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TRENTON, N.J. (AP) — Gov. Chris Christie signed a $33.8 billion state budget into law Friday, taking his veto pen to Democratic tax increases. The budget for the 2016 fiscal year that begins July 1 directs billions of dollars, according to Christie's priorities, increasing spending in some areas and decreasing it in others. Here's a look at how that plays out:
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WINNERS:
MILLIONAIRES: Christie spared residents with income over $1 million from a ratcheted-up tax rate under the Democrats' plan. Under their proposal, the income tax would rise from 8.97 percent to 10.75 percent on income topping $1 million, netting the state about $700 million in the coming fiscal year. Democrats envisioned the tax lasting four years. Republicans said it would kill small businesses and chase jobs out of New Jersey.
BUSINESSES: Christie sliced the 15 percent surcharge on New Jersey's corporation business tax out of the budget. Democrats expected their one-time levy to haul in more than $400 million for the state, but Christie called the proposal "ridiculous." From the floor of the Assembly, Republican Assemblyman Scott Rumana told the story of a local businessman who said he would be forced to close his shops that employed 150 people if the surcharge was enacted.
LOW-INCOME EARNERS: Christie called for increasing the percentage of the state's earned income tax credit, which traditionally helps lower-income families, from 20 percent to 30 percent of the federal credit. Democrats had proposed raising it to 25 percent in a bill sent to Christie, but he conditionally vetoed it Friday to increase the amount. The income threshold for 2014 for married couples or those joined in a civil union was $20,000. The Legislature must still weigh in on the conditional veto.
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LOSERS:
PUBLIC-SECTOR UNIONS: The New Jersey Education Association, Communication Workers of America and other labor organizations representing some 800,000 people lost when the state Supreme Court ruled Christie did not have to abide by the 2011 law requiring escalating pension payments over seven years. The 2016 payment would have been $3.1 billion, and the Democrats' budget raised taxes in order to fund the payment. But Christie reduced it to $1.3 billion. He's called for 401(k)-style plans and other changes. Democrats say he breached the public's trust by going back on the 2011 law.
SCHOOLS: For another year, funding for schools is below what the School Funding Reform Act called for, this time by about $1 billion. Republicans argue that the money was never included in previous budgets because of financial constraints so it doesn't make sense to say, as some Democrats do, that the 2016 budget slashed school funds.
TRANSPORTATION: Christie correctly pointed out that his budget allocates millions of dollars for transit and transportation in the state. But Transportation Commissioner Jamie Fox warned legislators that the state's transportation trust fund, which pays for capital improvements, will reach insolvency by the end of June 2016. The budget doesn't address this concern. The fund is paid for by a constitutionally dedicated gas tax.
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