Christie signs New Jersey budget but vetoes 2 tax hikes and full pension funding

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TRENTON, New Jersey — New Jersey Gov. Chris Christie signed a $32.5 billion state budget on Monday, but not before using his executive powers to veto two tax hikes passed by lawmakers and cut back the state's contribution to pension funds for public workers.

The signing put a budget in place for Tuesday's start of the fiscal year and averted any chance of a government shutdown, something that never seemed to be a serious treat this year. He waited until just before 6 p.m. before announcing the signing.

There was budget drama, particularly after the income tax returns that arrived in April showed a surprise shortfall for fiscal 2014 and caused lowered revenue projections for fiscal 2015.

Christie called for making up most of the gap — $2.75 billion over the two fiscal years — by reducing pension payments. He says that retirees will get what they have due in the short term, and he wants to overhaul the system further in the long term, arguing that growing obligations under a 2010 deal to stabilize the depleted funds are too costly for taxpayers.

The Democratic majorities in both chambers of the Legislature had a different approach to the budget crunch, calling to make up much of it by raising taxes on personal income over $1 million and imposing a 15 percent surcharge on a corporate tax.

The Legislature adopted its version with the expectation of seeing Christie impose his will through vetoes of tax bills and line-item vetoes of the budget bill.

Democrats do not have enough lawmakers to override a veto without Republicans' help and were not expected to try Monday night.

A Monmouth University/Asbury Park Press poll released Monday showed that voters aren't paying much attention to the current pension funding conundrum. But taxing wealthy individuals more was far more popular than raising business taxes.

Also, three-fifths of registered voters believe pension costs are "out of control," and three-fifths of that group blame the Legislature. The telephone poll of 800 randomly selected registered voters was conducted June 25 to 29 and has a margin of error of plus or minus 3.5 percentage points.

The fight over pensions may not end when the budget is signed. It's likely headed back to court.

A judge ruled last week that the state has a contractual obligation to fund pensions fully but that Christie's earlier cuts were permissible because of a surprise budget crisis. The unions' suit also asked for fully funded pensions for fiscal 2015, but no judge has addressed that yet because the budget had not been signed. Union officials hope that Christie will not be allowed to slice contributions again in the coming year.

A new budget generally brings some changes to the way the state operates. One passed by lawmakers this year is a one-year suspension in tax credits awarded through the Business Employee Incentive Program, which rewards firms for bringing jobs to the state. The measure is expected to save $175 million from one of a handful of similarly purposed programs.

About 500 companies have benefited from it the program over the years. But the awards were phased out last year and replaced with new incentives. Lawmakers recently have criticized Christie for doing so much for business. But they did not suspend any incentives under the packages they have adopted since last year.

There's another change that Christie called for but lawmakers undid in their version of the financial plan: Imposing a new tax on electronic cigarettes.

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