Sweeney: More Compromise Budgets Likely in Years Ahead

Mark J. Magyar | June 25, 2013 | Budget
Built-in rise in pension payments means ‘there’s no money’ to fight over, Senate president says

When it came to negotiating this year’s budget, there just wasn’t enough money to fight over, and there won’t be for the next several years either, Senate President Stephen Sweeney (D-Gloucester) said yesterday.

With the state’s pension obligations eating up the lion’s share of normal revenue growth through Fiscal Year 2018, compromise budgets like the $32.9 billion spending plan that cleared both the Democratic-controlled Senate and Assembly yesterday are likely to be the rule for the next four years, Sweeney said.

“What happened this year is going to happen over the next several years,” Sweeney said. “There’s no money. There are no other programs we can cut. That’s why this negotiated budget was so easy to negotiate.”

Despite Republican Gov. Chris Christie’s saber-rattling over pushing for a tax cut, even “the governor recognized there’s no money for it,” Sweeney said. In fact, Senate Budget Chairman Paul Sarlo (D-Bergen) said “there was no real mention of a tax cut” in the meetings he had with Christie.

The inability of the state over the past two years to fund even the first-year $183 million to $215 million cost of the property tax credit on the income tax that Sweeney proposed in March 2012 and Christie endorsed the following month raises doubts about how the state could possibly find the estimated $1.6 billion needed by the fourth year to pay for the maximum $1,000 per homeowner tax cut.

Sweeney said the $1.6 billion the state put into the pension system this year will grow to as much as $6 billion four budgets from now when the state completes its seven-year phase-in to full funding of pensions for state workers and New Jersey’s school employees.
That pension obligation will eat up most of the expected revenue growth during Christie’s second term or the first term of his Democratic challenger, Sen. Barbara Buono (D-Middlesex), who led the opposition to the negotiated budget during yesterday’s Senate debate.

Speaking at a recent Monmouth University property tax conference, Assemblyman Declan O’Scanlon (R-Monmouth), the Assembly Republican budget officer, tacitly acknowledged that major tax cuts most likely would have to wait when he suggested that the state could shift the additional $600 million to $700 million being pumped into pensions each year to fund property tax cuts after the pension phase-in is completed in FY2018.

Sarlo and Assembly Budget Chairman Vincent Prieto said their agreement with the Christie administration on a negotiated budget guaranteed that the governor would not use his line-item veto powers to red-line every Democratic-sponsored initiative, as he did two years ago. “This way, we know that the money we put in for nursing home providers, for example, will stay in the budget,” Prieto said.

The compromise budget passed comfortably — 29-11 in the Senate and 52-25 in the Assembly — but not without vehement opposition from sizable blocs in both Democratic caucuses, led by Buono and Sen. Richard Codey (D-Essex), who were deposed as Senate majority leader and Senate president by Sweeney and who have been the most vocal critics of Sweeney’s cooperative working relationship with Christie.

Buono focused her attack on Christie, saying she was “very disappointed in his priorities” for failing to include full funding of the school aid formula and preschool education, and for refusing to provide funding for women’s health clinics, reinstatement of the full Earned Income Tax Credit for the working poor, and more money for colleges and college students. She also criticized him for not providing funding to cut property taxes that are the highest in the nation.

“This governor has left New Jersey,” Buono asserted, contending that Christie was already looking ahead to running for president in 2016

Like Buono, Codey criticized Christie for insisting on holding special primary and general elections for the U.S. Senate that will cost $24 million combined, instead of saving at least $12 million by allowing the Senate general election to be held the same day as the November general election.

“When the governor is asked about it, he says, ‘I don’t give a damn,’” Codey said, noting that the special Senate election would cost more than funding women’s health clinics or reinstating the full Earned Income Tax Credit.

Codey also blasted Christie for closing the Hagedorn psychiatric hospital in Hunterdon County and a pair of developmental centers in Totowa and Woodbridge — a move that would require family members “to drive three hours to visit their loved ones who would be cared for by new employees they don’t know. What the governor is saying is ‘We don’t give a damn.’”

However, Assembly Minority Leader Jon Bramnick (R-Union) said the budget compromise reached by Christie and Democratic legislative leaders could serve as a model of bipartisan cooperation for the nation. “It wasn’t very long ago that we were here overnight arguing over every single issue in the budget,” Bramnick noted.

Kevin Roberts, Christie’s campaign spokesman, criticized Buono for voting against a budget that contained a record $9 billion in school aid, a record $1.676 billion pension payment, and more than $1 billion in funding for hospital charity care, as well as a dozen Democratic-sponsored add-ons that included increased funding for community providers of care to the mentally disabled, nursing home operators, and community colleges.

Democratic budget negotiators persuaded the Christie administration to add only $97 million in increased funding to the $32.9 billion budget that the governor originally proposed. The new funding was covered largely by Medicaid savings created by Christie’s decision to participate in the Obama administration’s Affordable Care Act. “There wasn’t much wiggle room in the budget,” Sarlo acknowledged.

The only Republican to speak against the budget — and the lone GOP vote in opposition in the Senate — was Sen. Michael Doherty (R-Warren), the Legislature’s leading conservative, who criticized the size of the $32.9 billion spending plan. “Our neighbor to the west, Pennsylvania — a state with four million more people — this year passed a budget for $28.3 billion,” Doherty noted.

Sweeney said one of his biggest regrets was his inability to persuade Christie to include $7.5 million in funding for women’s healthcare clinics, including Planned Parenthood, which he has refused to do for four years in a row. “He sees it as funding for abortion, but it’s not,” Sweeney said. “For every $1, we would get $9 back from the federal government. If you can find $24 million for special elections when you need to,” it’s not a question of finances, but of a policy choice, he said.

Sarlo was philosophical about the compromises Democrats made to get a budget agreement with Christie. “Nobody should be declaring victory today,” he said. “But it’s 2:30 in the afternoon on June 24th and we have a budget — six days early.”

That, said Sen. Joseph Pennachio (R-Morris), is “something to celebrate.”