry on the Democrats' budget when Republicans griped that they did not have time to digest the 14 pages of line-item changes and a packet with dozens of changes to budget language.

"I think the people of New Jersey will be surprised when the Legislature in 10 minutes is asked to vote on a $32 billion summary document," said Senate Minority Leader Thomas H. Kean Jr. (R., Union).

It passed out of the Senate budget committee along party lines. On Friday, it will be taken up by the Assembly budget committee, and it faces a vote of the full Assembly and Senate on Monday.

If it is passed, Christie is empowered under the state constitution to eliminate specific items, as he did last year.

Its passage, though, now appears contingent on the nine maverick Assembly Democrats' efforts to delay the higher education overhaul.

A sponsor of the education bill, Senate President Stephen Sweeney (D., Gloucester), postponed the vote on that measure until Monday. If approved, it would fold most of the University of Medicine and Dentistry of New Jersey into Rutgers University, and affiliate Rutgers-Camden with Rowan University.

There have been divergent reports this week on the costs of the overhaul.

According to a summary of a report by the nonpartisan Office of Legislative Services to the Senate Budget and Appropriations Committee, Rutgers may have to go through a costly bond restructuring process.

Earlier, the Treasury Department said Rutgers would not have to reissue its bonds - the cost of which the university estimates may run to $155 million.

The legislation, which has undergone extensive revision, was again amended Thursday when Democrats installed a provision that if any part of the plan could not be carried out, none of it would be carried out - pressuring a reluctant Rutgers to part with Rutgers-Camden or risk losing UMDNJ.

There may be a way for the higher education bill to pass by July 1, as Christie wants.

State Sen. Jim Holzapfel (R., Ocean) suggested that Democratic leadership could make concessions to bring enough Republicans on board for their budget bill so the Cryan Nine's votes aren't needed.

"If you can do it on your own, you do. And if you can't, you come to a consensus with the other side. . . . It's the art of politics," he said.

Contact Matt Katz at 609-217-8355, mkatz@phillynews.com, or follow on Twitter @mattkatz00. Read his blog, "Christie Chronicles," at www.philly.com/ChristieChronicles.

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