Gov. Christie's Budget: The 'New Normal'

Governor Chris Christie vowed on Tuesday afternoon to continue with what he called a “new normal” in New Jersey, calling for a reform effort that “marks the line in the sand that separates the way things used to be, and the way they are going to be.”

Christie said his budget reduces government spending 2.6 percent from last year’s $30.2 billion budget and “marks a departure from the Trenton tradition of budgeting to meet deficit projections that embrace wish-list spending by legislators and assume continuous funding increases that irresponsibly ignore actual revenue sources.”

Instead, his budget takes a “bottom to top” approach, and establishes priorities and will fund them based on revenue that is actually available, he said.

The 2012 budget includes $200 million in proposed tax cuts, including property tax relief, and will increase aid to schools.

The governor proposed a total state budget of $29.4 billion, which honed in on cutting spending, down 2.6 percent from last year, and calls for pensions and benefits reform, as well as education reform.

In addition, the governor laid out the path for the state and its residents to emerge from the recession by attracting new businesses to the state with tax cuts, reform and incentives to encourage job growth, with a proposed phased-in program of $2.5 billion in job-creation incentives over the next five years.

Christie said that the budget seeks to “protect those residents who are most vulnerable,” and preserve prescription aid for senior citizens and the disabled, as well as keeping 4,300 low-income citizens in their homes and apartments.

The budget speech was criticized by Democrats, including Assembly Speaker Sheila Y. Oliver (D-Essex).

She said in a statement on Tuesday afternoon that although the General Assembly stands ready to again control spending, “we must consider the impacts on working class New Jerseyans, senior citizens, children and those less fortunate.”

“We will begin our Constitutional obligation to review this budget, but property tax relief, health care access and job creation must be our priorities,” she added.

Christie laid out a plan to reduce what he said is wasteful spending in each reform category, and told the state that it would “require tough choices” to make a difference in each of these arenas.

He also encouraged the Legislature not to forget the progress made in the 2011 budget, and said states as diverse as California and Wisconsin, Ohio and Florida, New York and New Mexico are following the New Jersey model.

He said he does not view the budgetary reform as a partisan issue. Fiscal responsibility is “not blue or red (but) is the black and white of truth,” he said.

The 2012 budget plan includes spending cuts which will see many state departments operating on less than last year.

Among those departments facing a decrease, the Department of Health and Senior Services stands to see a decrease of nearly 15 percent. The Department of Environmental Protection will also see a decrease of nearly 10 percent.

To increase hospital funding by a projected $20 million from last year’s budget, the governor seeks to reform Medicaid by moving the state’s aged, blind and disabled recipients into modern managed care as well as moving their pharmacy benefit to modern managed care as well–a move, he estimated, that would save the state $41 million.

Christie proposed doubling the state research and development tax credit to encourage high technology and biotechnology entrepreneurs to create and discover within the borders of the Garden State.

For pension reform, which he deemed “simple and common sense,” Christie proposed raising the retirement age and eliminating the cost of living adjustments.

Christie urged the Democratic-controlled Legislature to pass the reforms quickly, and offered a $500 million pension payment as incentive for them to act swiftly. 

Critics, including New Jersey Education Association President Barbara Keshishian, said that would likely only be possible “if teachers and school employees pay thousands more out of their salaries–on top of their current contributions.”

 She questioned the fairness of the burden that educators are expected to shoulder.

“Chris Christie is singling them out to pay the entire tab for this budget. We estimate that his proposals would cut the average teacher’s compensation by 15 percent or more.  Where is the shared sacrifice?” she asked.

But education spending will increase, Christie said, and schools will see a $250 million influx of state aid, although they will also be asked to make changes in the way they do business.

“If [money] was the answer, we would not be spending over $17,600 per pupil in New Jersey and still have over 100,000 students trapped in 200 failing schools,” the governor said.

 Christie asked the legislature to pass the budget, while simultaneously acknowledging opposition, and imminent political difficulty.  He reminded the legislature and the state that “there is no turning back–New Jersey is in the lead and victory is in sight–for all of us.”

Reaction from Holmdel Mayor Patrick Impreveduto

Holmdel Mayor Patrick Impreveduto said the announcement the Governor would keep aid to municipalities flat, and put $250 million back into school aid if certain reforms were passed by the state legislature, was good news. "I was shocked; let's say I was pleasantly surprised," said Impreveduto.

He listened with interest on the doubling of the Homestead Rebate credit proposal. "It's a real positive for the people of Holmdel," he said. 

But most interesting of all was the plan to offer tax incentives to research and development companies to take up stakes in New Jersey. He said he hoped it would interest Somerset Development, the owner of the Alcatel-Lucent property, to return technology workers to the famed facility.

Statement from Holmdel Board of Education Vice President Barbara Garrity.

"Today Governor Christie presented the broad outlines of his proposed state budget.  Until we learn specifically how it will translate into state aid for our district, I can only speculate on the budget impact here in the Holmdel Public Schools.  Our district’s budget could be affected by a few of the proposed changes. 

First, the governor talked about increasing school aid statewide by $250 million.  Last year our general state aid was cut by $2.5 million, and the state began billing us for the debt service on our prior school construction bonds.  Taken together, that reduced our general state aid from $2.9 million to about $309,000.  It is not yet clear what the announced aid increase would mean for our district. 

Second, the Governor spoke of increasing our employees’ contribution to their health benefits.  At present, district health benefits cost $5.9 million, or about 12% of our budget.  Last May, when school employees, among others, were required to begin contributing 1.5% of their salaries toward their health insurance premiums, the increase took effect only after existing labor contracts expired.  Our newly negotiated contract with the HTEA, which represents 93% of our employees, does not expire until July, 2013.  So we would not expect to see much financial impact from increased employee contributions before the 2013-14 budget year.

Finally, there was some discussion of changes to employee pensions.  At present, the state makes the employer pension contribution for our certificated staff (e.g., teachers, administrators, etc.), and the district makes a roughly $800,000 pension contribution for our non-certificated staff (e.g., custodians, bus drivers, etc.).  It is not clear from the governor’s speech how that expense would be affected." - Barbara Garrity

-- Christina Johnson contributed reporting to this story.