Christie Battles to Balance New Jersey's Budget

Democratic State Sen. Steve Sweeney, president of the New Jersey State Senate, walked two tax bills across the capitol to the governor’s office moments after they were approved. New Jersey Governor Chris Christie was waiting there for him. “What took you so long?” Michael Drewniak, the governor’s press secretary asked as Sweeney entered the room.

Christie, ready with his veto pen, received the bills from Sweeney—a reinstatement of the state’s expired “millionaire’s tax”—and signed his message of disapproval with little fanfare. “As to bill A-10, I am sending it back to the legislature without my approval,” the governor said. “And the same as to bill A-20.” With a quick nod to the assembled press and to Sweeney, it was over.

“We’ll be back, governor,” Sweeney said from the back of the room. “All right, we’ll see,” Christie replied.

In his veto statement, Christie explained his reasons for rejecting the bills.

“While I have little doubt that the sponsors and supporters of this bill sincerely believe that the state can tax its way out of this financial crisis, I believe that this bill does nothing more than repeat the failed, irresponsible and unsustainable fiscal policies of the past,” Christie wrote. “Now is not the time for more of the same.”

It was the opening salvo in the budget battle that will consume Trenton for the next four weeks, as majority Democrats in the legislature and the new Republican governor attempt to hammer out a budget agreement before the June 30 deadline.

Christie announced his budget plan in an address to the legislature in March. The governor told the assembled lawmakers that the state was facing a deficit of nearly $11 billion in a total budget of $29 billion in fiscal year 2011. To close the budget gap in the short run, Christie proposed a program of spending cuts, pension payment deferments, suspension of property tax rebates for one year, and cuts to state aid for municipalities and school districts. 

For the longer term, Christie proposed reigning in state spending through a “tool kit” for municipalities—a 33-bill package of reforms anchored by a constitutional amendment imposing a 2.5% property tax and municipal spending cap. Under the proposal, spending and property tax increases over the 2.5% limit would have to be approved by the voters in a local referendum. New Jersey already has a 4% cap on property taxes. But Christie argues that effectiveness of the law is hampered by numerous exceptions. The governor says that despite the current cap, property taxes in the state have risen over 70% in the past decade.

In an op-ed published this week, Christie said the Democrats’ proposal to close the budget gap in part by increasing taxes on the wealthy would not work. “In fiscal year 2009, the state collected $10.476 billion from our income tax, with no surcharge on small businesses and the wealthy. In fiscal year 2010, with [former] Governor Corzine’s surcharge of 10.75% applied to small businesses and individuals, the state collected $10.243 billion,” Christie wrote. “Higher taxes will continue to drive citizens and businesses from New Jersey and keep our private sector job growth at zero, which it was for the entire first decade of this new century. We must change course.”

Democrats in the legislature sought to paint Christie as a protector of the rich at the expense of the needy and the middle class. State Assembly Majority Leader Joseph Cryan (D) said that the governor’s budget had left senior citizens, “to fend for themselves.”

“To our governor, giving the rich a tax break is a new twist on the meaning of share sacrifice,” Cryan said. “The only campaign promise I’ve seen the governor keep is the one about a tax break for the rich.”

After Christie vetoed the tax increase, Sweeney said that the bills were not a stunt, but a legitimate effort to answer the governor’s call for shared sacrifice. “If we’re in this together, we’re in it together, all New Jerseyans,” Sweeney said. “It can’t be ‘my way or the highway.’” 

With the state’s budget deadline a little more than a month away, the stakes are increasing for both sides in this budget battle. A recent Fairleigh Dickinson University/Public Mind poll shows voters in the Garden State split almost evenly on Christie’s job performance, with the governor holding a slight edge in approval by 44% to 42%. But the real battle lines become clear when respondents are broken down by occupation. Public sector employees disapprove of Christie’s performance by a 58-33 margin. But private sector employees approve of his job performance by 48% to 33%.

Democrats have not decided whether or when they will attempt an override of the vetoes—which would require a two-thirds vote of both houses—and they do not have the votes to override Christie’s vetoes without Republican support. Since no Republicans voted in favor of the tax increase, it is unlikely Democrats could overturn Christie’s decision.

In his four months in office, Christie has not shown a penchant for backing down and he does not figure to start now. Ultimately, Democrats will have to decide whether a government shutdown on July 1 is worse than working with Christie to balance New Jersey’s budget.