Source: The Daily Journal -
Assembly Democrats are now on board with their Senate colleagues in pushing for higher income taxes on wealthy households to avoid cutting the pension payment in New Jersey’s 2015 budget.
Details of the Assembly Democrats’ budget blueprint remain sketchy, although Speaker Vincent Prieto, D-Hudson, said he hopes the spending plan and associated tax increases will be approved by the Assembly next Thursday. The deadline to adopt a budget is June 30.
“Judging from their single-minded pursuit of tax increases, the Trenton Democrats’ plan will be disastrous for middle-class families struggling to find jobs and make ends meet. The last time New Jersey tried to tax itself out of its fiscal woes, thousands of residents left our state along with more than $70 billion in wealth. Rather than fiscal solvency, we were left with the largest structural budget deficit in the entire country.” – Assemblyman Sam Fiocchi
Prieto said he hoped to start the income-tax hike at $1 million, rather than at the $500,000 level proposed Wednesday by Senate President Stephen Sweeney, D-Gloucester. He said other details envisioned by Senate Democrats, including a 15 percent surcharge on corporate business taxes and a one-year suspension of some grants to businesses, are similarly subject to ongoing talks.
“The way I look at it, the state of New Jersey has a revenue problem. I don’t think it has a spending problem,” Prieto said.
The Assembly proposes additional spending that wasn’t included in the Senate’s plan and lacks the detail about revenue-raisers that Sweeney announced this week.
Whatever the details of the Democrats’ compromise turn out to be, the plan will be vetoed by Gov. Chris Christie.
“Different day, same plan for an already severely overtaxed state,” Christie spokesman Michael Drewniak said.
This would be the fourth time Democratic lawmakers sent Christie a so-called “millionaires tax.” The governor vetoed similar plans in 2010, 2011 and 2012.
Senate Democrats estimated a 10.75 percent tax rate on income over $1 million would generate $565 million in the coming budget year, not counting a one-time infusion — estimated at $105 million, which includes the impact of a 10.25 percent tax rate on income above $500,000 — generated by applying the tax retroactively on income since January.
Foremost among the obligations that Democrats say are being shirked is a $2.25 billion payment to the pension funds, rather than the $681 million Christie is proposing to offset reductions in the forecast for income tax collections. Unions have gone to court seeking to block the cuts in both the current and upcoming budgets, which total nearly $2.5 billion.
Union leaders cheered the plan, as they did the Senate’s proposal. Business organizations and Republicans criticized it.
“This is the same old tired song we hear repeatedly at budget time,” said Assemblywoman Bettylou DeCroce, R-Morris, of the more detailed Senate plan.
“A back-breaker for job-creators,” said Assemblyman Christopher Brown, R-Burlington.
Assembly Sam Fiocchi, R-Cumberland, panned the idea of tax hikes in response to the Senate Democrats’ proposal.
“Judging from their single-minded pursuit of tax increases, the Trenton Democrats’ plan will be disastrous for middle-class families struggling to find jobs and make ends meet,” Fiocchi said. “The last time New Jersey tried to tax itself out of its fiscal woes, thousands of residents left our state along with more than $70 billion in wealth. Rather than fiscal solvency, we were left with the largest structural budget deficit in the entire country.”