November 16, 2009 Christie: New Jersey's finances are worse than we thought By MICHAEL SYMONS GANNETT STATE BUREAU Gov.-elect Chris Christie's budget advisers, fresh off a meeting earlier in the day with Gov. Jon Corzine's top treasury officials, said today that the state's fiscal situation is worse in the current and upcoming budget years than expected. "We did not get any pleasant news this morning from the Treasurer's Office … not that I expected to, but more unpleasant perhaps than we had hoped,'' Christie said at an afternoon news conference in his new transition office in the state capital. Christie reiterated that he won't seek tax increases to balance the budget. He wouldn't commit to timetable for promised cuts in income and corporate taxes, though he said tax cuts and spending cuts are needed to fix the state's budget and economy. "The one thing that you can be sure of is this: I told all of you that I was going to govern like a one-termer. We are going to make the decisions that put this state on the long-term path to fiscal health, no matter what the ramifications of that are,'' Christie said. "The state of New Jersey certainly faces a very urgent fiscal situation,'' said Christie adviser Richard Bagger, a former lawmaker who is now an executive at Pfizer. "First with respect to the current fiscal year ... and an extraordinarily challenge with respect to the coming fiscal year, 2011, and significant long-term fiscal issues.'' "We do have some very, very urgent problems facing the state when it comes to fiscal matters,'' said budget adviser Robert Grady, a former communications director under Gov. Tom Kean who has directed venture capital at private equity firms for the last decade. To date, the state Treasury Department has announced a $190 million revenue shortfall in the first three months of the state fiscal year. The shortfalls continued in October. While no details have been announced, Corzine directed Cabinet officials to identify an additional $200 million in budget savings by Dec. 1. Grady said many state agencies will also require supplemental spending. That is typical in each state budget, and it may be aggravated this year by recession-driven demands for safety-net services. "If you add together the fact that revenues are continuing to come in light and there are clearly supplemental needs, it's clear that we are going to have a large problem for fiscal 2010, the current fiscal year, which will need to be addressed,'' Grady said. Grady said the $8 billion deficit projection that has been widely cited and attributed to the nonpartisan Office of Legislature Services "is at the low end of the range'' and that the structural deficit will be "clearly larger'' than that. Christie, Bagger and Grady declined to provide specifics. Christie's transition office is sending a letter to the Corzine administration today asking for a freeze on discretionary grants and aid, paid appointments, new hires and regulations that would cost the state money to enforce. The governor-elect is also requesting that any spending bills be line-item vetoed. Christie's budget advisers will also review Corzine administration proposals for spending cuts, provide ideas for added cuts, meet with Moody's investor service to talk about its negative outlook for New Jersey's credit rating and develop specific ideas for cutting spending and programs from current, upcoming and long-term state spending. Christie and his top budget aides met with three top officials in Gov. Jon Corzine's Treasury Department, including state Treasurer David Rousseau, for three hours today before the news conference. "I was laughing in there. I mean, what are you going to do?'' Christie said. ""We knew the situation was the way it was going to be. You know, kind of a rueful chuckle. You know, what are you going to do? This is the job. I said many times during the campaign: You are not going to hear this governor whine and moan and complain about how hard this job is.'' News On budget issues, Christie says everything is on the table By MATT FRIEDMAN, PolitickerNJ.com Reporter: After discussing the budget at a meeting with State Treasurer David Rousseau and two officials from the Office of Management and Budget, Gov.-Elect Christopher Christie said his reaction was a "rueful chuckle." And at a press conference today talking about that meeting, the faces of Christie and his two top budget advisors, Richard Bagger and Robert Grady - who were also present at the meeting -- were dour. That $8 billion structural deficit we've been talking about for 2011? If things remain the way they are and infusions like the one that came from the federal stimulus for the 2010 budget are not repeated, the men said, that's "the low end of the range." Moreover, the revenue projections for the 2010 budget, which were about $190 million short in the first quarter, are set to continue to come in below projections, while there are expected to be supplemental needs in agencies that will increase spending. "If you add together the fact that revenues are continuing to come in light and there are supplemental needs, it's clear that we will have a problem in Fiscal 2010 that will need to be addressed," said Grady to a room packed shoulder-to-shoulder with a few dozen reporters and cameramen. Christie and his advisors did not give details about how they planned to solve the problem, but said they will deliver a letter to Gov. Jon Corzine today about it and said they would undertake four steps: -Freeze spending in a number of areas, including discretionary grant and state aid accounts, hiring and paid appointments, and regulation that would incur spending. They requested that Corzine line-item veto any legislation that would impact the state budget. -Review Corzine's proposed $400 million directive to state agencies to find savings and add some recommendations of their own. -Meet with officials from Moody's, a rating agency, to figure out ways to upgrade New Jersey's outlook, which was downgraded to negative in August. -Develop "spending reduction and operational recommendations" for Christie "regarding with respect to the current year budget, the coming year budget, and the long-term urgent fiscal issues facing our state." The men did not get specific about how dire the forecasts from the Department of Treasury were, and gave no hint of what areas of the budget they would cut. Christie repeated the mantra that "everything is on the table," but did not single out the state's workforce, which during the campaign Christie said he hoped to cut. "There's no reason for them to be fearful," Christie said when asked specifically about state workers. "Part of New Jersey's problem has been a short term view to fiscal management: get through this fiscal year and don't worry about what happens next," said Christie. "I told all of you that I was going to govern like a one-termer. We are going to make the decisions that put this state on the long-term path to fiscal health." Christie, who blamed the fiscal mess not just on the economy but on the past eight years of Democratic governance - singling out former Gov. Jim McGreevey, whose fiscal management he called "obscene" -- said he did not know how the news would affect his plans for tax cuts, but pledged that he would not balance the budget by raising taxes. "Many of you pushed me during the campaign to be more specific about when we would cut taxes and by how much, and I refused to do that. Now you see why," he said. "I had a sense that things were getting worse, and I wanted to be responsible about that.... The answer is I don't know how it's going to affect it, but I can tell you this: I will not balance this budget by increasing taxes." Assemblyman Joseph Cryan (D-Union), the Democratic State Chairman, said that Christie offered few specifics on his budget plan during the campaign. “We’re still getting the same political speak,” Cryan said. “Considering the lingering impact of the global recession, it shouldn’t be news to anyone that the state budget is in tough shape, as it is in states throughout the nation,” said Cryan. “Gov.-elect Christie needs to begin offering real solutions.” Matt Friedman is a PolitickerNJ.com Reporter and can be reached via email at matt@politicsnj.com. participation. New Jersey Is an Equal Opportunity Employer • Printed on Recycled and Recyclable Paper CHRIS CHRISTIE Governor-Elect OFFICE OF THE GOVERNOR-ELECT 20 WEST STATE STREET PO BOX 022 TRENTON, NJ 08625-0022 KIM GUADAGNO Lt. Governor-Elect Re: URGENT ACTIONS WITH RESPECT TO THE STATE BUDGET Sent Via Hand Delivery Dear Governor Corzine: I am writing to follow-up on our conversation last week, and to thank you for your kind and gracious offer to take all possible steps to ensure a smooth and orderly transition. During that discussion, you indicated that you would be taking additional steps to address weak revenue collections that threaten to deplete this year’s planned budget surplus and aggravate next year’s multi-billion dollar structural budget deficit. As you know, I am deeply concerned about the state of New Jersey’s economy and the effects that the deepening fiscal crisis for both fiscal years 2010 and year 2011 could have on New Jersey taxpayers. In order to prevent the crisis from worsening and budget hole we are in from deepening during this critical transition period, I respectfully request that you take the following actions: 1) Place all discretionary grant and state aid accounts, including, but not limited to, Special Municipal Aid and Extraordinary Aid, in reserve. 2) Freeze all new paid appointments and re-appointments to boards and commissions. 3) Line item veto any legislation with a fiscal impact on the State budget. 4) Veto all discretionary spending items in authority minutes. 5) Freeze all professional service, public relations, and consulting contracts. 6) Freeze all pending regulations that would incur additional spending. 7) Freeze all nonessential hires, promotions and raises. 8) Freeze all non-contractual personnel actions, including title changes and transfers. 9) Freeze all transfers of funds and directory letter appropriations. 10) Freeze all new leases, long term purchasing contracts and other long term obligations including certificates of participation. 11) Freeze the retention of all new outside professionals, manager selections, and new contracts for managing alternative investments with respect to New Jersey’s pension funds. 12) Advise and provide advance notice to transition staff and major financial transactions. 13) Strictly enforce, and refrain from relaxing, any existing spending constraints and financial controls. 14) Hold 50% of all operating accounts in reserve to ensure that agencies are not spending more than half of their operating budgets prior to the commencement of the second half of the year. As we have advised your staff, I have named two experienced New Jersey natives and budget experts, Bob Grady and Rich Bagger, as Co-Chairmen of the Transition Task Force on Budget and Taxes. I have asked them to assemble a team to make recommendations to address the budget crisis and put New Jersey on a more sustainable fiscal footing. I ask that your staff continue to cooperate with them in providing information and assistance. I appreciate your cooperation on these vitally important matters. With best wishes, Yours sincerely, Chris Christie Governor-Elect Cc: David Rousseau, Treasurer