By Hilary Russ
TRENTON, New Jersey (Reuters) - New Jersey Republican Governor Chris Christie called lawmakers back for a special session on Monday to pass a tax cut plan, but the Democrat-led legislature refused to act.
After the special session, lawmakers left the statehouse without voting on Christie's proposal.
Christie signed a $31.7 billion budget on Friday and then called lawmakers back on what was to be the first day of their summer vacation after they ended last week's session without enacting any tax cut plan.
"I have used my veto authority on the budget you sent me to create a $650 million surplus," he said in an address to the legislature. "Can't we afford to send just one-third of that surplus back to our citizens and to give them that guarantee today? I say, 'Yes.'"
Enacting tax relief immediately will "lock in tax relief today that will help create new jobs tomorrow," he said.
In the budget they had sent to Christie, lawmakers in the Democrat-led legislature denied Christie, a likely contender for higher office, the 10 percent across-the-board income tax cut he proposed in February.
During budget negotiations over the past several weeks, Christie came to support a plan from state Senate President Steve Sweeney that would provide property tax credits on residents' income tax returns.
The version of that plan supported by Christie would apply to homeowners earning less than $400,000 a year, as opposed to Sweeney's original plan directed only to those earning $250,000 a year or less.
But there's a hitch to the deal -- legislators want to hold off on the relief until they see whether state revenue collections improve.
The chief legislative budget analyst has said that revenue collections could come in more than $1 billion short of Christie's projections through the end of fiscal year 2013.
The state's unemployment rate in May was 9.2 percent, compared with the 8.2 percent national average.
Sweeney could not say what specific amount of improvement lawmakers would like to see before they enact the tax relief, only that they would do so "if we're close" to the projections.
Democrats in the state Assembly also sought, for the third time, a so-called millionaire's tax, which Christie conditionally vetoed again on Monday, as he has twice before.
The measure would have permanently increased the tax rate on businesses and individuals with taxable gross incomes of $1 million or more to 10.75 percent from 8.97 percent, using the extra $789 million of revenue for a homestead benefits program.
The tax would "compel the exodus of our strongest businesses and most successful individuals," Christie said in his veto message.
With his conditional veto, Christie cut the millionaire's tax out of the legislation he sent back to the Assembly. Instead, he inserted his own proposal for the property tax credit program for those making up to $400,000.
During his address, Christie praised several bi-partisan agreements he's reached with Democrats since he took office in January 2010. Republicans gave him several standing ovations during his speech.
But the day ended as a face-off, with Democrats claiming the role of fiscal conservatives for themselves while trying to paint Christie as a grandstander concerned with his own political ambitions.
Senate Majority Leader Loretta Weinberg called Christie's demand for enacting tax cuts immediately, in a time of economic uncertainty, "a little bit ironic."
Democratic lawmakers also noted that no tax cuts could take effect until next year anyway, prompting Senate budget and appropriations committee Chairman Paul Sarlo to say that Christie's special session was "political theatrics."
In a conference after the special session, Sweeney said that the event was calculated "more for the national stage."
Republicans stood behind Christie's call for immediate action on Monday.
"Legislative Democrats have a choice - join Governor Christie and compromise to deliver middle-class tax cuts right now or break their promise to the people of New Jersey and reverse the progress of the last two years," said New Jersey Republican Party Chairman Samuel Raia in a statement.
(Reporting by Hilary Russ; Editing by Padraic Cassidy and Dan Grebler)