Sharp debate on N.J. budget

TRENTON - Lawmakers opened their review of Gov. Christie's proposed budget on Wednesday with sniping, sharp criticisms, and a reversal of roles for Democrats and Republicans.

On what some lawmakers referred to as their "opening day" on the $29.3 billion budget - their first hearings with nonpartisan fiscal analysts and Treasurer Andrew Sidamon-Eristoff - Democrats said Christie's plan would increase costs for the middle class, result in the largest property tax increases in state history, and give a break to the wealthy.

They also accused the Christie administration of "incompetence" for not releasing more budget details three weeks after the proposal was introduced.

"What we have in front of us is a tax-laden budget plan that targets the middle class, senior citizens, and the poor," said Assembly Budget Chairman Louis D. Greenwald (D., Camden). "It's a budget that spares no one but the wealthy and does nothing to cure New Jersey's addiction to property taxes."

He and other Democrats, who control the Legislature, said cuts to school and municipal aid, and the suspension of property tax rebates for 2010, amount to tax increases.

Republicans fired back by criticizing Democratic tax proposals and praising Christie for cutting spending. They said mayors and school boards should likewise reduce expenses.

Years of rising state spending did not hold down property taxes, said Assemblyman Jay Webber (R., Morris).

"While state spending went up, property taxes kept going up," said Webber, chairman of the state Republican Party. "There is a different way to go, and that's what the governor's proposal gives us an opportunity to do."

The back-and-forth likely foreshadows months of debate on the budget, which is supposed to be signed by July 1.

A morning hearing on revenue projections, a relatively dry topic, was full of pointed critiques and snippy exchanges between members of the Assembly Budget Committee.

After eight years featuring Republican criticism of budgets proposed by Democratic governors, the parties switched scripts.

Democrats - who defended similar proposals from recent Democratic governors - slammed Christie for using fund raids to close shortfalls and skipping the state's $3 billion pension payment.

Republicans - who long criticized such fiscal maneuvers as unsustainable gimmicks - came to Christie's defense, using the arguments Democrats previously employed: that if the steps were not taken, even more painful cuts would strike needed programs.

Much of the debate centered on an income-tax surcharge on those making $400,000 and up, which expired at the end of 2009. If reimposed, the tax hike would bring in around $1 billion and could ease some budget reductions.

Assemblyman John Burzichelli (D., Gloucester) contrasted that tax cut for the wealthy with the proposed loss of property tax rebates this year and a $45 million reduction in Earned Income Tax Credits, which go to those with low and moderate incomes.

A married couple with three children and $48,279 of income, the maximum for receiving the credit, would lose $283, Burzichelli said. Treasury figures show that the average recipient of the credit would lose around $92.

"The guys at the very top, who are going to be least impacted, are getting a break," Burzichelli said. "I don't think there's shared sacrifice."

Eristoff said Christie's budget did not include any broad-based tax increases.

"This governor will not sign a budget that increases taxes. To do so would break faith with the people of New Jersey, already the highest-taxed in the nation," and would hurt the state's economic position, he said. "Besides, history teaches us that tax increases in New Jersey never close deficits. They simply fuel more spending."

Democrats, however, said some savings proposals - increasing co-pays under a prescription-drug program for senior citizens and passing on more costs for the care of the developmentally disabled, among others - amount to de facto tax hikes.

Eristoff disputed the characterization, and called the changes service cuts.

"New Jersey has a spending problem. Specifically, New Jersey's state and local governments have built up unsustainable spending commitments over a long period of time," he said.

He also said Christie has reduced "one-shot" budget fixes from $3.8 billion to $1.7 billion.

The day began with revenue projections from the nonpartisan Office of Legislative Services.

Through July 2011, the OLS projected, state revenue will come in $250 million below Christie's predictions. If that forecast holds up, it would require more budget fixes, though the difference is small compared with overall spending.

The gloomier outlook comes in the midst of an "extraordinary and unprecedented state revenue decline," said David Rosen, the OLS's legislative budget and finance officer.

Revenues declined 11.2 percent in fiscal year 2009 and 6.1 percent in 2010, the largest annual declines in the last 40 years, Rosen said.

Compared with other budgets proposed in tough fiscal times, Christie's "relies decidedly more on spending reductions and less on revenue enhancement," Rosen said. Even so, the plan includes more than $600 million "state resources solutions." It also assumes the federal government will increase Medicaid funding to the state by close to $500 million.

He noted that the budget continues the state's pattern of failing to meet pension contribution obligations, this year by a record $3 billion.

As lawmakers begin to delve deep into plans for each state department, Rosen said that detailed budget documents had not begun to be released until late Tuesday, far later than usual.

"The delays have been extraordinary, beyond what I would have expected," he said, adding that the problem hampered the OLS analysis of the plan.

Greenwald referred to the delay as incompetence.

It was one more of the day's sharp exchanges, which continued into an afternoon hearing with Eristoff.

Addressing the administration's top fiscal officer, veteran Assemblyman Joseph Malone (R., Burlington) cracked sarcastically, "Mr. Treasurer, welcome to the budget hearings."