Lawmakers and economists dove back into the long-running debate Wednesday of whether the state can afford the broad tax cut that is one of Gov. Chris Christie’s top priorities for a second term.
One of Christie’s chief economic advisers told a gathering of economists in Trenton that the state can afford it. Meanwhile, lawmakers at a conference in Atlantic City debated the point.
Christie, a Republican who is seen as a possible presidential contender in 2016, proposed a tax cut last year. Lawmakers ultimately killed the proposal last year, saying the state budget could not handle a cut; and indeed, the state’s surplus for the budget year that ended June 30 was smaller than anticipated. Christie rejected the Legislature’s plan to link tax cuts for some to a higher income tax rate for high earners.
But on Wednesday, New Jersey Council of Economic Advisers chairman Robert Grady told economists and others at the state government-organized economic growth summit that the state can afford it now. He said revenue was up about 7 percent last year and is expected to rise about 5 percent this year.
“The economy is stabilized enough,” Grady said. “It will assist in both job creation, job retention and business attraction.”
In an interview after his talk, he said details of Christie’s latest proposal will be a part of his budget proposal in February. He said it has not been decided whether Christie will push for a phased-in 10 percent reduction of all income tax rates, as he initially proposed; or cuts based on residents’ property tax liability, as he later pushed as a compromise with the Democrats who control the state Legislature; or some other method.
David Rosen, the director of the state Office of Legislative Services, was at the talk but declined to comment on Grady’s projections. In the past, Christie has ripped Rosen for producing forecasts that showed the budget could not bear his proposed cuts. Rosen’s projections have turned out to be close to reality.
Grady also said it’s a good moment for New Jersey to reduce taxes in a bid to be more competitive in the region. He said he expects taxes will rise in Connecticut and New York City.
At a League of Municipalities conference in Atlantic City, Democratic lawmakers said the state’s revenues are not strong enough to pay for a tax cut. Outgoing Assembly Speaker Sheila Oliver says the state needs to put more money into higher education. But Assembly Republican Leader Jon Bramnick says it’s not necessarily an either-or question and that it may be possible to do both.