Christie, Sweeney Reach Deal on Tax Cut, but Can NJ Afford It?

By Mark J. Magyar, NJSpotlight.com

New Jersey Gov. Chris Christie and Senate President Stephen Sweeney (D-Gloucester) have reached agreement on a compromise tax cut plan. Now the question is whether any of Sweeney's fellow Democratic legislators will agree with the plan themselves.

For one thing, the state could be facing a $1 billion shortfall over the next 14 months, according to Assembly Majority Leader Lou Greenwald (D-Camden). For another, the compromise tax plan took Senate Democrats by surprise, and they're wary.

What's more, Greenwald is pushing his own tax cut plan in the state Assembly.

Under the proposed agreement, Christie would support Sweeney's approach of providing a property tax credit on state income taxes of up to $1,000, while Sweeney would agree to extend the tax credit to homeowners earning up to $400,000, up from the $250,000 income limit set in his original plan, according to a well-placed source. This would allow Christie to take credit for an income tax cut -- even though it is nothing like the original 10 percent cut Christie originally proposed that would have disproportionately benefited the wealthiest 1 percent, and even though Sweeney can continue to insist that it is a middle-class property tax cut.

Christie administration officials scheduled a 3 p.m. press conference to announce the tax cut compromise, then were forced to cancel it abruptly at 2:40 p.m. after Sweeney pulled out for health reasons after undergoing a medical procedure yesterday morning -- and after top Senate Democrats who were called by reporters howled in protest that they had not been informed of any deal.

No press conference will be held today either, as Sweeney has decided to try to persuade Greenwald and Assembly Democratic leaders to abandon their rival plan for a property tax credit. This would apply on income tax of up to $2,500 for senior citizens and $2,000 for homeowners earning up to $250,000, funded in part through the reimposition of a 10.75 percent "millionaire's tax."

Sweeney's pitch will fall on deaf ears, Greenwald said.

"All we know is the Assembly plans to continue its fight for significant property tax relief for New Jersey's middle-class and seniors. Our plan is responsible, reliable, and meaningful and because it's based on economic fairness it can withstand the sagging revenues of Gov. Christie's failed economic policies," Greenwald said.

Those "sagging revenues" were supposed to be detailed yesterday in an official Treasury Department report on April revenue collections, but the Christie administration abruptly cancelled release of that report late in the day -- even though Christie's Executive Order 8, signed the day after his inauguration in 2010, requires the release of monthly revenue figures on the 10th business day of the month, which was yesterday.

The fact that April revenue collections are coming in lower than expected is no surprise. David Rosen, the budget officer for the non-partisan Office of Legislative Services who has access to the Treasury Department's revenue database, sent a confidential memo to legislative leaders on May 3 reporting that income and corporate taxes for April were coming in below projections.

But Greenwald yesterday was the first to suggest that the final gap could be as high as $1 billion.

Read the rest of this report at NJSpotlight.com