Assembly panel clears $32B budget bill

The measure, with money for tax relief, now heads to showdown votes next week in the full Legislature.

Posted: June 24, 2012

TRENTON - A $32 billion state budget that contains money for tax relief, but with a provision to hold the funds for at least six months, cleared its final committee hurdle Friday.

Republican Gov. Christie threatened to make things uncomfortable for the Legislature's majority Democrats unless they make the tax cut immediate.

The bill, approved by the budget panel, heads to the Assembly and Senate for showdowns next week, then to the governor for his signature. A balanced budget must be in place by July 1, the start of the new fiscal year.

Meanwhile, two Assembly Democrats who were among a faction that had threatened to tie up the budget unless a vote on legislation to overhaul higher education was delayed backed down. That means the Democrats have enough votes to pass the spending plan without needing Republican help.

The proposed budget sticks closely to the spending plan Christie proposed in February.

One key difference is that the Democrats' plan sets aside $183 million for a modest tax cut, but holds up the money at least until January to see if the governor's optimistic revenue growth projections come true.

Christie and legislative Republicans want the tax cut implemented right away.

"I stuck my hand out and said I'll compromise, let's shake, and yesterday they slapped that hand away," Christie told a town hall audience in Readington on Friday. "So here's my announcement to them today. . . . If they want a fight, they're going to get one, and they're going to get one all long, hot summer until they cut your taxes."

Christie also took issue with the Democrats' third attempt to raise taxes on millionaires, and said he would use a red pen liberally to line-item-veto spending out of the budget.

The nearly 2 percent tax surcharge on the 16,000 wealthiest filers would be used to restore property tax rebates for the elderly, disabled, and those making under $100,000 a year. The Republican governor has vetoed that tax measure twice before and has vowed to do it again.

The budget the Democrats advanced relies on the same revenue projections as the governor - an ambitious growth rate of more than 7 percent in the fiscal year ahead that many economists, and Democrats, believe is too rosy to be realized.

Christie's estimates are also at odds with revenue collections through the first 11 months of the year and projections by the research arm of the Legislature, which warns that the shortfall could grow to $1.4 billion by next July.

The Democrats have added $130 million in spending to their budget, which includes increasing a tax credit for the working poor and providing additional aid to nursing homes. Corresponding spending cuts have been offered.

Sen. Kevin O'Toole (R., Passaic) said it was ironic that Democrats were relying on the governor's revenue forecast to build their budget while insisting that the state delay Christie's tax cut over fiscal concerns.

There were other apparent contradictions.

On Friday, Assemblyman Gary Schaer (D., Passaic) pointed out pitfalls in the governor's budget - it contains $260 million in additional borrowing for the transportation fund rather than paying up front for it, and it funds only a fraction of the state's obligation to employee retirement funds, for example - but then voted to approve it.

Monday's budget vote in the Assembly now promises to be less contentious than anticipated.

Two of nine Democrats threatening to withhold their budget votes changed their minds, clearing the way for the $32 billion spending bill to pass.

Assembly members Connie Wagner and Tim Eustace, both of Bergen County, said they would support the budget despite their concerns over the far-reaching plan to affiliate Rutgers-Camden and Rowan University and dismantle the University of Medicine and Dentistry that is being sped through the Legislature.

The two say they remain concerned but have changed their minds since Tuesday, when they signed a letter outlining their intention to withhold their budget votes unless the university restructuring legislation was delayed till November.

Their turnabout is significant, because it whittles the faction down to seven, not enough to affect the outcome of the budget bill. There are 48 Democrats in the 80-member Assembly and 41 votes are needed to pass legislation.

Assembly Speaker Sheila Oliver (D., Essex) scheduled an initial hearing for the university merger bill for Monday morning.

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