Governor Chris Christie addressed the state legislature recently with his budget plan for the upcoming fiscal year beginning July 1; though the proposed budget is the state’s largest ever, Christie has not called for any increase in taxes.
The $34 billion spending plan calls for a $2.25 billion payment to the public worker pension fund, a slight increase in K-12 funding, a $159 million (about eight percent) increase in higher education funding. The budget is a four percent increase from the state’s current fiscal plan, and, without tax increases, this is, in part, coming from the $5.4 billion in increased state revenue since the 2012 fiscal year. Plans project that the administration will raise $205 million by charging sales tax to online retailers. There’s also a predicted six percent increase in tax collection, fees, and other revenue.
The budget as a whole isn’t the only number winning a largest title; the pension payment is also the largest in state history. The proposed payment is a more than $650 million increase from last year’s proposal. In his address, Christie said that 90 percent of the budget is made up of pension, health benefit and debt payments, which, he said, means that only six percent of new spending can go toward “areas where we really want to dedicate our resources,” like education, tax relief, public safety, higher education, drug rehabilitation, and healthcare. “We, all of us, are paying today for the sins of the past. So, let’s pause a second, let’s take a deep breath, and let’s pledge to each other not to repeat those sins for political purposes,” he said.
Pension funding is the most controversial part of the budget. In December Moody’s Investors Service lowered its outlook on New Jersey’s rating in large part because of pension issues. A report last year by the Division of Investment claimed there were 504,791 active and retired employees in the main public pension system.
State actuaries have consistently recommended that the budget include as much as $3 billion more in pension payments annually than have ever actually been paid. Christie’s proposal this year falls $1.75 billion short of the $4 billion proposed by state actuaries. “We just can’t raise taxes enough to pay for the exploding costs of public employee pensions and benefits,” Christie said. He added that, nationwide, funding for education, energy, and infrastructure are being sacrificed “on the altar of these three things: pensions, health costs, and debt.”
“Exploding entitlement costs” were brought up more than once in Christie’s address. “Due to these exploding entitlement costs, we are failing our taxpayers when we refuse to honestly address these problems and try to fool them into believing that choices do not need to be made. We are better than that. New Jersey is clearly better than that.”
Regardless, Christie’s proposal is still seen as a victory by Democratic leaders and a conciliation on Christie’s part, given his feelings that the pension payment size creates a large burden on the state. In late January, State Senate President Stephen Sweeney (D- Gloucester) threatened to shut down the state government if Governor Christie didn’t make a large enough payment to the pension fund.
Not everyone is happy with the budget. State Senator Loretta Weinberg said: “The Governor’s budget proposal is bad news for the state and equally bad for Bergen County. He says he’s spending approximately $2 billion less in the core budget than what was spent in 2008, but what he doesn’t say is that reduction comes from property tax rebates for middle class homeowners and reductions in local aid, which has resulted in fewer police and firefighters in our towns and cities. School aid is essentially flat, which makes it hard for educators to provide the quality education that is so important to families throughout Bergen County. Uncompensated care for hospitals is cut by $25 million, putting hospitals in a tight squeeze and I’m very disappointed that he once again won’t provide the state funds for women’s health clinics, funds that would generate a nine-to-one match of federal dollars. And the budget does nothing to create jobs or spur the economy. In total, the Governor’s budget doesn’t meet the important needs of the residents of Bergen County and will not do enough to move the state forward.”
Senator Bob Gordon also had something to say. “Generally speaking, this budget is going to be onerous for the Bergen tax payer,” he said, explaining that the $2 billion comes from cuts to property tax relief that middle class families had been getting. Both Senators spoke about hospital budgeting, Gordon noting that the Bergen Regional Medical Center would be getting less, but that funding for Englewood and Hackensack would be going up and Weinberg saying that “Uncompensated care for hospitals is cut by $25 million, putting hospitals in a tight squeeze and I’m very disappointed that he once again won’t provide the state funds for women’s health clinics, funds that would generate a nine-to-one match of federal dollars.”
State Legislature will spend the next few months going over the budget line by line until they settle upon an agreed plan with Governor Christie.
By Aliza Chasan
