More money for education and the public-employee pension system. A continuation of an increased tax credit for the state’s lowest wage earners. And a call for a “reasonable agreement” on renewing New Jersey’s Transportation Trust Fund.
Though the tone of Gov. Chris Christie’s budget message yesterday may have been combative at times, the substance of his proposed $34.8 billion spending plan lines up well with some of the biggest priorities for Democratic legislative leaders. And it also left some room for bipartisan cooperation going forward.
That said, the new budget also continues a series of fiscal policies Democrats have long complained about since Christie took office in early 2010. They include several dedicated-fund diversions and cuts to environmental funding and women’s healthcare.
For Christie, a second-term Republican, the budget speech marked his first public appearance since he dropped out of the GOP’s presidential primary after poor finishes in Iowa and New Hampshire. It also came as Christie has now started his last two years of his final term in office — and as the political jockeying has already begun among those hoping to replace him in advance of the 2017 gubernatorial election.
Christie didn’t hold back on the political rhetoric during the more than 30-minute speech before a joint session of the Legislature in the State House yesterday afternoon. He accused Democrats of sabotaging an earlier deal on transportation funding, and he chided them for recently announced efforts to increase the state’s minimum wage to $15.
But he also pledged to work with Democrats on the state’s thorniest issues, saying he has roughly 630 days left in office to get things done.
“We might not always agree on everything, but we’ve always been able to have the hard conversations we need to move our state forward,” Christie said. “Let’s do that now, and continue to invest in making New Jersey the greatest state possible for all our people.”
Afterward, Democrats took exception to Christie’s partisan tone, but they also welcomed him back to the state after months of intense campaigning. And they said they could still work with him in a bipartisan way.
“None of us want to get into the back-and-forth where we don’t solve these problems,” said Senate Budget and Appropriations Committee Chair Paul Sarlo (D-Bergen).
Republican lawmakers, meanwhile, praised Christie for offering another balanced budget without any tax hikes — and for repeating last month’s call to repeal New Jersey’s estate tax.
“It is a very solid budget, and it focuses on the right priorities,” said Senate Minority Leader Tom Kean Jr. (R-Union).
“He continues to say we can’t raise taxes, we need to be competitive with other states and can’t be doing stupid stuff in terms of messing with the constitution,” said Assembly Minority Leader Jon Bramnick (R-Union). “It’s the same thing he’s been saying from Day One.”
In all, Christie’s new budget calls for a 3 percent increase in spending over the current, $33.8 billion fiscal year budget, relying on a modest 3.1 percent projection for revenue growth. That’s a shade under the growth forecast for the current budget, and much less than some of Christie’s prior spending plans.
And though the proposed budget doesn’t factor in a gas-tax hike or new borrowing for a state Transportation Trust Fund that’s on course to run out of money by the end of June, Christie also did not take a firm position yesterday against a gas-tax hike, which is the preferred path among Democrats.
“I’m ready to wait for realistic proposals and for a legitimate discussion on tax fairness, not just tax hikes,” Christie said.
Afterward, Democrats said that means there’s now room to negotiate, particularly since they already favor making the kind of “tax fairness” changes that could entice Christie to strike a deal. They include phasing out the estate tax and boosting the current income tax exemptions on retirement income from pensions, annuities and 401(k) plans.
The new budget also recommends a surplus fund of $800 million, leaving enough of a cushion for lawmakers and Christie to absorb some loss of revenue that would come with the kind of tax cut Christie would be seeking in a broader deal on transportation funding.
“I’m always willing to negotiate,” said Assembly Speaker Vince Prieto (D-Hudson).
[related]Patrick Murray, director of Monmouth University’s Polling Institute, said he was struck by Christie’s tone, especially given “what we had just been hearing from him on the campaign trail for president.”
“He knows he has to work with them to some extent, and also an acknowledgment that they are a lot less inclined to work with him now than when he came into office,” Murray said. “He has a lot less political capital.”
The proposed budget, meanwhile, also calls for the state contribution to the public-employee pension system — which is grossly underfunded and has been the source of high-profile clashes between Christie and lawmakers in the past — to go up by more than $500 million to $1.86 billion.
Democrats said that proposal is acceptable to them. They also said Christie’s ability to increase the pension contribution without hiking taxes proves a constitutional amendment they want to put before voters later this year mandating a series of ramped-up state pension contributions is realistic and achievable.
“Guess what? We’ve been saying now for the last couple months you can make the pension payments without raising taxes,” said Senate President Stephen Sweeney (D-Gloucester).
“He validates that we can stay on the schedule,” said Sweeney, the sponsor of the amendment and one of the likely Democratic candidates in the 2017 gubernatorial election.
Still, Christie loudly decried the proposed constitutional amendment during his speech yesterday, and he also called for $250 million in new savings from changing employee health-benefit plans. That could come from co-pay increases, the use of more generic drugs and other adjustments, he said. And it would reduce costs for government, taxpayers, and workers.
“It’s a win-win-win for our citizens,” Christie said.
Hetty Rosenstein, state director of the Communications Workers of America labor union, questioned afterward whether those savings — which are already baked into the budget — can be realized in the areas Christie mentioned.
“I don’t know where those numbers come from. They’re bizarre,” said Rosenstein, who is also a member of a committee that designs state-worker health-benefit plans and has final say over any changes.
A full 38 percent of the overall projected spending in the new budget will go to education aid, for a total of $13.3 billion.
But formula aid that goes directly to K-12 districts remains essentially flat at $7.9 billion. And the state will continue to underfund the current school-aid law by about $1 billion, according to the New Jersey Education Association.
“Schools will also once again feel the pain of the governor’s misplaced priorities,” said Wendell Steinhauer, the union’s president.
Also left flat was funding for two key property-tax relief programs, the Homestead tax credit, and the “Senior Freeze.”
For the more than 650,000 homeowners who qualify for the Homestead program, their benefits won’t keep pace with rising New Jersey property-tax bills, which went up on average by nearly $200 last year.
Prieto called that a “difficult” predicament caused by a state economy that hasn’t recovered as swiftly from the last recession as lawmakers would like.
“We have a revenue problem in this state,” he said. “The economy is getting better, we have to get better.”
But Christie is continuing an increase of the state Earned Income Tax Credit up to 30 percent of the federal version of the credit that was launched on a bipartisan basis last year, which helps more than 500,000 of New Jersey’s lowest-income workers.
Business-tax cuts are also being continued in the new budget, and Christie drew praise from business-lobbying groups yesterday for talking about the estate tax — some want to see a similar tax levied on inheritances also repealed — and for showing a willingness to work with the Democrats on transportation funding.
“We believe the governor struck the appropriate note of collaboration with state legislative leaders, and they did the same in opening the door to discussions about funding the Transportation Trust Fund and discussing the Estate Tax,” said Tom Bracken, president and chief executive of the New Jersey Chamber of Commerce.
But liberal groups called on Democrats to draft and advance their own spending plan, saying Christie’s simply continues tax breaks for the wealthy and large corporations.
“We urge legislators to reject Christie’s latest austerity budget, as well as his call for eliminating taxes on the state’s wealthiest 4 percent of estates,” said Analilia Mejia, executive director of New Jersey Working Families.
John Mooney contributed to this story.