Gov. Chris Christie slashes tax hikes, signs $34 billion budget

TRENTON, N.J. -- Republican New Jersey Gov. Chris Christie used his veto pen Friday to strip more than $1.6 billion from the 2016 budget approved by the Democratic-controlled Legislature and signed a roughly $34 billion budget into law.

Christie vetoed an income tax increase and corporate business tax. He also conditionally vetoed the Democrats' millionaires' tax, but asked the Legislature to approve an increase in the earned income tax credit, something the Legislature has also called for. Christie proposes raising the credit for the 500,000 in the state who receive it to 30 percent of federal levels, instead of 20 percent. Democrats proposed raising it to 25 percent.

Christie signed the budget on Friday at the statehouse before a wide-ranging news conference.

"Once again the Legislature overspent," he said. "The action that I took on spending, discretionary spending - which means everything other than pensions, health care and debt service - is in this budget $2.3 billion less than it was eight years ago, which should show the people of our state that when we said we were gonna make government smaller that we in fact kept that promise and continue to do so."

The signature comes four days ahead of a deadline for enacting the budget on Tuesday - the same day he is expected to announce a run for the Republican nomination for president, according to several people familiar with his political plans. They spoke to The Associated Press on condition of anonymity because they were not authorized to pre-empt Christie's announcement.

Christie contrasted his budget action with other potential presidential primary opponents, specifically singling out Wisconsin, where Gov. Scott Walker could be a presidential contender.

"Today in New Jersey, four days early now that I've signed it, we have a budget. They don't have one in Wisconsin, with a Republican Legislature and a Republican governor."

Democrats, as expected, criticized Christie's vetoes and said his actions are digging a deeper fiscal crisis for the state. They said his increase in the earned income tax credit is the right thing to, but that he hurt families by vetoing it previously.

"Democrats submitted a plan to balance our budget and fully fund our obligations, but Governor Christie's fiscal policies continue without direction and review," said Democratic Assemblyman Gary Schaer.

The Democrat-led Legislature sent Christie a $35.3 billion budget on Thursday. Democrats had included a tax on income over $1 million, as well as a 15 percent surcharge on the corporate business tax to raise revenue and make the $3.1 billion payment to the state pension fund required by a 2011 law, which Christie had signed.

Christie's proposal slashed that amount to $1.3 billion after the state Supreme Court this month sided with Christie concluding the governor and Legislature must work out the payment through the budget process. He also said he is allocating an additional $212 million toward the pension because of unexpectedly high revenue collection late in the fiscal year.

The 2016 fiscal year budget advanced Thursday by a 24-16 vote in the Senate and by a 47-31 vote in the Assembly; the debate surrounding it fell along party lines. Republican lawmakers argued the budget would drive business out of the state and did not truly solve the state's pension funding problem. They called on Democrats to sit down with Christie to redraft a pension solution.

The budget doesn't address the state's transportation trust fund, which is headed for insolvency in the next fiscal year.

The budget's passage likely caps the Legislature's busy season as the Assembly, which is at the top of the ticket in November, looks ahead to the fall election and as Christie prepares his campaign plans.