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N.J. Senate, Assembly approve $29.4 billion budget

TRENTON - The New Jersey Assembly passed a $29.8 billion budget early Tuesday morning, following the Senate's approval late Monday, all of which suspends property-tax rebates in 2010, increases no major taxes, and slashes state aid to schools and towns.

TRENTON - The New Jersey Assembly passed a $29.8 billion budget early Tuesday morning, following the Senate's approval late Monday, all of which suspends property-tax rebates in 2010, increases no major taxes, and slashes state aid to schools and towns.

The spending plan was down 8.8 percent from the budget for the fiscal year that ends Wednesday. It was only slightly different from the one proposed by Republican Gov. Christie in March.

Christie probably will sign the bill sometime on Tuesday. The fiscal year starts Thursday.

The Senate passed the budget bill by a vote of 21-19. In the Assembly, eight Democrats agreed to vote for the budget bill along with all 33 Republicans, so it passed 41-37.

The budget cuts $820 million in aid to schools.

Just before midnight, Assemblyman Albert Coutinho (D., Essex) drew applause as he said he would provide one of the Democratic votes needed for passage of the budget, in the spirit of bipartisanship. It still took nearly two more hours to pass the measure.

Assemblyman Joseph Malone (R., Burlington) noted that the budget was "beyond difficult," but the state faced a historic collapse in revenue and for years had not made hard choices as government continued to grow.

"Our government's addiction to spending has sickened taxpayers," said Malone, a sponsor of the budget bill.

"Everything important to middle-class and low-income New Jerseyans has been taxed in this budget," countered Assemblyman Lou Greenwald (D., Camden) in the hours before the bill passed in the Assembly.

Meanwhile, Senate president Stephen Sweeney (D., Gloucester) said Monday night that he would not be surprised if Christie called a special session of the legislature later this week to discuss Christies' proposals to curtail property taxes.

The Senate budget bill cuts spending across state government, but also employs some of the onetime budget fixes for which Republicans have criticized Democrats in recent years. In addition to suspending property-tax rebates, for example, this year's budget would skip all $3 billion in payments to state pension plans for public employees to close a budget gap of nearly $11 billion.

Senate Republicans portrayed the spending plan as a responsible, if difficult, step toward a better future for the state.

Sen. Anthony Bucco (R., Morris), who sponsored the budget bill in the upper house, said lawmakers had made changes to take the worst sting out of the legislation. He said the budget would "begin to right New Jersey's fiscal ship."

Democrats had a very different take, arguing that while Christie had advocated "shared sacrifice," he let the wealthiest New Jerseyans off the hook at the expense of the neediest.

Sen. Paul Sarlo (D., Bergen), chairman of the Senate Budget and Appropriations Committee, predicted that the budget would lead to "one of the largest property-tax increases in New Jersey history" by cutting aid to schools and towns.

"The ultimate test is whether all New Jerseyans are called to sacrifice," Sarlo said. "This budget fails that test."

With a new governor, Senate president, and Assembly speaker in place, this year's budget negotiations began with both parties taking militant stands and talking of a potential shutdown of state government.

Christie vowed not to increase taxes, while Democrats pledged to reject any budget that failed to renew the so-called millionaires' tax, a temporary income-tax surcharge that expired under Christie's predecessor, Gov. Jon S. Corzine.

But after Christie vetoed a bill to reinstate the tax, Democrats resigned themselves to approving the budget.

Many observers expect the real battle this year will be over Christie's proposed constitutional amendment to cap property-tax increases at 2.5 percent annually. New Jersey residents pay the highest property taxes in the nation.

On Monday, the Senate approved a counterproposal by Sweeney for a statutory cap of 2.9 percent annually, with exceptions for costs such as health care, loss of state aid, and pensions.

If the counterproposal passes in the Assembly, as expected, the governor will decide whether to approve it, veto it, or conditionally veto it, which would send it back to the Legislature with changes for lawmakers to consider.

Sweeney's proposal, like Christie's, would allow towns to "bank" unspent funds for future years as an incentive not to spend up to the cap each year.

Towns now are restricted to 4 percent increases annually but cannot bank unspent funds.

In order to put his proposed amendment on the November ballot for voter approval, the governor would have to persuade the Legislature to pass it by July 7. That would be the point of a special session.

Assembly Speaker Sheila Oliver (D., Essex) announced Monday that 12 Assembly Democrats had been assigned to study property-tax-overhaul ideas over the summer and to convene public hearings "in preparation for legislative action in the fall."

Democratic lawmakers, who hold the majority in both houses, took the unusual step this year of not sponsoring the budget legislation, apparently hoping to blame the GOP for the budget's painful cuts.

Democratic lawmakers promised to give the GOP enough votes to pass the budget only if all the Republicans approved it, leading to last-minute wrangling to ensure all GOP members were on board with it and more than a dozen related bills.

Democrats made some last-minute efforts to restore funding, including $7.5 million for women's health and $25 million for health care for poor families. Christie's budget would eliminate state aid to 58 family-planning centers that provide a range of health services to mostly low-income women. The governor can approve or veto the restorations; the women's health restoration received enough votes to override a governor's veto.

According to the state's Constitution, a budget must be approved by July 1, the start of the next fiscal year.

Most years, the Legislature takes a summer break after passage of the budget. This year, however, Christie is urging lawmakers to discuss his 33-bill "tool kit" for property-tax reform, the cornerstone of which is the constitutional amendment to cap property-tax increases.

Both houses also took action Monday on a slew of unrelated bills. The Senate approved legislation to grant the state an additional 90 days to implement the medical-marijuana law, which now will take effect Oct. 1.

Following heated debate, the Assembly voted to dramatically cut the time period after which the state considers money orders, calling cards, and gift cards abandoned property. While the measure aims to bring more revenue to state coffers, opponents expressed concern that it would hurt small businesses and be difficult to administer.

The lower house also approved a bill to raise fees on those taking civil service exams. While supporters said hiking fees would hurt unemployed people taking the tests, lawmakers against the bill said it was unfair for all residents to subsidize an expense that should be paid by the user.

The Assembly voted for a bill that would close out the 2010 budget using diversions from dedicated funds, provoking Democratic lawmakers to grill sponsor Malone on why Republicans now supported a practice they had opposed in earlier budgets endorsed by Democrats.

The Assembly also cleared bills that would ban local authorities from paying their executive directors salaries higher than the governor's and would lift a cap on an assessment of ambulatory-care facilities' revenues.

Contact staff writer Adrienne Lu at 609-989-8990 or alu@phillynews.com.