Budget Crisis: Sweeney, Senate Dems, propose tax hike for income earners over $500,000

By CHASE BRUSH

TRENTON – In a backroom press conference at the statehouse earlier today, Senate President Steve Sweeney (D-3) and Senate Majority Leader Loretta Weinberg (D-37) stood side-by-side as they proposed their own budget plan to fix the state’s ailing pension system. 

“What I’m proposing is a budget that will meet all our obligations moving forward,” Sweeney told the roomful of reporters. “You know the governor talks about having someone that is an adult in the room. Well there is a Plan B, and the Plan B is to finds ways to fund our commitments.”

Their proposal would raise $1.6 billion — equal to the next pension payment promised by lawmakers’ original pension reform plan signed in 2011 — over the next fiscal year by imposing a 10.25 percent tax rate on income over $500,000, and a 10.75 percent tax rate on income over $1 million. Comparatively, the state’s top tax rate is currently 8.97 percent, levied on income above $500,000.

It also calls for a 15 percent corporate business tax surcharge and a suspension of $175 million from the Economic Development Authority’s Business Employment Incentive Program.

“The reason why we’re in a crisis is because the governor hasn’t done what he needed to do to fix this, which is grow the economy,” Sweeney said. “He can’t blame John Corzine or anyone else — he’s been the governor now for the past four years. He’s given us unbalanced budgets every year, and we’ve argued over his certification number and projections. So that’s one piece.

“And the second piece is the gap between the working middle class and the wealthy is expanding dramatically,” Sweeney added, saying that New Jersey has recovered only 40 percent of jobs lost during the 2008 recession. “We’re just asking everyone to do their fair share.”

The Senate Democrats’ proposal contrasts with Governor Chris Christie’s own plan, which calls for cutting $2.5 billion in pension contributions to public employees between now and 2015 to make up for an estimated $800 million revenue shortfall.

Sweeney said he’s considering “all constitutional opportunities” should the governor, who’s done so with similar proposals in the past, veto the new plan.

“There’s a lot of things we can do if he vetoes this, though I certainly hope he doesn’t. I’ve offered to sunset the millionaires’ tax when the economy gets stronger. You can even put it on a scale where as jobs start to come up the tax starts to come down,” Sweeney said.

On the opposite side of the aisle, Senate Republican leaders have also proposed their own budget plans, which they feel would better serve New Jerseyans still struggling with the after-effects of the 2008 recession.

Senate Republican Leader Tom Kean (R-21) and Senate Republican Budget Officer Anthony Bucco (R-25) said they will “absolutely not” support the Democrats’ proposal, but are not ready to throw their full weight behind the Governor’s plan. Instead, they suggest cutting $137 million in tax and fee hikes from the proposed budget.

“Senate Republicans believe that budget negotiations should steer sharply away from dozens of tax and fee increases,” said Kean in a press release. “We support 99 percent of the Governor’s proposed budget, but believe that there is a better way to finish the document than raising so many costs on New Jerseyans and job creators.”

Assembly Republican Budget Officer Declan O’Scanlon (R-13) and Assembly Minority Leader Jon Bramnick (R-21) also rejected the Democrats’ proposal.

 “The Senate Democrat’s strategy creates $1.6 billion in new taxes and goes right to the throats of the employers in New Jersey,” O’Scanlon said. “This approach will chase private sector jobs out of the state. This is completely contrary to what we should be doing – if we care at all about our state’s future economic viability.  It is also in stunning contrast to the Democrat’s rhetoric of the last several years when they have said creating jobs should be our main focus.  This proposal destroys their credibility on that front.”

“Taxes, taxes, taxes – that’s how we got in this jam,” Bramnick said. “The Democrats’ solution will make our state less competitive and less attractive to business. We need to cut spending further and eventually lower the tax burden.”

Senator Joe Kyrillos expressed skepticism, saying the “$1.6 billion tax-raising proposal represents an all-time low.”

“If people think this shortfall is bad, imagine what happens when the highest percentage of taxpayers leave and take 40 percent of the state revenue with them. That means cuts to public services, pensions, benefits and the elimination of public jobs,” he said.

Sweeney said he wants to hash out the details of the plan with the Assembly, but that he intends to get it passed by July 1, the end of the current fiscal year.

“Let me tell you something — we’re not going to leave anyone out here,” he said. “We’re all in it together means we’re all in it together.”

The Assembly Democrats led by Speaker Vincent Prieto (D-32) would only say that the budget process continues, leaving open the possibility of Prieto parting company with Sweeney.

 

 

 

Budget Crisis: Sweeney, Senate Dems, propose tax hike for income earners over $500,000