Change or Rhetoric?

TRENTON - Gov. Christie took office a year ago this week, vowing to turn Trenton upside down.

In many ways, the former prosecutor has done just that, dictating the state's agenda and putting New Jersey firmly on the national political map with his tough talk of fiscal responsibility.

"There's been a big culture change, a change of a landscape," said Sen. Joseph Kyrillos Jr. (R., Monmouth), a Christie confidant. "It's a political establishment with more spine, more creativity, and a wider-eyed understanding of the economic realities that we face."

But critics say Christie's bold assertions about righting the state's financial ship do not always stand up to close scrutiny. Dig beneath his frequent declarations that it is now "grown-up time" in New Jersey, they argue, and it is debatable how much the Republican governor has really addressed the state's underlying fiscal problems.

Those woes - property taxes among the highest in the nation, a gargantuan annual structural budget gap (larger, as a percentage of the state budget, than any other state's), and a public-employee pension system veering toward insolvency - have been years in the making, and it would have been unreasonable to believe they could be solved in one year.

Still, Christie's forceful rhetoric often leaves the impression that he has reversed the state's course. Critics in both parties, however, argue that he has followed some of the well-worn paths of the predecessors he frequently disparages, including skipping state payments to the pension system, borrowing money for short-term and long-term expenses, and cutting property-tax rebates to find quick cash.

In some cases, Christie has offered ambitious proposals - his plan to save public-employee pensions, for example - but has yet to do the difficult work of winning consensus.

Supporters say he has already taken many steps in the right direction. The administration has cited as achievements the slight drop in the state unemployment rate since Christie took office, from above the national rate to below, and the uptick in the business environment, according to at least one ranking.

Some praise his controversial decision to cancel the multibillion-dollar Hudson River rail tunnel, although others argue that it cost taxpayers $3 billion in federal aid for a much-needed project. Others have praised moves to require public employees to contribute 1.5 percent of their salaries toward health-care benefits and to adopt various pension changes for new hires.

But some critics see all those measures as baby steps when the state, they say, needs a bold new direction.

"We have not seen any of the fundamental changes needed to change the state's economy," said Steve Lonegan, the Republican former mayor of Bogota, who lost to Christie in the Republican primary for governor. "We've seen a little tinkering around the edges."

For months, Christie has been campaigning for fellow Republicans and appearing on national TV shows, boasting of closing a gap of nearly $11 billion in a $29 billion budget without raising taxes.

But the $10.7 billion structural deficit, a fuzzy-at-best estimate of the difference between revenue and the amount the state would spend if every budget item on the books were fully funded, is somewhat deceptive because budgetary obligations are rarely fully funded even in boom times.

On the campaign trail, Christie urged his incumbent opponent, Jon S. Corzine, to drop out of the race in shame when a report from the nonpartisan Office of Legislative Services estimated the state's structural deficit at $8 billion.

"You know what he should do? He should stand up today . . . and say out of shame, 'I'm not going to seek reelection,' " Christie said in July 2009.

The only way to shrink the structural deficit is to increase revenue or change the laws that govern the state's spending obligations.

Christie has done neither, and now, at the start of his second year in office, he faces a structural deficit that is likely about the same size as the one Corzine left him. The Office of Legislative Services estimated last summer the structural deficit for the coming fiscal year would be $10.5 billion.

Upon closer examination, Christie's budget cuts were nowhere near what one might surmise from his claims of closing an $11 billion budget gap.

His first budget was smaller than Corzine's last, excluding federal stimulus aid in both years, by $626 million, or 2.2 percent. Corzine's last two budgets cut spending by $3.9 billion in fiscal 2010 and $602 million in fiscal 2009.

Though Christie cut spending in every department, much of the budget gap was closed by taking steps such as withholding the state's contribution to public-employee pensions to save $3.1 billion and suspending property-tax rebates to save $848 million. The budget also cut aid to schools by $819 million and aid to towns by $446 million.

Democratic lawmakers argue that the budget cuts Christie did make disproportionately hurt middle-class and poor residents, who now pay more to ride public transportation and, along with everyone else, more in property taxes.

Assembly Majority Leader Joseph Cryan (D., Union) said Christie's first budget marked the beginning of a painful year for working-class New Jerseyans while the state's wealthiest residents received an income-tax cut.

"Just about everything vital to average New Jerseyans is getting taxed in this budget, whether it be property taxes, health care, jobs, or income," Cryan said. "Well, your income taxes go up only if you're a working-poor family. Millionaires will be enjoying their tax cut."

Conservatives, though approving of the income-tax cut for the richest residents, have complained about wealthier school districts' losing most or all of their state aid while the poorest districts lost far less. Christie has said his cuts, amounting to about 5 percent of each district's total budget, were the fairest way to distribute the pain.

Two of the accomplishments Christie cited in his State of the State speech Tuesday - the 2 percent cap on property-tax increases and changes to the arbitration process that determines compensation for police and firefighters who do not negotiate contracts through collective bargaining - passed in the Legislature, but only after significant compromises.

The property-tax cap is essentially a stricter version of the 4 percent cap enacted under Corzine. But with exemptions for health care, pensions, debt service, and emergencies still in effect, even Christie has acknowledged he does not expect property taxes to decrease.

Homeowners paid an average property-tax bill of $7,281 two years ago, an increase of 3.3 percent over the previous year, the smallest increase in years. The state is due to release its annual report on property-tax increases next month, and taxes are expected to have risen last year.

The law changing the arbitration process, which caps increases in compensation that arbitrators can award to police and firefighters, will expire in three years and does not cover contracts that expired before Jan. 1, which means some towns will not be affected by it.

Conservative critics also point out that under Christie, the state has continued to borrow money for school construction, transportation, and short-term expenses, although as a candidate he criticized such borrowing.

The administration argues that the state's bonded debt grew at the slowest pace in three fiscal years in fiscal 2010, during which Christie was in office for only six months.

Christie's plans to pay for transportation and phase in contributions to the pension system would mean that by fiscal 2016, the state would be paying $605 million toward transportation and an estimated $3.6 billion into the pension system, both of which would require either significant new revenue or budget cuts.

Ingrid Reed, former director of the Eagleton Institute at Rutgers University, gave Christie credit for defining the state's problems.

So far, though, the question of how to solve them remains unanswered, she said.

"I guess that he has built awareness among New Jerseyans . . . about the financial problems that we are facing," Reed said. "It's a little bit harder to say he's helped us understand how we're going to get out of the financial mess, so I think that's the biggest challenge in the second year - to be more of a teacher and a leader with some vision, as opposed to ringing a gong, crying fire in a burning building, when there really is a fire."