| June 26
June 26 New Jersey's Democrat-led legislature
passed a $34.1 billion budget on Thursday that funds the state's
full pension contribution by hiking taxes on the wealthy and
That puts the state's fiscal 2015 budget, which must be
finalized by midnight on Monday, on track for a possible
line-item veto by Governor Chris Christie, who has said he will
not support those measures and could strip away some of the
Democrats' other spending priorities.
The legislature voted to hike the marginal tax rate on New
Jerseyans earning more than $1 million annually to 10.75
percent, which would raise $723 million in revenue, according to
The Democrats' plan also calls for a one-year tax increase
of 1.5 percent on corporations, which would raise an estimated
Their plan would use the increased revenue to help fund New
Jersey's planned $2.25 billion contribution into the state's
troubled public pension system for fiscal 2015.
Last month, after revealing a $2.75 billion revenue
shortfall through fiscal 2015, Christie slashed the state's
pension contribution this year by nearly $1 billion.
Labor unions sued in an effort to restore the funding under
the state's 2011 pension reform law, but on Wednesday a judge
ruled that New Jersey's fiscal crisis gave Christie the power to
reduce the payment. The underlying lawsuit and its challenge to
any 2015 pension cuts remain alive.
Christie would almost certainly reject the tax hikes and the
full pension contribution expenditure as approved by lawmakers.
He has vetoed a so-called "millionaires tax" three times.
If Christie rejects the tax hikes and reduces the pension
contribution, "both sides get a victory in their eyes," said
David Rousseau, a former state treasurer now with the research
group New Jersey Policy Perspective.
Democrats can say they tried to protect pension obligations
and make corporations pay. Meanwhile Christie, a possible 2016
Republican presidential candidate, could have a stronger
platform for pension reforms later this year and can say he shot
down tax hikes.
"Come midnight on June 30, we'll have a budget. It will be
balanced," said Rousseau. "But all the structural problems...
are still there."
(Reporting by Hilary Russ; editing by Gunna Dickson)