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Christie Unveils State Budget Plan

2-25-14

By Michael Aron
Chief Political Correspondent

Contrary to Democratic speculation, Gov. Chris Christie’s budget plan appears to fully fund the public employee pension system and does not propose a new tax cut.

In a room at least half full with Christie staff, cabinet officers and allies, he got a rousing welcome.

His message to this joint session of the legislature, however, amounted to a warning about the pension system. Even after historic pension reform three years ago, the funds are still $52 billion in debt, he said.

“All of you have great ideas of things you want to do to make New Jersey stronger and more competitive. So do I. If we do not get this tiger by the tail, none of it will happen,” Christie said.

The budget Christie presented for fiscal year 2015 would spend $34.4 billion, an increase of 3.5 percent over the current year. It’s the largest state budget ever, but 94 percent of the increase is eaten up by rising pension, employee health benefit and debt service costs.

“Nine out of every 10 dollars of new spending this year goes to fund these three entitlements. Just three things eating up 94 percent of the new spending. The looming crisis is clear,” said Christie.

Christie compared New Jersey to the bankrupt city of Detroit. But Democrats weren’t buying that.

“I was a little offended by the word ‘entitlement,’” said Senate President Steve Sweeney. “A pension’s not an entitlement. It’s something that people have paid into. And there was mismanagement over the years with the pension system. We all know that. But we fixed that back when we did the pension/benefit overhaul. And employees are paying more. And if we stay the course, the pension system will be fine. It’s not going bankrupt us.”

Other aspects of the budget Christie unveiled for next year: school aid goes up by $40 million (or about one half of a percent); higher education gets a nearly 8 percent increase; homestead rebates or credits as they’re now called are essentially flat; there is no pay-as-you-go funding for transportation, so the state will again borrow to fund a billion-six in infrastructure repairs; and Christie hopes to start collecting sales tax from online retailers who operate out of state.

While the governor dropped the idea of a tax cut, he proudly announced there are no tax hikes.

Democrats have talked about restoring the millionaire’s tax.

“We need to get revenues. And we can’t keep growing a budget when you know you have more expenses without putting something into it,” said Assembly Speaker Vincent Prieto.

They said the best way to raise revenue is to grow the economy.

Christie’s way is to entertain a second round of pension and benefits reform, even though the first round drew angry reactions from public employee unions.

“The reality is that the aggressive reforms we enacted together have only done one thing. They bought us time to act again,” Christie said.

They have four months to resolve it.