TRENTON — Gov. Chris Christie, better known for his near-apocalyptic financial predictions, Tuesday proposed a $29.4 billion budget painting a brighter picture of a state turning back from the brink of calamity. He also challenged Democrats to toe his line on pension and benefit reductions and continued his push to redefine the state’s financial responsibilities. Christie said the state’s...
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TRENTON — Gov. Chris Christie, better known for his near-apocalyptic financial predictions, Tuesday proposed a $29.4 billion budget painting a brighter picture of a state turning back from the brink of calamity. He also challenged Democrats to toe his line on pension and benefit reductions and continued his push to redefine the state’s financial responsibilities.
Christie said the state’s fiscal outlook has improved enough to cut business taxes and increase school funding — but not enough to avoid reductions in Medicaid or restore state spending to levels before last year’s cuts.
"We are not out of harm’s way yet," he told lawmakers in a 45-minute budget address. "We must continue on the path to reform, and continue to make the hard choices."
Christie also offered Democrats a politically charged deal on property tax credits, saying he would boost funding for the popular program only if lawmakers agree to reduce health care benefits for public employees, an important constituency for Democrats seeking to hold their majorities in the Legislature.
The governor said his budget represents a "new normal" where the state will no longer hew to financial commitments made when the state was flush with cash.
"Today marks the line in the sand that separates the way things used to be, and the way they are going to be," he said. "And we will not be going back."
The proposed budget would total roughly the same as the one Christie signed last June. Christie said overall spending will drop by 2.6 percent, but only if the state makes a pension payment early. Either way, the spending of state tax dollars is expected to increase as federal stimulus money dries up.
The budget would boost state aid to schools by $250 million, keep aid to towns about the same, and provide more tuition help for college students.
Public employee unions blasted Christie’s budget, while a business lobbying group cheered the governor’s push for tax breaks during a reception at a nearby hotel. Democrats said the budget would only increase residents’ property tax burden by keeping state aid to schools and towns at levels lower than when Christie took office.
"The governor talked about the new norm, it’s nothing new in Trenton," said Senate President Stephen Sweeney (D-Gloucester). "The new norm is the same old, it’s higher property taxes for the people of New Jersey."
The governor’s speech is one of state government’s most important rituals and is delivered to an Assembly chamber packed with government officials, union leaders and both houses of the Legislature. It kicks off months of intense negotiation and lobbying as lawmakers hash out the final budget before the June 30 deadline, when state law requires the budget to be approved by the Legislature and signed by the governor.
Christie’s proposal is particularly dependent on cooperation from Democrats who run the Legislature.
For example, the governor plans to shave health benefit costs $323 million in the upcoming fiscal year by requiring public employees to pay more. If Democrats don’t go along with the plan, Christie said he won’t be able to boost property tax credits, which are popular with heavily taxed voters.
"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."
Senate Budget Committee Chairman Paul Sarlo (D-Bergen) said he was surprised the budget includes the savings for health care benefits changes that haven’t passed the Legislature. "That’s a big assumption to make, a big if," he said.
Christie’s budget also assumes the state will make a $506 million payment into the pension fund in the current fiscal year. If that happens, the current budget would top $30.1 billion — and Christie’s proposed budget would be considered smaller. But the governor said he won’t make the payment ahead of schedule if lawmakers don’t approve his proposed pension benefit reductions by next month.
Christie also wants to phase in a series of tax cuts, mostly for businesses, over the next five fiscal years. The 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 from $675,000 to $1 million.
Even with the tax cuts, state revenues are expected to increase almost 4 percent as the economy improves in the coming year. The state is not expecting any federal stimulus money this year, taking a nearly $800 million bite out of Medicaid funding. "The state was extremely reliant on those dollars to balance the budget in previous fiscal years," Treasurer Andrew Sidamon-Eristoff said.
Christie’s speech also represents his different approach to the budget process. Last year he closed a nearly $11 billion deficit largely by ignoring commitments like a payment into the pension system. Afterward, the nonpartisan Office of Legislative Services predicted a $10.5 billion budget deficit would persist in the upcoming fiscal year.
But Tuesday, Christie said his administration would not remain beholden to previous financial benchmarks because it’s setting new priorities in a more difficult economic climate. That includes funding schools at levels lower than the court-approved formula requires and making payments into the pension system far smaller than the $3.09 billion recommended to keep the fund stable.
"We will no longer blindly fund commitments that prior legislators and governors have made," Christie said. "In the ‘new normal,’ we can and will stop old commitments, so we can set new priorities to meet New Jersey’s 21st-century challenges."
Almost all state government departments are poised to lose funding. Christie’s proposal has the Department of Health and Senior Services receiving the largest percentage cut, 15.1 percent. The Department of Environmental Protection would lose 9.8 percent of its funding.
"The budget hurts the environment and leaves less people to protect New Jersey from pollution," Sierra Club state director Jeff Tittel said.
By Jarrett Renshaw and Chris Megerian/Statehouse Bureau
Star-Ledger staff writers Megan DeMarco, Matt Friedman, Ginger Gibson, Susan K. Livio and Salvador Rizzo contributed to this report.