New Jersey Gov. Chris Christie is reviving a tax-cut plan similar to one that floundered last year as the Democrat-controlled state Legislature fretted that the state would not have the revenue to support it.
Christie spells out his latest version of the plan in a conditional veto to be issued Monday of a bill that would raise the state's earned-income tax credit for the working poor. The Associated Press obtained a copy of the conditional veto.
In the document, the Republican governor calls for doing what lawmakers wanted -- increasing the state's earned income tax credit to 25 percent of the federal level from the current 20 percent, where it's been since Christie reduced it from 25 percent in 2010. But he also calls for implementing a bigger move aimed at the middle class and some higher earners.
At the end of a four-year phase-in, households earning up to $400,000 would receive an income tax credit equivalent to 10 percent of their property tax bill. The credits would be refundable and capped at $10,000.
The new plan adds a “circuit breaker” provision that lets the Legislature scrap the cuts if they're not affordable.
“We're now offering tax cuts for middle-class and working-class New Jerseyans. We've now addressed every issue those Democrats in the Legislature put up,” Christie said while pitching the plan on New Jersey 101.5 FM Monday morning. “The question is why can't we return some of this money to the people who paid it in the first place?”
Last year, New Jersey homeowners paid had the nation's highest average property tax bill of $7,900.
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Qualifying homeowners would get a $100 credit for the second half of 2013, then 4 percent of their property taxes next year, 8 percent in 2015 and 10 percent in 2016 and thereafter.
The governor also calls for gradually increasing the refund for renters -- currently $50 -- to $200 by 2015.
The conditional veto, which is essentially a call to action for lawmakers, does not lay the cost of the credit or what changes might be made to his budget proposal to accommodate it.
In his first three years in office, Christie has successfully pushed for many big changes, including making government employees pay more for health insurance and pensions and making tenure for teachers harder to get and easier to lose. He also implemented a 2 percent cap on property-tax growth. But while he's vetoed three Democrats' attempts to raise income taxes on high earners, he has not been able to sell a tax reduction, despite an intense effort to do so. Reducing taxes could provide a boost for the already popular governor this year as he faces re-election. His likely Democratic opponent is state Sen. Barbara Buono.
New Jersey homeowners had grown accustomed to property tax refunds, but they have fluctuated with the state's finances. Currently, only senior citizens with household incomes under $150,000 and non-seniors with incomes under $75,000 get credits. Christie has proposed pushing back delivery of that credit to August from May to close a shortfall in the current budget year.
Last year, Christie proposed a 10 percent across-the-board income tax cut. When lawmakers said they would prefer a cut linked to property taxes, he acquiesced. But a deal fell apart as lawmakers -- like some economists -- feared Christie's revenue projections were too optimistic.
Ultimately, the Legislature adopted a budget that called for setting aside $183 million for a tax cut if the budget could bear it. In a year when the state was slammed by Superstorm Sandy and the economy grew more slowly than Christie's administration projected, it couldn't.
The nonpartisan Office of Legislative Services said this month that the state government could miss revenue estimates by $302 million in the budget year that ends June 30 and could be another $335 million short in the next fiscal year. The administration has said the state's finances are in better shape than that.
Last year, Christie struck his budget deal with state Sen. President Stephen Sweeney, a Democrat who is his partner on many major initiatives and his sparring partner on others. Last week, Sweeney said publicly that he was open to a tax cut in the coming year, though one was not in the budget proposal Christie has put forth.
“This improves upon the bipartisan agreement we reached last year but was ultimately rejected by some legislators, who now have no reason to stand in the way of a responsible tax relief plan,” the governor says in the conditional veto.
The new tax cut proposal comes in an election year in which the governor and all 120 seats in the Legislature are up for re-election.
