State Budget - NY Times - Corzine, Roberts differences drive confrontation

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Published in the New York Times, Wednesday, June 28, 2006

Political Memo
In Trenton, Democrats in a Tax War

By RICHARD G. JONES and LAURA MANSNERUS

TRENTON, June 27 — If nothing else, the stalemate between Gov. Jon S. Corzine and Democratic legislators over his plan to increase the sales tax has exposed a deep divide in the party that might not otherwise have been revealed.

As the Friday deadline to approve a new budget draws closer, blocs in the Assembly have broken into factions on the tax question. Republicans have held several meetings with Democratic opponents of the governor to build a bipartisan coalition. The opposition has gone so far as to draft an alternative budget that increases or extends almost a dozen others taxes in a plan intended to eliminate the need for the sales tax increase. It will be unveiled at an Assembly Budget Committee meeting on Wednesday.

Throughout the budget debate, however, one question has remained unanswered: What is the source of the division between the Democratic governor and the tax increase opponents, who are led by Assembly Speaker Joseph J. Roberts Jr.?

The dispute, State House observers inside and outside the government say, stems as much from a philosophical difference between Mr. Corzine and Mr. Roberts over the prospect of raising taxes as it does from each man's political calculations.

For Mr. Corzine, they say, the focus is largely on honoring his campaign promise to address the state's long-term fiscal problems. To Mr. Roberts, the priority is to ease the state's property tax burden in preparation for the re-election that his colleagues face in 2007.

One observer, David P. Rebovich, managing director of the Rider University Institute for New Jersey Politics, said Mr. Corzine was planning for the long-term consequences "and thinking New Jerseyans will make him and the Democrats pay if they don't somehow shore up the state's finances." Mr. Roberts, he said, is more concerned with the immediate consequences and "is thinking 16 months from now."

The inability to find common ground has the state in jeopardy of missing the June 30 budget deadline, which the state Constitution requires. The prospect raises the threat of a government shutdown over the long July 4th weekend.

On Tuesday morning, Mr. Corzine met with cabinet members to discuss plans in the event of a shutdown. Those plans would include closing the 12 casinos in Atlantic City and paring down the Department of Transportation staff for a shutdown.

Mr. Corzine was not optimistic that an agreement could be reached on Mr. Roberts's alternate plan. "I don't see any room for compromise based on what's been proposed," Mr. Corzine said last night in a radio interview on WKXW-FM.

Nevertheless, Mr. Roberts continued working to build support for his proposals. He met with Republican leaders, who have recommended $2.2 billion in cuts to Mr. Corzine's proposed budget that they say will eliminate the need for a tax increase.

Mr. Corzine has proposed increasing the sales tax to 7 percent from 6 percent, a move he estimates will raise about $1.1 billion in new revenue. He has also proposed increases in other taxes, including the cigarette tax, which, combined with the sales tax increase, are expected to generate about $2 billion. The governor has also proposed about $2.5 billion in cuts.

The money from the tax increases and the spending cuts are intended to close a shortfall of about $4 billion in the governor's $31 billion budget.

As details of Mr. Roberts's proposals have emerged, the emphasis has been on a combination of spending cuts that polls show are more popular with voters, and new or expanded taxes.

Under his proposals, the largest amount would come from extending a disability tax to include higher wage earners as well as creating a tax on computer repair and security services. Those three, Mr. Roberts says, would account for about $530 million of what he says would be $917 million in recurring revenue. He also proposed doubling the tax on rental cars from $2 to $4, adding a 3.5 percent surcharge on corporate business tax liability, and extending the sales tax to other items.

At the same time, Mr. Roberts has proposed $741 million in new spending cuts while restoring money to areas where Mr. Corzine has proposed reductions, including about $120 million for higher education.

Legislators who have held one-on-one meetings with the governor say they have asked him to campaign for them next year in exchange for their support with the budget. That support may be crucial for Democratic lawmakers, who hold a 49-to-31 advantage in the Assembly and are haunted by how the party lost its majority after raising the sales tax to 7 percent from 6 percent in 1990.

In a recent interview, Mr. Roberts recalled: "We started on Election Day with 43 seats and when the election was over we had 22. We were cut in half in one day."

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