Tensions in Trenton rise as budget deadline looms

Gov. Murphy’s ordered state agencies to prepare for a government shutdown in case a state budget isn’t signed by June 30th. Chief Political Correspondent Michael Aron has new information on the apparently contentious meeting that preceded the order.

Relations between the governor, the Senate president and the Assembly speaker are fraying. On Friday morning they seemed to take a turn for the worse.

The top staffers of each were in a regular Friday morning meeting. They were talking about school funding and didn’t really get into the budget issues that divide them. Senate President Sweeney has threatened a government shutdown over the school issue. It got acrimonious. Especially when someone brought up the television ad that a Murphy-backed nonprofit is preparing to run and that has irked the legislative leaders.

According to sources, the governor’s Chief Counsel Matt Platkin got up and walked out. Then Murphy’s Chief of Staff Pete Cammarano abruptly adjourned the meeting.

An hour or so later, a three-page memo went out. It’s from Platkin to Cabinet members ordering them to prepare contingency plans for a possible state government shutdown on July 1st.

Was it a response to the the morning meeting that went south? The governor’s office says no. It’s standard operating procedure to ask for contingency planning, says Murphy spokesman Dan Bryan.

Others are not so sure. Some think maybe it was the governor’s office sending a message to the Senate and Assembly Democrats that they are all headed toward a shutdown if they can’t negotiate a budget deal.

Clearly, the three-page memo wasn’t written this morning, but it could have been in the can and then released by someone in the governor’s office wanting to send a message.

It’s worth noting that Chris Christie didn’t order contingency planning until June 29 last year when there was a shutdown.

Bottom line, we head into June with the major players in the budget drama arguing and playing games with each other. Murphy on Tuesday said the budget negotiations are in the sixth inning. Sweeney said yesterday it’s more like the second inning. Murphy today said at least they agree it’s baseball they are playing.

A looming showdown over retooling school funding. The state’s powerful Senate president says he’s ready to shut down the government if his plan doesn’t pass. It would gradually decrease aid to over funded districts and increase aid to under funded ones and cost taxpayers an extra $2 billion dollars. Controversial? You bet. NJ Spotlight’s founding CEO and Education Writer John Mooney joins Senior Correspondent David Cruz.

Cruz: So, Senate President Steve Sweeney introduced what he called the school funding formula fix. How significant is this? Is this a game changer?

Mooney: Well, I mean it’s certainly significant. The context is Gov. Murphy has put forward a state budget for next year which included a pretty significant increase for schools. Virtually no district would see any cuts and a vast majority would see increases. It was about $283 million dollars more on a tab of about $9 billion dollars, so a big piece of the state budget. A huge piece of the state budget. There has always been some tension with Steve Sweeney over this. He has had his own ideas on what would happen with school aid and this is his response to it. Basically, it’s very similar, it’s somewhat of a tweak, but the significant thing is that it would include some reductions. Steve Sweeney has really wanted to rightsize the formula and included are winners and losers in that. So, that’s going to be the tension point and he’s coming forward. It’s about the same about of money. It actually may be a little bit more money. So, it would have some reductions for some districts, about 190 districts would see a net loss over 5 or 7 years and then the rest of the districts, including a bunch that have seen significant cuts or significant underfunding over the years would see some big increases. So, we’ll see how significant it is. The big question now is, how will Gov. Murphy react to it and so far we haven’t really gotten a real read on that yet.

Cruz: We’ll get to him in a second. You talk about rightsizing. So, what exactly does that mean? There are some districts who are being overfunded and some are being underfunded. What does that mean exactly?

Mooney: Well, basically the formula was adopted 10 years ago under Gov. Corzine and was once fully funded, the first year. Then the whole recession happened and everything blew up. We have gotten to a point now where it’s $2 billion underfunded. In that period of time, and there were some steep cuts along the way by Gov. Christie, and then he basically flat funded the rest of the years. What has happened is we have some districts who are getting really a small fraction of what the formula calls for. And then there’s other districts that are getting more than what the formula calls for.

Cruz: This is a district, like say Jersey City, they just got an $8 million cut. Why did they get an $8 million cut? They had less students?

Mooney: Yes. And what happened and this is one of the specifics in this fight that’s going on, or at least this debate that’s going on in the formula. There is a large chunk, it’s about $600 million that is called “adjustment aid.” It’s basically a hold harmless. It saves districts from seeing cuts and it was put into the formula early on. Basically a political move.

Cruz: Districts that have lost student population.

Mooney: Yes. And so they were saving them from seeing deep cuts. That was supposed to be phased out. It never was. One of the things Sweeney wants to do is start phasing that out over a 7-year period. Actually, Jersey City is going to be a little bit different because they are being offered a chance of having a payroll tax which would go to schools. Theirs would be phased out over 5 years. Sweeney wants to start that phase out and actually did to a degree last year. Murphy is holding back on that and he has a powerful ally in that in the NJEA, the teacher’s union, which is also putting back on that. That’s really where the tension is. I think they both agree that more aid to schools is a good idea. It’s just the fact that there’s going to be, and it’s no small number it’s about 190 districts are going to see less aid in the long run. That’s where the debate is right now.

Cruz: So, there’s winners and losers obviously. Who stands to gain the most and who stands to lose the most, or do we know that even yet?

Mooney: They haven’t shared that yet. Sweeney’s camp shared a broad run on that actually a few weeks ago, what would happen over the course of 5 or 7 years. Again, there are some large, urban districts, Jersey City would be one, that would see less state aid. But this has big impact on the suburbs and the rural districts as well. Sweeney holds up some districts down in South Jersey that are seeing 20 percent of the aid that the formula calls for and he wants to lift those. His plan, or at least what he said yesterday is, his plan in the first year no district would be getting less than 58 percent of their aid. So, that’s a big step up. It would solve the ones that are really at the bottom, but there are lots of details to this. And this whole notion on whether he would shut down the government over it, you know there’s some hardball going, even among the Democrats.

Cruz: We’re kind of looking at from 30,000 feet, but if you get really down close, you mention some of the key players here, the New Jersey Education Association which is the teachers union, the governor and the Senate president. Is this all part of this 11th hour, well, 10th hour negotiation going on right now?

Mooney: Yes, and I wouldn’t leave out the courts. I mean they are a big player in school funding in New Jersey and have been for 40 years. And one of the things that Sweeney has built into this is that he is allowed some flexibility on property tax caps to those districts that have fallen under the Abbott v. Burke school equity ruling, which is 30 districts. Because the court certainly could weigh in if all of a sudden there are edicts around Abbott v. Burke, which is providing more additional money to needy districts. If that’s not getting followed, you know that they’ll weigh in on that. So, I think that there’s a bunch of different players here. Some are being very public about it and I’m sure there’s lots going on behind closed doors that we haven’t seen yet either.