Democrats' budget puts Christie on spot

TRENTON - Democratic lawmakers sent a budget to Gov. Christie on Monday night that tests whether he will let the government shut down over a tax-cut dispute.

The Democrats' tax-relief plan is starkly different from Christie's proposal, setting up a possible showdown in the five days before the new fiscal year begins Sunday.

The Republican governor can veto the budget bill outright, forcing a last-ditch attempt for compromise before Sunday, when the government would be unable to pay its bills.

He could do what he did last year: Cross out specific appropriations - such as social programs important to Democrats - and then sign the budget anyway.

Or, as Christie often does, he could pull a wild card. For example, he could issue a "conditional veto" of an unrelated taxation bill and insert language mandating his tax cut. The Legislature would then have to vote on that proposal.

The $31.7 billion Democratic budget passed both legislative houses along party lines - 26-14 in the Senate and 48-31 in the Assembly. The group of Democratic lawmakers led by Assemblyman Joseph Cryan (D., Union) who had threatened to vote against the budget unless a bill to revamp the higher-education system was postponed voted to support the budget.

The budget sets aside $183 million for a Democratic tax cut that would begin in January only if the state meets Christie's optimistic revenue projections.

The cut - which has yet to be detailed in a bill - would be an income-tax credit based on the amount a homeowner pays in property taxes. It would exclude the wealthiest New Jerseyans. As part of their proposed budget, Democrats also would increase the earned-income tax credit for the working poor.

Christie's tax cut, on the other hand, proposed providing a 10 percent income-tax reduction to all earners, regardless of income, over four years. He has shown some willingness to compromise but has said the Democratic plan falls short of his expectations.

"They're going to get one long, hot summer till they cut your taxes," Christie told a town-hall meeting Friday.

In a statement released after Monday's vote, Christie did not say whether he would veto the budget bill, but he made it clear he didn't like it.

"After two years without raising taxes, the only way to feed the Corzine Democrats' obsession is to hold tax relief hostage," he said. "I will not allow New Jersey to go back to the same failed policies that nearly put our state over a fiscal cliff."

Christie has a town-hall meeting Tuesday in Brick, where he will undoubtedly respond to the Democratic proposal.

Sen. Paul Sarlo (D., Bergen), who sponsored the Democratic budget, said Monday on the Senate floor: "This budget plans for the tax cut. It doesn't necessarily have to commit for it today, but the tax cut is part of this budget. This is a responsible budget guided by economic reality, not by anybody's . . . political ambition."

Republicans said tax relief was needed immediately because residents were fleeing the state for cheaper areas.

"This budget, with its hedged tax relief, sends the wrong message to those people - and to those job creators looking to come here as well," said Assemblyman Declan J. O'Scanlon Jr (R., Monmouth).

The Democrats' budget is $62 million less than the last budget proposal that Christie offered in May but is otherwise largely similar. Despite panning Christie's revenue estimates in the coming fiscal year as being politically motivated, Democrats used those estimates in their budget proposal.

To move money into programs they wanted, Democrats nipped and tucked Christie's proposal.

* Democrats found $5 million by not filling new state positions, $20 million through refinancing debt, and $55 million from line items that were overfunded this fiscal year.

* Both Christie's and the Democrats' budgets rely on nearly $2 billion in one-time-only revenue sources. Among the programs being tapped are those allocated for other uses, such as a clean-energy fund and municipalities' affordable-housing trust funds.

* Both budget proposals require taking money set aside for transportation projects and borrowing $261 million to make up the resulting shortfall in the transportation fund. That would trigger interest payments for decades to come. As a gubernatorial candidate, Christie decried such fiscal practices as "unconscionable."

* Democrats added on to the governor's budget in several areas: $25 million for nursing homes, $4 million to cover child care for welfare recipients, $1.75 million for after-school programs, and $400,000 for clinical legal aid programs.

* Democrats reduced the governor's overall budget for welfare by $9.4 million, but said the changes were based on recent recommendations from the administration due to a reduction in the number of recipients.

* Democrats inserted a requirement that the Department of Corrections issue quarterly reports about halfway houses as a result of a New York Times expose about escapes and violence at state-funded, privately run facilities.

* The Democratic budget gives more power to the Legislature's Joint Budget Oversight Committee - which Democrats control - to oversee the governor's financial decisions.

* Democrats deleted the governor's changes to the public school funding formula - such as his plan to use student attendance rate as a basis for calculating aid. Critics have said Christie's changes would cost poor districts needed funds.