|6-28-12 State Budget and Related Issues in the News|
The Record - A rundown of legislation heading to Christie's desk… “He can veto or accept the Democrats' budget — which doesn't include his signature income tax cut, but does have several new spending items — or he can line-item veto specific parts of their budget and enact others… And dozens of other bills are being rushed to the governor's desk — some covering some major issues…”
NY Times - POLITICAL MEMO- As His Optimistic Budget Falters, Christie Comes Out Swinging
Politickerknj - Rutgers Board of Govs to vote on merger today
Star Ledger - State Legislature to vote on Rutgers-Rowan-UMDNJ merger today
The Record - A rundown of legislation heading to Christie's desk
Thursday, June 28, 2012 BY JOHN REITMEYER STATE HOUSE BUREAU
Governor Christie has a big decision to make on the budget Democrats sent him Monday with a few days to go before the state constitution's deadline for a balanced spending plan.
He can veto or accept the Democrats' budget — which doesn't include his signature income tax cut, but does have several new spending items — or he can line-item veto specific parts of their budget and enact others.
And dozens of other bills are being rushed to the governor's desk — some covering some major issues. Here's a look at the top decisions Christie will have to make:
Tax relief: At the top of the list of decisions Christie has to make is what he does with the $183 million Democrats set aside in their $31.7 billion spending plan for tax relief. The governor said during the State of the State address in January that New Jersey's economy was bouncing back from recession and state taxpayers should enjoy some of the success by getting an income tax break. But the state's unemployment rate has gone up and tax collections have failed to meet Christie's growth targets. In response, Democrats put $183 million in their budget for tax relief, but as an income tax credit for middle-class homeowners. And Democrats say they are being responsible by holding back legislation to enact the tax relief until January to make sure tax collections meet the governor's lofty expectations. Christie is hammering Democrats for holding up the tax relief. But he has yet to say what he'll do about it, whether that's an outright veto or just the line-item veto many expect.
Millionaire's tax: For the third time, lawmakers in the Democratic-controlled Assembly and Senate are advancing legislation that would hike the income tax rate on earnings over $1 million. The increase is expected to generate nearly $800 million, which Democrats plan to use as property tax relief. Christie has twice vetoed efforts to enact the higher rate. The governor is expected to again veto the legislation even at the expense of appearing to be against property tax relief.
Earned income tax credit: The Democrats' budget restores Christie's 2010 cut of the tax credit program for the working poor. Democrats passed legislation to specifically restore the cut, something they tried to do last year as well. Christie, earlier this year, announced that he was also in favor of restoring the cut, but said it should be delayed until the next budget, not the one that will go into effect on July 1. The restoration costs $50 million. Christie could delete it, or keep it in and take credit for the restoration.
Halfway houses: After stories in The New York Times this month detailed problems with the state's system of privatized halfway houses — some run by a company with close ties to the governor and one of his top advisers — Democrats inserted language into their budget that calls for upgraded monitoring. Democrats also sent Christie a bill that would direct the state auditor to review the private contracts. Republicans all voted against the measure. If Christie deletes the budget language and the oversight legislation, the former U.S. attorney who made his mark targeting corruption risks appearing as if he holds his allies to a different standard.
School funding: Christie increased direct aid to schools in the $32 billion budget he proposed in February, but with a catch. Suburban schools would see more state aid at the expense of urban districts. Democrats took Christie's language out to block what many perceived as an attempt to get around the state's school funding law.
Higher education merger: The governor has been pushing to reorganize Rutgers and Rowan universities, as well as the University of Medicine and Dentistry of New Jersey. Originally, the governor thought he would be able to implement his plan, which would provide a medical school to Rutgers in New Brunswick, while boosting Rowan in South Jersey, through his executive powers. But a state appellate court decision on affordable housing affirmed that Christie would need cooperation from lawmakers. Democrats who control the Legislature have been working on a bill that would make many changes, though dozens of last-minute amendments have now seen the measure take on a new life. And cost concerns have yet to be resolved. Christie will have to decide whether he can live with this version of higher education reorganization.
Teacher tenure: The governor has pushed for changes to K-12 education in New Jersey since taking office, including the way teachers and principals achieve tenure. But after declaring 2011 the year for education reform, the governor was stymied by Democrats reluctant to simply enact the legislation he proposed. Instead, they methodically worked with the New Jersey Education Association and other stakeholders to come up with compromise legislation. The tenure bill cleared both houses of the Legislature this week. Though watered down from his original bill, Christie would accomplish another one of his major goals — along with a property tax cap and public employee benefits changes — by enacting the legislation.
Transportation spending: The Legislature is sending Christie a bill that would increase borrowing capacity for the state Transportation Trust Fund, which pays for road, bridge and rail improvements. For Christie, the reliance on borrowing without voter approval goes against positions he took on state debt as a candidate. But tax collections are lagging behind growth projections and transportation infrastructure projects provide a major source of in-state jobs. Christie has signaled he's willing to take a hit on this issue by announcing last month that the state would use $260 million that would have supplemented transportation spending to rebalance his budget, something that will bring on even more borrowing.
NY Times - Political Memo- As His Optimistic Budget Falters, Christie Comes Out Swinging
By KATE ZERNIKE Published: June 27, 2012
Gov. Chris Christie of New Jersey promised a have-your-cake-and-eat-it-too budget for next year, one that would make the state’s pension payments, increase money for schools, provide drug treatment for nonviolent criminals, restore tax credits for the working poor and give every taxpayer a 10 percent income tax cut.
At $32 billion, the proposal for the next fiscal year — unveiled in February — included the biggest spending increase of any governor in the country. But it was based on the most optimistic revenue projections in the country, too, assuming that taxes and fees paid to the state would rise 7.3 percent.
Now those projections are coming up short. With unemployment in New Jersey still higher than the national average, tax revenues have failed to meet targets for several months in a row. Depending on whether you believe the governor, the nonpartisan legislative office that analyzes the budget, or the rating agency Moody’s, the state will take in anywhere from $704 million to $2.2 billion less than it had anticipated.
But far from backing down, Mr. Christie has reacted in character. He derided the director of the nonpartisan office who downgraded the revenue estimates as a partisan hack, a “Dr. Kevorkian of the numbers.” And he doubled down on his bet, insisting that even with reduced revenue, the state could still afford the $183 million tax cut.
To make the numbers work, he proposed doing what he said he would not: borrowing $260 million from transportation projects that he had planned to pay for in cash so he could transfer money from the state’s Transportation Trust Fund to cover holes in the budget.
The governor, a Republican, had already filled the trust fund with money from a project to build a Hudson River train tunnel, which he canceled in 2010. His budget includes an additional $500 million in other one-time transfers — a tactic he derided as a gimmick when his Democratic predecessors did it.
Democrats, who control the Legislature, approved a budget this week that looks largely like Mr. Christie’s, including the $183 million tax cut, but with this condition: The cut will kick in only if the revenues the governor is predicting come in as promised in January.
Mr. Christie is unlikely to veto the entire budget, which would shut down the government starting Sunday, when the 2013 fiscal year begins. Instead, he will fight the way he typically wins: in public relations. He promises to flog Democrats “all long, hot summer” in town-hall-style meetings, the kind that have made him a YouTube sensation and a superstar of the national Republican Party.
“We’re going on tour!” he declared at the latest one, in largely Republican Bergen County on Wednesday.
But even some in the audiences — almost uniformly adoring crowds — suggest that the governor may be in a bind.
On Friday, at a town-hall-style event in Readington, in well-off Hunterdon County, a man stood up holding a flier that the governor’s staff had distributed, which boasted of a “New Jersey Comeback” that would allow an increase in spending as well as the tax cut.
Wouldn’t this require the kind of borrowing that got the state in trouble before? “I’d like to know what the remainder of the plan will be,” the man said.
Mr. Christie, who typically conducts the back and forth of these events at sitcom speed, was uncharacteristically slow to respond. First he asked to see the flier. He read it while the audience sat silently. Then he summoned his favorite boogeyman, his Democratic predecessor, arguing, “It’s still lower than Jon Corzine’s 2008 budget.”
“We’re not borrowing money to be able to spend money,” he added. “We’re borrowing for long-term capital interests — roads and bridges. Those are the things you should be borrowing for.”
But Mr. Christie has built his reputation on making what he calls “the hard choices.” His early budgets reflected fiscal conservatism: he began paying off pension obligations, required public workers to pay more for their benefits and managed to keep a healthy surplus for a rainy day.
Now, even if revenue comes in as he hopes, he has set the state up for higher debt costs down the road. And the surplus cushion he put in the budget is smaller than that of any other state.
Mr. Christie has had to assume such high revenue in part because of tax cuts he already made. According to the Office of Legislative Services, a cut in corporate taxes cost $70 million in 2012, and next year, will cost $127.5 million. Many wonder why Mr. Christie is focused on an income-tax cut — a woman in Readington asked the governor why he did not cut property taxes, which are a much higher burden.
The income-tax cut would give back about $275 a year to a family earning $100,000. Polls show most residents would prefer a property tax cut. An editorial cartoon in The Star-Ledger of Newark this month caricatured the governor as saying: “I promised you an income-tax cut you don’t need and we can’t afford, and I’m willing to borrow millions and shut down the government to get it!!’” The caption: “Chris Christie: fiscal conservative.”
Democrats insist that the governor has an eye on Tampa, Fla., where the Republicans will have their national convention this summer. Mr. Christie is often discussed as a vice-presidential candidate or a keynote speaker, perhaps to set up a future run for president. A 10 percent tax cut sounds good, but cutting the property tax by that much would cost about $500 million, compared with $183 million for the income-tax cut proposal.
The Democrats argue they are the ones who have actually made tax cuts: among the few changes they made to the governor’s budget proposal is a plan to give municipalities money they had been promised from energy tax receipts, which they can then use to avoid raising property taxes.
The Democrats also restored the earned-income tax credit, which the governor had promised but not included in his plan until 2014. They also voted to give property tax credits of from 10 percent to 20 percent on the first $10,000 paid by people earning up to $250,000.
“We’ve given him true tax cuts on property taxes, and we’ve identified the revenue with which to give them,” said Louis Greenwald of Camden, the leader of the Democratic majority in the State Assembly.
But to assist with property taxes, they voted to raise the marginal tax rate on the state’s 16,000 millionaires, to 10.75 percent from 8.97 percent.
Mr. Christie’s aides say that makes the Democrats’ argument hard and his easy: I want to give you a tax break; Democrats — “Corzine Democrats,” as he has branded them recently — want to raise taxes instead.
Paul A. Sarlo, the Democratic chairman of the Senate Budget Committee, scoffed at that idea. “When you have a responsible plan such as ours, it’s easy to explain,” Senator Sarlo, of Wood-Ridge, said.
“We’ve taken the high road,” he added. “These are his revenue projections; he’s got to live and die by them.”
At a town-hall event on Tuesday in Brick, Mr. Christie referred to Mr. Sarlo with a profanity. It was just a preview of his long, hot summer.
Politickerknj - Rutgers Board of Govs to vote on merger today
The Rutgers Board of Governors will meet this morning at 10 a.m. to vote on a controversial plan that would see the university absorb portions of the University of Medicine and Dentistry of New Jersey and merge its Camden campus with Rowan University in Glassboro.
The meeting comes after a long night of negotiating that resulted in an agreement that assuages the board's concerns over the governance of the university, sources with knowledge of the negotiations tell PolitickerNJ. Talks with the Board of Trustees reportedly self destructed amid collective bargaining concerns, the sources said Wednesday.
According to the sources, the board is expected to approve the plan.
Star Ledger - State Legislature to vote on Rutgers-Rowan-UMDNJ merger today
Published: Thurs, June 28, 2012, 6:15 AM The Star-Ledger
TRENTON — Both houses of the Legislature are scheduled to vote today on a sweeping plan to restructure the state’s higher education system.
The controversial bill (S2063), which has gone through many changes since Gov. Chris Christie announced the plan in January, would merge Rutgers-Camden with Rowan University and govern them with a joint board. It would also fold most of the University of Medicine and Dentistry of New Jersey (UMDNJ) into Rutgers. Rowan also would take over UMDNJ's School of Osteopathic Medicine in Stratford.
Although the Legislature is rushing to pass the bill, which Gov. Chris Christie said he wants done by July 1, its final cost remains unclear.
Proponents say it will save the state money in the long run, but Rutgers officials testified this week that it would cost the university at least $155 million to refinance its debt if it had to cut financial ties with its Camden campus.
Garden State Coalition of Schools