State Budget - Ledger - Roberts' plan angers Corzine

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Published in the Star-Ledger, Wednesday, June 28, 2006

Assembly confronts a rewrite of budget
Roberts' alternative angers governor

BY JOE DONOHUE AND DUNSTAN McNICHOL
Star-Ledger Staff

As state government braced for a possible shutdown, rebellious lawmakers yesterday unveiled a budget plan that leaves out Gov. Jon Corzine's sales tax increase, and the governor promptly threatened to veto it.

A showdown will come today when Assembly Speaker Joseph Roberts (D-Camden) tries to push the alternative plan through the Assembly Budget Committee. While it would leave the sales tax unchanged, it would increase corporate taxes and the disability tax on wages.

Statehouse sources said Corzine personally was phoning Democratic members of the committee urging them to vote against it. Corzine also said it would not be posted in the Senate.

On New Jersey 101.5 FM last night, Corzine was asked if he would veto a spending plan that failed to include the $1.1 billion sales tax hike. "As of tonight, yes," he said. "I don't see any room for compromise based on what has been proposed."

"I still don't see an alternative that's complete, nor do I see one that I think is workable. So we've got a lot of work to do," he added.

Roberts remains equally resolute in his opposition to Corzine's plan to raise the 6 percent state sales tax to 7 percent. The governor insists the extra money is needed to help stabilize the state's long-term finances.

Roberts contends any sales tax increase should be used solely to lower property-tax bills. He introduced a $30.4 billion alternative budget -- $442 million less than Corzine's plan -- that excludes the tax hike.

"This is it: Any proposal to raise the sales tax from 6 to 7 percent that does not use every single, solitary penny of that sales tax increase for property tax reform, I view to be unacceptable. Is that clear?" Roberts said in an interview.

With the budget year ending at midnight Friday, Corzine met with his Cabinet earlier yesterday to discuss plans for a possible government shutdown. Over doughnuts and coffee, the governor pressed his department heads on preparation details, such as what the Corrections department is doing to keep prisons safe.

"This is Boy Scout stuff -- be prepared," said Anthony Coley, the governor's spokesman, after the meeting. "We hope and expect to have a budget by the deadline."

The possibility of a shutdown already was causing anxiety for state workers. "I am concerned and my membership is concerned," said Sherryl Gordon, representing the American Federation of State, County, and Municipal Employees. Gordon said her members "are dedicated and hard-working and they will show up," but she worries they won't get paid for working during a shutdown.

As details of the Assembly budget alternative emerged yesterday, perhaps the biggest surprise was a bill (A-4713) that seeks a $370 million increase in the state disability tax on wages. The increase would help pay for hospital care for the poor now that Corzine has dropped plans to impose a new tax on hospital beds.

The plan would extend the 0.5-percent payroll deduction used to fund the state's Temporary Disability Insurance program, now applied to every worker's first $25,800 in income each year. The new threshold would be the worker's first $94,000 of income.

Assembly Budget Committee Chairman Lou Greenwald said for a person earning the median New Jersey income of $33,000 per year, the increase would amount to $38 a year, compared with the $250 average the sales tax increase would cost. But the Treasury Department released figures showing the wage tax proposal would cost more than $250 for anyone earning $75,000 or more.

Corzine said last night the new tax would be "a huge, huge increase in the middle income taxes. That's a bad idea."

Greenwald called that misleading. "This is why we can't get this budget completed," he said. "How can you reach a resolution when the administration just keeps kicking wrong figures around and making misrepresentations about the good-faith, responsible alternatives that we are putting forward?"

The Assembly proposal also would eliminate the 10 percent increase Corzine proposed in state tax rebates. It would boost corporate taxes by $102 million; impose a 1 percent supplemental registration fee on gas-guzzlers and on luxury cars that cost more than $45,000; and double the current $2-per-day surcharge on car rentals to raise $24 million.

It eliminates a plan to collect $24 million from rural communities for State Police patrols, and restores $120 million for colleges and universities -- less than half the $308 million cut by Corzine.

Greenwald said the new plan is responsible.

"Our budget as proposed will spend less, and it will finish the year with $238 million more in surplus," said Greenwald. "I will promise you that this will get out of committee" today, he said.

The four Republicans on the committee are not prepared to support the plan, said their ranking member, Assemblyman Joseph Malone (R-Burlington). That means Greenwald will need votes from at least seven of the eight Democrats.

The proposal includes sweeteners that could help land those votes. For instance, it eliminates Corzine's proposal to raise $30 million by forcing certain parents to pay for after-school programs in needy communities, a concern of Assemblyman William Payne (D-Essex).

Approval of the alternative budget would set up a conflict among Corzine, Democrats in the Assembly, and the Senate, which is also controlled by Democrats. "It's like three trains that are going to collide on the track," said Malone.

Staff writers Susan Livio, Jeff Whelan and Josh Margolin contributed to this report. Joe Donohue covers state government and politics. He may be reached at jdonohue@starledger.com or (609)-989-0208.

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