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New Jersey Gov. Chris Christie Revives Plan For Tax Cut

TRENTON, N.J. (AP) -- New Jersey Gov. Chris Christie has revived a tax-cut plan similar to one that floundered last year as the Democrat-controlled state Legislature fretted that the state would not have the revenue to support it.

Christie, who spelled out the latest version of the plan Monday in a conditional veto of a bill raising a tax credit for the working poor, is hoping enough Democrats will join the Republican minority in the Legislature to pass his tax-relief plan in a re-election year.

"We're now offering tax cuts for middle-class and working-class New Jerseyans. We've now addressed every issue those Democrats in the Legislature put up," Christie said while pitching the plan on New Jersey 101.5 FM Monday morning. "The question is why can't we return some of this money to the people who paid it in the first place?"

Early indications, however, are that Democrats are unlikely to move off the argument that the -state is not taking in sufficient revenues to support a phased-in 10 percent cut despite the addition of a "circuit breaker" that lets the Legislature scrap the cuts if they're not affordable.

"He's proposing new property tax cuts when he can't even pay for property tax relief promised this year," said Sen. Barbara Buono, Christie's likely opponent in November. "It's like he's forgotten his own budget framework."

The governor has asked to defer rebates to low-income and disabled taxpayers until late summer to close a gap in the current budget.

In the veto message, the Republican governor calls for doing what lawmakers wanted—restoring the state's earned income tax credit to 25 percent of the federal level from the current 20 percent, where it's been since Christie reduced it in 2010. But he also calls for implementing a bigger move aimed at the middle class and some higher earners.

At the end of a four-year phase-in, households earning up to $400,000 would receive an income tax credit equivalent to 10 percent of their property tax bill. The credits would be refundable and capped at $10,000.
Last year, New Jersey homeowners paid had the nation's highest average property tax bill of $7,900.

Assembly Speaker Sheila Oliver faulted the governor for proposing a plan without providing a means to pay for it, while her Republican counterpart, Minority Leader John Bramnick, called on the speaker to convene a special session to discuss and implement Christie's plan. Because the governor's proposal was laid out in the veto of a bill that originated in the Senate, it would be up to that chamber to act first.

Senate President Stephen Sweeney, a Democrat who has been Christie's partner on many major initiatives and his sparring partner on others, said last week he was open to a tax cut in the coming year, though one was not in the budget proposal Christie put forth.

On Monday, he told reporters the governor's veto would be reviewed, and he reiterated his position that any tax cut should be tied to revenue strength.

Qualifying homeowners under Christie's plan would get a $100 credit for the second half of 2013, then 4 percent of their property taxes next year, 8 percent in 2015 and 10 percent in 2016 and thereafter.

The governor also calls for gradually increasing the refund for renters—currently $50 -- to $200 by 2015.

The conditional veto, which is essentially a call to action for lawmakers, does not lay the cost of the credit or what changes might be made to his budget proposal to accommodate it.

In his first three years in office, Christie has successfully pushed for many big changes, including making government employees pay more for health insurance and pensions and making tenure for teachers harder to get and easier to lose. He also implemented a 2 percent cap on property-tax growth. But while he's vetoed three Democrats' attempts to raise income taxes on high earners, he has not been able to sell a tax reduction, despite an intense effort to do so. Reducing taxes could provide a boost for the already popular governor this year as he faces re-election.

New Jersey homeowners had grown accustomed to property tax refunds, but they have fluctuated with the state's finances. Currently, only senior citizens with household incomes under $150,000 and non-seniors with incomes under $75,000 get credits.

Last year, Christie proposed a 10 percent across-the-board income tax cut. When lawmakers said they would prefer a cut linked to property taxes, he acquiesced. But a deal fell apart as lawmakers—like some economists—feared Christie's revenue projections were too optimistic.

Ultimately, the Legislature adopted a budget that called for setting aside $183 million for a tax cut if the budget could bear it. In a year when the state was slammed by Superstorm Sandy and the economy grew more slowly than Christie's administration projected, it couldn't.

The nonpartisan Office of Legislative Services said this month that the state government could miss revenue estimates by $302 million in the budget year that ends June 30 and could be another $335 million short in the next fiscal year. The administration has said the state's finances are in better shape than that.

"This improves upon the bipartisan agreement we reached last year but was ultimately rejected by some legislators, who now have no reason to stand in the way of a responsible tax relief plan," the governor says in the conditional veto.

The new tax cut proposal comes as the governor and all 120 legislators face re-election.

(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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