New Jersey Governor Chris Christie proposed increasing the state’s minimum wage by $1 over a phase- in period of three years.

Christie conditionally vetoed Democrats’ legislation, which had sought to raise the wage to $8.50 an hour in March from $7.25 and tie future increases to changes in the U.S. Consumer Price Index. He also proposed a 25 percent increase in the New Jersey Earned Income Tax Credit, which benefits workers of low and moderate incomes.

Christie, 50, a Republican seeking a second term, said in a statement that the Democrats’ measure was “lopsided” because it would harm small businesses while helping wage earners.