With less than two weeks left ahead of New Jersey's budget deadline, Governor Chris Christie and the Democrats, who control the state house, remain at odds over Christie's proposal for a 10 percent income tax cut.
Christie says the state needs the tax cut to attract employers who have written off New Jersey as a high tax, anti-business state. But Democrats say the state can't afford it and that the cut disproportionately favors the state's wealthiest households, which are already benefiting from Bush-era tax cuts and their extension.
Political analyst Ingrid Reed, formerly of the Eagleton Institute, said the state's July 1 budget deadline can make for nail-biting political brinkmanship. Reed said Christie was able to peel off enough Democrats to get his public employee pension reforms and property tax cap passed in his first two years in office. But with the 2013 gubernatorial and legislative contests looming, he may have a tougher time rounding up Democrats this time.
"If Christie wants to go into this summer with another feather in his cap like a tax cut, he's going to figure out how he can compromise and declare victory on the budget process," said Reed.
Christie has two town hall meetings scheduled this week to take his case directly to voters, the first one on Tuesday at Cedar Grove. Christie has made close to 90 such appearances since he took office in 2009, drawing standing room only crowds and becoming a YouTube phenomenon in the process.
Christie's poll numbers remain strong and his supporters have mounted a TV ad campaign highlighting his "bi-partisan" accomplishments, like public employee pension reform.
But Democrats have seized on an analysis by the state's non-partisan Office of Legislative Services showing Christie's revenue projections for this year and next are off by $1.4 billion.
Democrats say they also want to provide tax relief, but that they want to deliver it in the form of property tax credits off-set by reinstating the state's millionaire's tax, a measure Governor Christie opposes and has vetoed twice. Democrats have said they are willing to set aside more than $180 million for some form of tax relief, but want to wait until December to see how the state's revenues fare before committing it.
Christie says New Jersey is rebounding from the recession, but can't afford not to cut taxes now to keep the momentum going. Since Christie came into office, New Jersey has added more than 84,000 private sector jobs. In May, one-in-four private sector jobs created in the country were located in New Jersey.
But the state's unemployment rate is still higher than the national average.
Last week, it was widely reported that Governor Christie told his subordinates to draw up contingencies for a government shut down. "He may assess closing down government would be seen as a firm way of standing up to the Democrats," analyst Reed said.
The last time a budget impasse produced a state shut down was during Governor Jon Corzine's administration after a bitter stand-off between the Democratic Governor and Democratically-controlled Assembly and Senate.