Christie Battles N.J. Democrats Over Budget Cuts

Republican Gov. Chris Christie of New Jersey has been riding the crest of a wave of political victories in his first six months in office. 

Christie recently signed a property tax and municipal spending cap, limiting annual increases in taxes and spending at the local level to 2%. The bill gives the power over local budgets to taxpayers in most situations, requiring voter approval—with few exceptions—for increases above the limit. Earlier this year, Christie was able to close a $2 billion budget hole in the fiscal 2010 budget by freezing spending and ordering cuts in 375 state programs. 

But perhaps Christie’s biggest victory was the passage by the Democratic-controlled legislature of his fiscal 2011 budget. After a very short skirmish, Democrats provided the votes to pass the budget largely intact, although they insisted that minority Republicans sponsor the implementing legislation. The governor’s budget closed an $11 billion deficit in a total budget of just under $29 billion without increasing taxes.

Now, seeking a way to slow Christie’s considerable momentum, Democrats in New Jersey are trying to diminish the significance of the governor’s budget victory. They commissioned an analysis of next year’s budget—11 months early—from the Office of Legislative Services, the state-level equivalent of the Congressional Budget Office. The report concluded that the state will face a budget shortfall in fiscal 2012 of $10.5 billion, almost exactly the same gap as the current budget closed.

Democrats are using the report to argue that Christie’s budget victory was no victory at all.  They say that the report is proof that the governor’s trumpeted fiscal reforms amount to nothing more than putting off the state’s problems to next year. Assemblyman Joseph Cryan called on Christie to stop claiming credit for passing the budget. “While there’s more work to do, the governor should stop taking victory laps,” he said.

Christie fired back at the report, whose conclusions he labeled, “fake.” He said that the Democrats’ report assumes spending that was cut in this year’s budget will be reinstated next year with further increases. Christie said that isn’t going to happen, ruling out spending increases above fiscal 2011 levels in future budgets.

“This is a mindset that says, ‘We’re going to build back all the cuts the governor made this year, and we’re going to then give it the hands-off-the-wheel enhancement,’” Christie said. “The number is completely fake, and doesn’t understand the new reality, which is I’m not going to approve spending that goes over that.”

“The new bar is set. The place to reduce from is where we are now,” Christie said.

Christie spokesman Michael Drewniak has been quoted saying that Christie is not considering any tax increases to raise revenue, either.  “New Jersey doesn’t have a revenue problem, it has a spending problem,” he said. “It is not our intention to tax our way out of this problem.”

The Democrats’ report also takes issue with Christie’s decision to forgo a $3.1 billion payment to the state’s beleaguered pension system. The report notes that the state will be required to make a $3.5 billion payment into the fund next year, assuming no changes are made in the current legislative year. “He just didn’t pay the bills,” Cryan said, calling the missed payment, “cost avoidance.”

Asked about the pension payment in his first Sunday show appearance this week, Christie was unapologetic. He highlighted the need for changes to the state pension system, and defended his decision to skip the payment.

“On pensions, I wasn’t going to put $3 billion into a failing pension system. We need pension reform,” Christie said. “I passed some already for new hires in March, and now this fall we’re going to go after current employees and pension reform and health benefit reform because we’re going broke.”

Christie was referring to a package of pension reforms that he pushed through the legislature in March. That bill made major changes to the system over the loud objections of New Jersey’s public-sector unions. The bill rescinds a 9% benefits increase granted by the prior administration, bans future part-time workers from the state system—requiring them to enroll in 401(k) style accounts—and requires new hires to pay 1.5% of their salaries towards their health insurance premiums, a first in the state.

Now Christie has announced that his administration will come out with additional changes to the pension and benefits system for public-sector union workers before September 1. He promises to make these changes apply to current employees, and counts State Senate President Steve Sweeney (D), a private-sector union president, as a supporter.

Six months into his first term, New Jersey Democrats have yet to find a way to slow down Christie’s agenda. And the governor has shown no inclination to let up on the accelerator.