A Democrat-backed, $34.1 billion budget that enables the state to make a full pension payment in the upcoming fiscal year — in part by raising taxes on businesses and millionaires — is now headed to Gov. Chris Christie’s desk.
The Senate voted Thursday along party lines, 24 Democrats to 16 Republicans, to pass the spending plan. The Democratic-led Assembly followed suit later Thursday and also approved the budget along party lines, 48-31.
The plan was put forth by Democrats as an alternative to Christie’s proposal of slashing next fiscal year’s scheduled pension payment of $2.25 billion down to $681 million.
Christie has repeatedly said he’s opposed to any new tax hikes and is expected to veto the plan promptly.
The plan would raise the income tax rate on those earning more than $1 million annually from 8.97 percent to 10.75 percent and also hike the state’s corporate business tax to 10.35 percent from the current 9 percent rate. Those measures, in addition to putting off Business Employment Incentive Program tax abatements for a year, would look to generate some $1.3 billion in new revenue for the state, Democrats say.
“This is a fair and responsible budget that will help restore fiscal integrity to state finances,” Senate President Steve Sweeney (D-West Deptford) said. “It is a balanced budget that meets all the state’s obligations. It keeps the promise to retirees and middle class workers by making the full contribution to the pension system. Abandoning that commitment is not only the wrong thing to do, it would cause pension costs to multiply in the years ahead and it would put the state at risk of more downgrades in our credit rating.”
Christie won a court decision this week enabling him to cut the current fiscal year’s scheduled pension payment by roughly $900 million in order to plug an unanticipated revenue shortfall. Another court decision will most likely be needed to determine if Christie will be able to reduce pension payments again in the upcoming fiscal year.
“We stand at a watershed moment in New Jersey’s history where we can either propose real solutions to tough problems or we can point fingers and continue to dig a financial hole that one day may be too deep to climb out of,” state Sen. and Senate Budget and Appropriations Committee Chairman Paul Sarlo (D-Wood-Ridge) said. “By approving this budget, we chose to make the difficult choices and in a responsible way. The governor has repeatedly created budget deficits and has caused the state’s credit rating to be downgraded six times. This budget restores our fiscal integrity and protects the people of New Jersey from fiscal problems.”
Republicans railed against the proposal and voted against it in unison. State Sen. Tony Bucco (R-Denville) said it was “one of the toughest budget cycles” that he had ever been a part of.
“The only way to improve state revenues and protect public services is to make New Jersey more competitive and attractive to businesses, better than what our neighboring states are doing to take our jobs away,” Bucco said. “Raising taxes is clearly not the answer. Tax incentive programs are short-term fixes, but again, are not the answer.”
New Jersey Business & Industry Association acting President Melanie Willoughby said the tax increases under the approved plan “send the wrong message to the business community.”
“Great progress has been made in the last five years in reducing the burden on business,” Willoughby said. “We should not now be heading in the opposite direction — back to the bad old days of higher taxes and unfriendly business climate. Our economy is still too fragile.”
ALSO ON NJBIZ:
Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.View Comment Policy