Christie defends tax cut plan
LONG BRANCH — Gov. Chris Christie on Monday offered his most vigorous defense yet of a plan to trim taxes by 10 percent, saying tax relief has become “even more urgent” because of recent bad economic reports.
Christie’s proposal to phase in a modest residential tax cut over three years beginning in January has been at the center of a partisan storm over the state’s economic trend.
Democrats agreed to fund the first phase of the cut — $183 million — but Christie said they are holding the money political hostage by refusing to release it unless revenue collections meet his optimistic projection of 7.2 percent. Democrats say it would be irresponsible to cut taxes if the state can’t afford to do so. Christie vetoed the Democrats’ plan for middle-class tax relief in June because it relied on additional tax revenue from the wealthiest 16,000 filers.
“If we want to get the economy moving in New Jersey, we’ve got to be more competitive with our neighboring states, and we have the highest tax rates in the region,” Christie said when asked Monday about the state’s finances after an elementary school groundbreaking in Long Branch. “The reason the tax cut is even more urgent now is to try to make us more competitive with these other states.”
Sen. Paul Sarlo, a Bergen County Democrat who chairs the Senate Budget Committee, said Democrats persuaded Christie to support a property tax reduction rather than a personal income tax cut, which would disproportionately benefit the wealthy. But, Sarlo said, Democrats have since adopted a wait-and-see approach because of disappointing revenue collections.
Christie has been calling out Democrats for reneging on the deal after he agreed to go along with Senate President Steve Sweeney’s proposal for property tax relief. On Monday, the governor upped the ante: If Democrats don’t think the state can afford a tax cut, they should propose a corresponding amount in budget cuts to fund the tax break.
Assemblyman Vincent Prieto, a Democrat who chairs the chamber’s budget committee, convened a hearing last week to get a handle on how the state finished the 2012 fiscal year on June 30 and how well it’s done in the first two months of the new fiscal year. Christie didn’t send the state treasurer to testify and on Monday dismissed the effort as a political circus. But Prieto, of Hudson County, said the session shed light on the state’s ongoing and significant fiscal problems.
“We all want a tax cut and a successful state, but it must be a responsible tax cut, and we face major fiscal problems unresolved by this administration,” Prieto said.
A report released by the treasury showed tax collections are $100 million below projections for the first two months of the fiscal year. The Legislature’s budget expert estimates that the state finished 2012 with about $240 million less than projected. The state’s unemployment rate hit 9.9 percent in August, well above the national average of 8.1 percent.
Standard & Poor’s lowered New Jersey’s credit outlook to negative from stable. Two other ratings houses sounded similar warnings about the state’s structural budget deficit and ballooning pension fund obligation but retained a stable outlook for the state.
On Monday, Christie railed against what he termed Democrats’ obsession with revenue numbers and defended his conditional veto of a bill that would have required prompt monthly reporting of state finances, even though it mirrored an executive order he signed in 2010 requiring the treasury to publish monthly revenue reports.