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Analysis: Christie Offers No Tax Cut, But $205 Million In Veiled Tax Hikes

Embattled governor arouses furor with call to renegotiate state’s pension obligation, but lack of specifics raises questions about Christie’s intent

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Somberly warning that New Jersey would have to renegotiate its public employee pension obligations to fund vital services, Gov. Chris Christie yesterday unveiled a record $34.4 billion state budget that made the promised pension payment, left out an expected tax cut, and surprisingly included $205 million in tax increases that were defended as “closing tax loopholes to level the playing field.”

The tax changes, which included the extension of the state’s 7 percent sales tax to Internet sales by out-of-state retailers, did not quite square with the opening assertion of Christie’s Budget Address yesterday that he was presenting a budget that, “for the fifth year in a row, requires no new taxes on the people of New Jersey.”

Nor did Christie’s decision to once again use $324 million in New Jersey Turnpike toll money to balance his budget, forcing him to borrow more money for the Transportation Trust Fund again, square with Christie’s complaint that the rising cost of debt service -- along with pensions and retiree health benefits -- was eating up 94 percent of the funding available for new programs this year.

Overall, however, the budget for Fiscal Year 2015 was a status quo document that did not differ substantially from this year’s spending plan and was based on a 5.8 percent increase in estimated revenue that Assembly Speaker Vincent Prieto (D-Hudson) deemed reasonable.

The budget recommends small increases in aid for schools and Medicaid, modest competitive grant programs for school districts to experiment with extended school days and for municipalities willing to consider consolidation, and minor increases for drug courts and an innovative substance abuse program tied to employment services.

And while Christie aroused the ire of Democratic legislators and union officials with his call for state leaders to revisit the obligations imposed by the landmark 2011 pension and health benefits bill he pushed through with Senate President Stephen Sweeney (D-Gloucester), the governor’s speech was just that -- a speech.

No call for delaying the seven-year pension payment schedule under which he agreed to make next year’s required $2.25 billion record contribution. No call for public employees to pay more or retire later. Not even a call for a blue-ribbon pension commission. Not a single new pension policy initiative.

“This was the most low-key speech I’ve ever heard this governor give,” said Monmouth University political scientist Patrick Murray, echoing the private sentiments of many of the lobbyists and aides packed into the stairwells and onto windowsills of the Assembly Gallery. “This was racing under the yellow flag. They’re just trying to hold their position.”

A Holding Action

For Christie, holding his position would be a victory in the wake of the disastrous nose-dive in popularity and credibility he has endured since the release seven weeks ago of an email showing that his deputy chief of staff, Bridget Kelly, ordered the infamous George Washington Bridge lane closures in apparent retaliation against Fort Lee’s Democratic mayor for refusing to endorse Christie for reelection.

Since then, Christie has been the subject of 24/7 cable news coverage. Five high-ranking Christie appointees in the governor’s office or the Port Authority have been fired or resigned. The U.S. Attorney’s Office and the Legislature’s Joint Select Committee on Investigation have flooded the governor’s office and campaign with subpoenas. Christie’s approval ratings have dropped below 50 percent in New Jersey polls and he has lost -- and may never regain -- his frontrunner status in the 2016 Republican presidential race.

It was against this backdrop that a politically weakened Christie gave yesterday’s budget speech, and the drop in the number of national news cameras reflected his plummet in the national polls.

Yesterday’s speech seemed aimed at a New Jersey audience, rather than a national Republican electorate: A pre-Bridgegate Christie still running neck-and-neck with Hillary Clinton in the presidential polls might have been more aggressive and found a way to propose a tax cut -- even if Sweeney and Prieto had already declared it dead on arrival.

Instead, Christie yesterday took what several Democratic leaders praised as a “conciliatory” tone in his speech, focusing on New Jersey issues and resisting the temptation to declare that the threat to New Jersey’s fiscal future posed by mounting pension and retiree health benefits was part of a national problem that he could show the nation how to fix.

The Christie administration didn’t even bother to scatter the five obscure changes in tax laws, exemptions, and penalties throughout the budget to make it harder for reporters to spot them. Treasury’s Budget Summary packaged the $205 million in revenue enhancements together with the explanation that “Governor Christie is taking action to level the playing field and promote tax fairness by closing corporate tax loopholes, removing inconsistencies, and modernizing enforcement for tax delinquents.”

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