$29.4 billion state budget includes business tax cuts, school spending boosts and increases in property tax relief Watch video
TRENTON — Gov. Chris Christie today proposed a $29.4 billion state budget that includes business tax cuts, school spending boosts and increases in property tax relief.
Direct property tax relief counts for $1.03 billion in Christie's proposal, including a nearly $190 million boost in credits.
Municipal aid would remain largely the same, except for a $10 million drop in financial assistance to struggling towns. Graduate medical education is increasing $30 million, and charity care is getting a $10 million boost.
New Jersey has long been the symbol of out-of-control spending, but now it’s the leader in fiscal reform, Christie said.
He noted governors across the country are enacting many of the reforms he put into place last year and ones he called for this year, including pension and benefit reform. He said the federal government has yet to learn its lesson and continues to spend more money than it has.
"The change is coming from the states and the charge is being led by New Jersey," Christie said.
Christie said the only way he can provide additional property tax relief is if the legislature reforms public health benefits.
“Let’s not pick special interests over the already overburdened taxpayers of New Jersey,” Christie said. "There can no longer be two classes of citizens: those that receive rich retirement and health benefits, and those that pay for them."
The Christie administration held a briefing for reporters in advance of the governor's speech today at the Statehouse. The budget proposal was kept under tight wraps, and many lawmakers were only informed of its contents this morning.
View full sizeHere are the top 50 words from Gov. Chris Christie's budget address, created with the online application Wordle. The words "New," "Jersey," "budget" and "year" have been removed, as well as common words like "the.""This budget represents the new normal," said Chief of Staff Rich Bagger, calling it a direct reflection of the governor's priorities.
Christie's budget is contingent on cooperation from the Democratic-controlled Legislature. State law requires the budget to be approved by the Legislature and signed by the governor by June 30.
In addition, the proposal assumes the Legislature will pass the pension and benefit changes Christie has been pushing. For example, Christie hopes to shave health benefits by $323 million in the upcoming fiscal year by requiring public employees to begin paying a greater share of their premiums. Those savings have already been taken into account in Christie's budget proposal.
Christie's analysis also includes a $506 million payment into the pension fund in the current fiscal year. But administration officials said Christie won't make the payment if lawmakers don't approve his proposed pension benefit reductions.
If the state does end up making that pension payment before the current fiscal year ends on June 30, overall state spending will decline by 2.6 percent if federal stimulus dollars are included.
However, the spending of state tax dollars would increase slightly by under Christie's budget proposal, from $29.32 billion to $29.42 billion.
The state is not expecting any federal stimulus money this year, taking a nearly $800 million bite out of Medicaid fuding.
"We lost almost $1 billion," Treasurer Andrew Sidamon-Eristoff said. "The state was extremely reliant on those dollars to balance the budget in previous fiscal years."
The Christie administration wants to phase in a series of tax cuts, mostly for businesses, over the next five fiscal years. This year's revenue would drop almost $200 million. By fiscal year 2016 revenue would drop $690 million.
The tax proposals include some Democratic bills that Christie vetoed last week, angering top lawmakers.
"He’s taken basically corporate business tax issues, erased our names and put his name on basically the same bills," Assemblyman Lou Greenwald (D-Camden) said.
The governor also wants to raise the estate tax exemption to $1 million.
Even with the tax cuts, state revenues are expected to increase 4.3 percent, to $29.37 billion, as the economy improves in the coming year. The treasurer called that projection "a little on the conservative side."
Christie wants to boost aid to schools by $250 million, returning some of the $820 million that was cut from schools in the current fiscal year.
The state was able to provide additional school aid in part because they refinanced school construction bonds, cutting debt payments by $149 million in the next fiscal year.
In order to refinance the bonds, the state had to partially terminate a number of interest rate swap deals, a favorite financing tool of former Gov. James McGreevy. Since the start of the year, the state paid $185 million to partially terminate the swaps.
Instead of paying cash to terminate the swaps, the state used new bond issues to pay the costs. State officials said the deals will save money in the long term.
Almost all state government departments are poised to lose funding. Christie's proposal has the Department of Health and Senior Services receiving the highest percentage cut, 15.1 percent. The Department of Environmental Protection would lose 9.8 percent of its funding.
In addition, various commissions would lose 27.4 percent.
The Treasury and Department of Transportation would get the biggest bumps in funding. Eristoff said that's because the governor is increasing direct property tax relief, which is routed through the Treasury, and cash payments into the Transportation Trust Fund.
By Chris Megerian and Jarrett Renshaw/Statehouse Bureau