There was a pledge to not increase taxes. A promise to deliver the last installment in a $2 billion business-tax cut initiative. And an announcement that teachers through their unions are open to sweeping changes designed to make health and pension benefits more affordable.
“That is fiscal discipline,” Gov. Chris Christie declared yesterday while putting forward a $33.8 billion budget for the fiscal year that will begin on July 1.
While Christie’s pronouncements were probably well-received by those looking at Christie from afar as he prepares to jump into the 2016 Republican presidential primary, many New Jersey lawmakers — still reeling after Monday’s court ruling that ordered them to work with Christie to find billions more for the state pension system — said they were left with too many unanswered questions.
Christie gave a commanding performance, but he avoided mentioning some key problems New Jersey faces. He said nothing about how the state is going to sustain transportation spending, and made only a passing reference to Monday’s court ruling requiring an additional $1.6 billion be found in this year’s budget to fund the state’s pension system, and another possibly $3 billion payment in 2016. Christie’s budget proposal yesterday called for a $1.3 billion pension contribution in the new fiscal year.
“I honestly thought when he got to the end, that really wasn’t the end, there was going to be some paragraphs of substance, but there was nothing,” said Senate Majority Leader Loretta Weinberg (D-Bergen).
Christie’s biggest new proposal yesterday was the announcement that the nonpartisan panel of experts he convened last year to find ways to make public-employee benefits more affordable had finally released its recommendations. The panel is calling for sweeping changes, including a freezing of the current state pension system and the creation of a new hybrid system incorporating some features of a defined-contribution plan, or 401(k).
Christie in his 30-minute speech also touted a long-term payment plan that would involve a constitutional amendment to ensure payment of the pension system’s debt, which measures between $37 billion and $83 billion depending on which accounting method is used. And the governor repeatedly said the New Jersey Education Association’s leaders endorsed the plan.
“We are on the verge of providing evidence to our citizens once again that we can make government work for them, the people who actually pay the bills,” Christie said.
But the teachers union’s leadership later disagreed with the governor’s characterization of its support of the commission’s full work. And unions representing other public employees took a firm stand against the panel’s ideas.
Hetty Rosenstein, state director of the Communications Workers of America, said the state pension payments affirmed by the court on Monday need to be honored. Union members are paying more for their benefits, but the state isn’t living up to its obligations, she said.
“The law is the law,” Rosenstein said. “You can’t change the script, it’s the law.”
Legislative leaders, who would need to sign on to the proposed changes, were also noncommittal, saying they need more details.
“We heard a hope, an aspiration, but we did not hear a concrete plan,” said Assembly Budget Committee Chairman Gary Schaer (D-Passaic).
“We’re missing a lot of the specifics,” said Senate Budget and Appropriations Committee Chair Paul Sarlo (D-Bergen).
Christie also said nothing yesterday about how he plans to maintain spending on transportation projects, something lawmakers and the governor have been discussing now for weeks without reaching an agreement. The current source of revenue, the state’s 14.5-cent gas tax, will no longer be an option starting July 1 because the money from that tax will be needed to pay off the state Transportation Trust Fund’s existing debt.
And the budget booklet distributed after Christie’s speech by the state Department of Treasury said increasing employee health premiums and other rising costs will force the agency to review revenue-generating options “that may include the first fare adjustment since May of 2010.”
In a briefing with reporters held before Christie’s budget speech, state Treasurer Andrew Sidamon-Eristoff said there is about $600 million in debt that could be issued to fund road, bridge, and rail projects, but there would be no “pay-as-you-go” component, something Christie consistently promised during his first term as a way to ease the state’s reliance on new borrowing.
Though that funding level wouldn’t jeopardize matching federal funds, it’s less than the more than $1 billion that’s being spent on transportation annually by the state now, and far below the nearly $2 billion many think the state should be spending.
The transportation issue is “something that we can’t put off,” said Assembly Speaker Vincent Prieto (D-Hudson).
Tom Bracken, chair of Forward New Jersey, a coalition of 75 different organizations that’s been pressing this year for a new source of funding for transportation, said “it is time for the discussion to stop and the solution to be put forward.”
But left unclear this year is how much Democrats, who control the Legislature, will be able to cooperate with each other given that the full Assembly is up for reelection in November. Senate and Assembly leaders held separate news conferences yesterday to respond to Christie’s budget speech, breaking from past years when they reacted together.
What’s more, Senate President Stephen Sweeney, and possibly other legislators, are eyeing runs to replace Christie as governor in 2018. Given that, they want these pressing issues solved sooner than later.
In all, Christie’s new budget would increase spending by about 4 percent over the current, $32.5 billion budget. But many key areas in the spending plan would see only flat funding.
Formula aid for local school districts — the amount of money that goes right to the classroom — would be held at $7.86 billion. Aid for municipalities would remain at $1.5 billion.
For many local governments that translates into a cut since they are facing increased costs, said Bill Dressel, executive director of the New Jersey League of Municipalities.
“This is not relief,” Dressel said. “This is putting more burden on the mayors and the governing body officials.”
And funding for property tax relief remains just over $1 billion, with money for Homestead credits down slightly to $341 million. That means, after a year that saw New Jersey property tax bills go up on average by $173 to $8,161, property-tax relief intended to offset those bills for many seniors and low- and moderate-income homeowners will not be keeping pace.
“The governor glossed over historic problems,” said Assembly Majority Leader Lou Greenwald (D-Camden). “He did not lead us today on key issues.”
In all, the budget envisions revenues growing through June 30, 2016 by more than $1 billion, or 3.8 percent. That’s less than the roughly 5 percent growth forecast for the current fiscal year, and one of the more modest projections offered by the governor since he took office in early 2010.
Still, that revenue projection shows the state is “clearly on the right track,” said Michele Siekerka, president of the New Jersey Business and Industry Association. “Investments are paying off.”
But Democrats said by now New Jersey should be enjoying a better economy, and one that should be producing more tax revenue to pay for priorities like the pension system. Instead, New Jersey’s economy has only recovered about 50 percent of the jobs lost to the last recession.
“He has no plan to fix the economy in this state. It’s not acceptable,” said Sweeney (D-Gloucester).
Sweeney was one of the Democrats who worked with Christie on public-employee benefits reform in 2011. This time around he said he’s holding firm to a position that unless the Christie administration makes a strong effort to pay more into the pension system, he will hold back from seriously talking about new reforms.
“I didn’t say I’m not on board, but we need to see a good faith effort,” said Sweeney, who suggested new revenue could be raised by hiking taxes on millionaires.
Tom Byrne, the acting chairman of the New Jersey State Investment Council and one of the experts who sat on the governor’s study commission, said the recommendations represent “the best of bad choices.”
Byrne, a former state Democratic Party chairman, went on to call them “rational, realistic” and “the best we’re going to do.”
Unlike the prior reform efforts, Byrne said the commission’s proposal identifies how it would fund the staggering task of paying down the unfunded pension liability. A big part of the panel’s vision involves trading less generous health benefits for more security, he said.
“The money stays with the employees,” he said.
The commission’s work also drew praise from Republican lawmakers.
“As we have said all along, it is essential we come together to craft solutions that provide long-term relief,” said Assemblyman Declan O’Scanlon (R-Monmouth).
But others said more details are needed to fully evaluate the proposal.
“Before we comment further, we will be studying the proposal in depth to ascertain its potential impact on local boards of education,” said Frank Belluscio, a spokesman for the New Jersey School Boards Association.
Dressel, the leader of the League of Municipalities, said he would be concerned about any diversion of savings from offering less-generous health plans, something suggested in the report.
“Those savings should go back into local government,” Dressel said.
Christie will head out on the road today to sell his budget and benefits-reform agenda to the public. He will hold his first town hall-style event of the year in Moorestown this afternoon.
And lawmakers now have until June 30, a deadline set by the state constitution, to either embrace Christie’s vision for the budget or come up with their own spending bill.
“We have a lot of work to do,” Greenwald said.