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2-25-14 p.m. 'Christie unveils his new 34.4M Budget'
Star Ledger - Christie unveils his new $34.4B budget..."The $34.4 billion state budget unveiled by Gov. Chris Christie today makes modest spending increases to schools and Medicaid — and includes a $2.25 billion payment to the retirement fund for public workers, the largest in state history..."

Star Ledger - Christie unveils his new $34.4B

By Sal Rizzo-The Star-LedgerEmail the author | Follow on Twitter   February 25, 2014 updated February 25, 2014 at 6:59

TRENTON — The $34.4 billion state budget unveiled by Gov. Chris Christie today makes modest spending increases to schools and Medicaid — and includes a $2.25 billion payment to the retirement fund for public workers, the largest in state history.

The Republican governor's new budget is 4.2 percent larger than the one he signed last year, and relies on revenue growth of 5.8 percent.

However, it keeps in place several cuts Christie made in previous years to women's health centers and the Earned Income Tax Credit, which is aimed at the working poor. Democrats have urged him to reverse those cuts.

They have also said Christie should raise the income tax rate for people making more than $1 million, or the state gas tax. But Christie ruled out those tax increases today.

It was a somber speech Christie gave before the Legislature today laying out his new budget, at a time when his administration is working under the cloud of state and federal investigations into the George Washington Bridge scandal and the potential role Christie's top aides and advisers played.

Peppered throughout his speech were warnings about "tough choices" and a "looming crisis" unless the state made further changes to its system of retirement benefits to public workers. He declined to specify any plans, however.

"Due to our pension, health benefit, and debt obligations, only 6 percent of new spending can be focused on the areas where we really want to dedicate our resources: education, tax relief, public safety, higher education, drug rehabilitation, health care," Christie said. "We are in danger of having these costs overwhelm our budget, monopolize our resources, and threaten our ability to continue to fund the priorities we care about most."

Democratic lawmakers and unions took issue with that rhetoric, saying public workers were not to blame for the state neglecting the pension fund for years and years before Christie.

“Public employees, unlike the state, have never skipped a payment into the pension system," said Charles Wowkanech, president of the state chapter of the AFL-CIO union. "And, over the past three years, they’ve paid even more to try to bring the funds back to health. At the least, they deserve a state finally willing to shoulder its share of the responsibility so we can climb out of this hole together."

In 2011, the Republican governor and his allies in the Legislature raised the state retirement age to 65 and made public workers pay more for their retirement benefits. In exchange, the state agreed to pay larger sums every year into their retirement funds after years of governors skipping those payments.

Leading Democrats in the Legislature said after the speech today that they appreciated the "conciliatory" tone of Christie's speech but that they would not consider changes to the pension system beyond the overhauls Christie signed into law in 2011.

“We’re not doing it,” said Senate President Stephen Sweeney (D-Gloucester). “We made a commitment. We’re not breaking the commitment.”

"If we stay the course, the pension system will be fine – it’s not going to bankrupt us," Sweeney added. "What’s missing here is we haven’t grown our economy, and that’s the issue.”

Today, the governor repeatedly highlighted New Jersey's tough financial situation and touted a series of spending increases that he managed to eke out, including "a record-setting $9 billion in direct aid to schools." That's an increase of $38 million from the current fiscal year.

"We will ensure that every one of our nearly 600 school districts receives an increase," Christie told lawmakers gathered in the Assembly chamber. He also proposed a $5 million pilot program to study longer school days in New Jersey, and another $5 million for "preschool initiatives."

Christie's budget plan is also notable for what it doesn't include: a tax cut that the Republican governor had sought for years.

After Christie won re-election in November, his top advisers suggested that a 10 percent, across-the-board tax cut would be a key part of his new budget. But today, state Treasurer Andrew Sidamon-Eristoff said the state could not afford to lose the revenue.
 

Dems to Christie: Where are the jobs?Democratic leaders in the state legislature respond to New Jersey Gov. Chris Christie's 2015 Budget Address by faulting the administration's handling of the economy and blaming Christie for the state's lackluster job growth. While Christie suggested in his speech that further pension reforms are needed to enable the state to make ballooning pension, health care and debt payments, Democrats faulted Christie for failing to create more jobs that help would solve the revenue problem. (Video by Brian Donohue / The Star-Ledger)


"This budget represents a long process of setting priorities and making choices," Sidamon-Eristoff told reporters in a briefing bfore the governor's speech. "We have limited resources and we have some significant non-discretionary needs that we have to address. ... So under these circumstances we're doing what we think is the prudent, fiscally responsible thing."

In his new budget, Christie proposed to make a $2.25 billion pension payment, up from $1.7 billion in the current one. The $2.25 billion is the full amount required in the new budget under the pension overhaul law, yet it is still only 57 percent of what actuaries say is needed in the next fiscal year.

The pension payments are on track to keep rising each year until reaching 100 percent in 2018.

The treasurer said Medicaid funding will increase by $200 million, with the cost split between the state and the federal government. Closing a few tax loopholes and subjecting online retailers to the state sales tax would bring in roughly $200 million in the new budget, Sidamon-Eristoff said.

The state's rainy-day fund, or surplus, would total $313 million in the new budget, the treasurer said.

Assemblyman Declan O'Scanlon (R-Monmouth), the Republican budget officer in the lower house, hailed the budget plan and said Christie was keeping spending growth in check while fulfilling his promise to restore the health of the pension system.

"Virtually all of the spending increases are eaten up on a percentage basis by pension and health benefits — things that we knew were coming," O'Scanlon said. "This governor I don't think is spending one additional discretionary dime unwisely."

Christie said today that further pension reform is needed — but did not make new proposals on that front. He only called on the state's municipalities to consider merging with neighboring towns, or sharing services such as garbage collection or police and fire departments, and referenced his property tax "toolkit" proposals from his first term, which are designed to reduce homeowner's tax bills.

The state League of Municipalities said that "while property tax relief funding has not been reduced, New Jersey municipalities will, once again, balance their budgets without the benefit of all the property tax relief funding that is their due." The group of mayors said the state for six years has taken $331 million in relief funds meant for towns to balance its budget. Christie's new budget would make that seven years.

“Mayors working with their local governing bodies over the past five years deserve credit for making the tough decisions in tough times,” said Stone Harbor Mayor Suzanne M. Walters, the League president. “We have pruned budgets, pursued savings, engaged in tough negotiations, reduced the workforce, shared services, cut spending, applied best practices, emptied reserve accounts and deferred investments. We did this as property values declined, tax appeals increased, development and economic activity stalled, employment slumped and property tax relief funding was diverted to the state budget.”

It is now up to the Democratic-controlled Legislature to analyze Christie's plan, suggest changes, and pass a budget before July 1.