Senate President Stephen Sweeney proposed an alternative to Gov. Chris Christie’s budget on Wednesday that raises taxes on the state’s wealthiest residents and imposes a business tax surcharge to fund next year’s required pension system payment.
Sweeney unveiled his $34.4billion budget proposal the same day trustees for one of New Jersey’s public employee pension funds voted to sue over Christie’s plan to skip a $900 million pension payment due June 30.
“They’re doing their part. It’s our responsibility to do our part,” Sweeney said of the state’s public workers, who have been paying significantly more for benefits since 2011.
The state agreed to phase in its required pension contribution in exchange for the benefits changes in 2011. Sweeney, a labor leader and a likely candidate for governor in 2017, aligned with Christie to enact the changes. He now says he will insist that the state live up to its part of the bargain.
Arguments in the pension suit are scheduled for June 25 in Mercer County Superior Court, less than a week before the deadline for the state’s 2015 budget.
Sweeney’s budget would raise roughly $1.6 billion in revenue, which would allow next year’s $2.25 billion pension payment to be made. It raises the income tax rate to 10.75 percent for those earning more than $1 million and to 10.25 percent for those earning $500,000 to $1 million. Top earners now pay 8.97 percent.
Sweeney said the tax increases would sunset when the state’s economy improves, but he was not specific when that would be.
Christie has repeatedly vetoed tax increases.
“Raising taxes drives businesses and citizens out of New Jersey and makes our problems worse,” said spokesman Kevin Roberts.
If Democrats send him a budget that raises taxes, Christie can veto the increases. The possible 2016 presidential candidate has said repeatedly that the state cannot afford to make the pension payments it promised for this year or next year.