Gov Calls Legislature to Special Session July 2, Seeks Tax Cut Now

By: Jennifer Keyes-Maloney7/3/2012 12:00:00 AM

In a speech July 2 before a joint session of the Legislature, Gov. Chris Christie urged the immediate passage of a four-year, $1.4 billion income tax cut but the Democratic Legislature wasn’t buying, calling the appeal “pure theatrics.”

Unmoved by the 17-minute plea, Democrats dismissed the session as a stunt intended to increase his YouTube hits and bolster his national credentials eight weeks before the Republican National Convention in Tampa.

"This is a YouTube moment," Senate President Steve Sweeney (D-Gloucester) said. "That’s all this was. We provided a responsible budget, spent less than he did, (and) put the money in to ensure a tax cut. What it comes down to is, we have to make sure the money is there."

The speech came hours after the Governor vetoed the millionaires tax for a second time.

Christie’s Appeal, Dems Dismissal

"The people of New Jersey deserve a tax cut," Christie urged in a speech to a joint session of the New Jersey Legislature he had used his constitutional authority to summon.

But Democratic legislative leaders made it clear that they would approve no tax cut until the "New Jersey Comeback" Christie proclaimed almost six months ago produces the 7.3 percent revenue growth that the governor has promised -- and that vote will not come before December.

The governor has touted what he calls a “Jersey Comeback” that will cover tax cuts and higher spending. His proposed fiscal 2013 budget counted on a 7.2 percent revenue gain compared with 2012, second only to a 7.7 percent jump projected by California Governor Jerry Brown, according to an analysis of a National Governors Association report.

Treasurer Andrew Sidamon-Eristoff, a Christie appointee, has said that revenue through the June 2013 end of the fiscal year may trail the governor’s target by $700 million, while the Legislature’s chief budget analyst has said the gap may be almost twice that size.

Which is why Democrats have said they will wait at least until at least December, halfway through the fiscal year, to evaluate the revenue picture and make a decision whether to implement a tax rollback at that time.

“We’re giving him the benefit of the doubt here and saying the money is in the budget,” Sweeney said in his statehouse office after Christie’s remarks. “Why would we jump and do something today, then come December, we may have a big hole in our budget.”

In fact, the Legislature set aside funds in surplus to effectuate the tax cut should revenue projections come in as the Governor expects.

“We set aside $183 million in the surplus for a tax cut, and if the revenues come in, we'll approve it," Senate Budget Chairman Paul Sarlo (D-Bergen) said. "Whether we vote today or six months from today, nobody will get a tax cut until they file their income taxes in April 2013, and the governor knows it. This is all aimed at a national audience."

A Call for Bipartisanship

For the second time in seven weeks, Christie emphasized that he was willing to abandon his own 10 percent across-the-board income tax cut -- which would have primarily benefited wealthy "job creators," as he put it -- in favor of a plan advanced by Senate President Stephen Sweeney (D-Gloucester) to provide property tax credits up to $1,000 on the income taxes of all those earning up to $400,000. As an additional inducement to Democrats, he offered to include funding for the increase in the Earned Income Tax Credit for the working poor that he had vetoed on Friday.

"I have come to the center of the room and agreed to the Senate Democratic tax plan," Christie said. "Will you join me? Will you act today to guarantee a summer of tax relief, job competitiveness, and increased confidence in state government for our citizens?"

Christie also referenced a list of bipartisan “successes” in his speech, including tenure reform, mandatory drug treatment and a "historic reorganization" of higher education as a few examples.

"Our state is a better place because of what we have done and our people can feel it," Christie told a chamber packed with lawmakers who had reluctantly returned. "Let’s not stop now. We know that we have the means after the years of shared sacrifice to give the people of New Jersey relief."

He went on to juxtapose the Congress and New Jersey government.

"This is a moment," Christie said. "But it's not a moment where we should take a cue from Washington, D.C., and begin emulating the politically shameful performances we see down there. Washington, D.C., has been paralyzed because people talk at one another, not to one another. No one stops for a second to think about how what they fail to do today will lead to failure for our citizens tomorrow. Instead, it's a constant fight to see who wins the next 24-hour news cycle.

"Is that really what we aspire to be here in New Jersey?" he exclaimed.

He also struck a playful note toward Sweeney and Sens. Loretta Weinberg (D-Weinberg) and Jeff Van Drew (D-Ocean). He said the lawmakers had initially agreed with him to let residents claim 10 percent of their property taxes as a dollar-for-dollar credit against their income tax bill.

"Imagine that — a tax cut plan endorsed by Sweeney, Van Drew, Weinberg and me?" he said. "Let’s not let a moment that comes with the frequency of Halley’s Comet pass us by ... Let’s show our state we can work together and finish the job before we leave for this holiday weekend."

But Legislative Leadership appeared unmoved by Christie's argument that New Jerseyans need to see immediate action on tax cut legislation.

"I'm rooting him on the revenue projections. I'm hoping they come true because if his revenue projections come true that means that people have gone back to work," said Sweeney.

Like Sarlo, Sweeney asserted that Christie's demand that the Legislature come in for a special session was "completely unnecessary because we've already placed in the budget the money for a tax cut."

Sweeney, who had persuaded Christie in May to shift from an income tax cut weighted toward the wealthy to his middle-class property tax credit plan, has stressed that the Legislature could wait until December or even later to approve his legislation because the income tax write-off would go into effect when taxpayers file their income taxes next April anyway.

Millionaire’s Tax Vetoed, Rises As Sweeney Property Tax Plan in CV

As expected, Christie rejected the Democrats' "millionaire's tax" within minutes of the speech- calling it an $800 million tax increase. The tax proposal would have increased the top income tax rate on the state's 16,000 millionaires from 8.97 percent to 10.75 percent in order to fund expanded property tax credits for senior citizens making up to $250,000 and homeowners up to $150,000.

Using his conditional veto powers to propose revised legislation, Christie transformed the "millionaire's tax" into the Sweeney property tax credit program, and asked the Legislature to approve it. He simultaneously proposed a $50 million restoration of the earned income tax credit on the condition that Democrats sign on immediately to the tax cut he and Sweeney had arrived at.

Christie noted that the spending cuts he made in the $31.7 billion budget June 29 increased the state's surplus to $650 million -- up from $300 million in Christie's original proposed budget and $486 million in the budget passed by the Democratic-controlled Legislature on a party line vote last week.

"Can't we afford to send just one-third of that surplus back to our citizens? I say yes. We have the money available to fund a tax cut that gives relief to middle-class New Jerseyans," he insisted.

What Christie didn't mention in his 17-minute speech was that his conditional veto not only would have required the state to provide a $183 million property tax credit on income taxes for this year, but also would have locked in an additional three years of tax cuts that would have cost the state an estimated $575 million in Fiscal Year 2014 and would have grown to $1.4 billion by Fiscal Year 2016.

"The governor is putting this state on a fiscal precipice," said Assemblyman John Wisniewski (D-Middlesex), the state Democratic Party chairman. "Nobody in this chamber is against tax relief. But everybody is against borrowing $261 million for 30 years in order to pay for tax relief, which is what this governor is doing to balance his budget. We have billions of dollars in future pension obligations, a transportation program that will ultimately cost $900 million out of the budget, and the governor has loaded this budget with so many one-shot revenues that we don't know how we're going to replace them next year. We need to be fiscally responsible."

Wisniewski and Assembly Majority Leader Lou Greenwald (D-Camden) both noted that Christie's expanded surplus was smaller than the $724 million to $824 million shortfall that David Rosen, budget officer for the non-partisan Office of Legislative Services, is projecting in Christie's revenue projections for the fiscal year that began Sunday.

While the Democrats' refusal to go along with Christie's demand for an immediate tax cut most likely ends the legislative battle over tax cuts for at least several months, Christie is promising to wage a political campaign over the issue all summer.

Before his address to the Legislature yesterday, Christie already had taped a new radio ad taking credit for vetoing the millionaire's tax and calling upon Democrats to cut taxes.

Meanwhile, the Republican State Committee launched a robocall attack ad campaign against Senators Richard Codey (D-Essex) and Barbara Buono (D-Middlesex), both of whom are considered potential Democratic candidates for governor next year, and Senator Robert Gordon (D-Bergen), whose 38th District battle was the most hotly contested Senate race in 2011 and is likely to be again next year. The robocalls charge the Democrats with voting to raise income taxes by $800 million -- without mentioning that the income tax hike would only apply to millionaires, of course.

Governor's Speech as Delivered

Source: NJSpotlight, NJ.com; Bergen Record