Dems continue to snipe over tax rebates

As the Democratic Assembly speaker charged the treasurer with "poisoning the well of cooperation," Senate Democrats yesterday veered into a collision course with their Assembly comrades as the Democratic dispute over the budget and restoring property tax rebates simmered without a breakthrough.

Majority Senate Democrats called for setting tax rebates at $900 for senior and disabled citizens and $300 for others, short of the Assembly Democratic goal to offer $1,200 rebates for senior and disabled citizens and $800 for others.

"Property tax relief must be a priority, but it cannot be the only priority," Senate Majority Leader Bernard F. Kenny, D-Hoboken, said as he gathered most Senate Democrats together for a State House news conference to declare their support for much of acting Gov. Richard J. Codey's $27.4 billion budget proposal.

Codey, who is also Senate president, wants to partially restore rebates, impose new taxes - including a new cable and satellite television levy advanced yesterday - to enhance revenue and strengthen the state's budget surplus fund.

Assembly Speaker Albio Sires, D-West New York, welcomed Senate Democratic support for cutting another $100 million from the budget, but said both sides still had "a long way to go" with just a week left to approve a budget by July 1 and prevent a state financial crisis with the July 4th holiday looming.

Assembly Democrats want property tax rebates fully restored and no new tax increases.

"We are committed to working with the Senate to reach a consensus on the budget, but we remain firm in our position to achieve a budget that restores rebates, cuts spending and avoids new taxes," Sires said.

Senate Democrats had already supported some of Codey's proposal, particularly the planned tax increases and partial rebate restoration, but they clearly articulated that support yesterday.

"Our goal is to start the state on path towards a structurally sound, long-term budget," said Sen. Wayne Bryant, D-Lawnside, the Senate budget chairman. "That is what the governor said in March and it is something we all support."

Senate Democrats dropped their support for Codey's plan to raise $150 million through video lottery terminals at the Meadowlands, but Codey spokeswoman Kelley Heck said the governor was satisfied with the Senate Democrat proposal.

"In general, we support the plan because we think it's fiscally responsible," Heck said.

Codey introduced the $27.4 billion budget March 1 amid a $4 billion deficit. To close that gap, Codey proposed cutting rebates for senior and disabled citizens from $1,200 to $800 and eliminating them for all others, but Assembly Democrats seeking re-election this year insist rebates must be restored to help citizens deal with the nation's highest property taxes.

The Assembly Democrats proposed $468 million in budget cuts to restore rebates, but Treasurer John McCormac on Wednesday said most proposed cuts would either slice vital services or be impossible to implement.

All sides had accepted estimates the state will get $1.5 billion in unanticipated tax revenue this and next fiscal year. Senate Democrats yesterday agreed with Codey that $400 million of that money should boost property tax rebates.

They also agreed with Codey to eliminate several proposed tax increases, reduce a proposed sale of state assets and increase the state's surplus to $600 million. They want $150 million dedicated to needs such as schools, hospitals and cancer research.

Sires, meanwhile, took exception to McCormac's Wednesday claim that their proposed cuts would threaten state trooper positions and child welfare workers.

"The treasurer's statements were outrageous, irresponsible and completely out of line," Sires said. "The rhetoric he is employing is poisoning the well of cooperation that is needed to complete this budget process."

"It's alarming to see the treasurer employing scare tactics to protect the status quo bureaucracy," Sires said. "It's a very regrettable development."

McCormac declined to comment on Sires' statements.

The bill proposing the cable and satellite television tax, which would raise about $50 million, was released by the Senate Budget and Appropriations Committee, with Democrats supporting and Republicans opposing.

Republicans, the minority in both houses, have been bystanders. Senate Minority Leader Leonard Lance, R-Clinton Township, said Republicans were waiting for Democrats to end their dispute.

The cable and satellite tax comes after the Senate committee on Monday approved bills expanding the sales tax to raise $170 million and ending property tax and pension deductions for some taxpayers to raise $130 million.

But the proposed tax bills aren't going anywhere unless the Assembly agrees to move them and Assembly Democrats have vowed not to impose any new taxes.

The bill calls for a uniform 2 percent tax on the gross receipts from television reception service sales. The bill bars companies from collecting the tax directly from subscribers, but Karen Alexander, president of the New Jersey Cable Telecommunications Association, said federal law prevents the state from enforcing that provision. She predicted higher rates for the state's 2.5 million cable subscribers.