Christie proposes $32.1 billion N.J. budget with slight increases in spending

TRENTON - Armed with a rosy revenue projection, Gov. Christie proposed a $32.1 billion budget Tuesday that sprinkles additional funding throughout the state - including a modest increase for public schools and a 5.5 percent boost in direct aid to colleges and universities - while making a down payment on an income-tax cut.

Extolling a "New Jersey comeback," the first-term Republican governor departed from his often confrontational tone in addressing the Democratic-controlled Legislature and offered a spending plan that is the largest since fiscal year 2008, according to the state, and about 8 percent more than the budget he signed last summer.

The state treasurer projects a 7 percent increase in revenue for 2013 with an increasingly healthy economy due to lower unemployment, higher wages, and positive signs from the retail sector.

"Let us continue to be the example for the nation in getting our fiscal house in order, in addressing long-term pension problems, in fixing our schools and in becoming a haven and home for job growth," Christie said during his speech in the Assembly chambers.

Specific appropriations to schools and municipalities will not be available until later this week, but municipal aid is unchanged and most school districts are expected to receive a slight funding boost compared with last year.

The school funds would not fully restore the reductions that Christie implemented when he first assumed office, according to the state School Boards Association.

In one of the more drastic cuts in the spending plan, Camden City government could lose much of the money on which it relies to function. Camden Mayor Dana L. Redd, a Democrat, attended the budget address and said she did not know the implications of the proposed 56 percent cut to the transitional aid program for struggling municipalities.

She did not look surprised, however. The governor has said that transitional aid was meant to be just that - transitional. Redd had a positive appraisal of the governor's speech, saying Christie was "balancing the needs" of the overall population and the most vulnerable.

Legislative Democrats, who have until June 30 to approve the budget, were not nearly as kind. But they refrained from declaring any of its provisions dead on arrival.

They echoed earlier complaints about Christie's plan to cut income taxes by 10 percent over three years, saying the savings would be meaningless to those in the still-struggling middle class.

"For a family making $150,000 in New Jersey - a strong middle-class family - the governor has promised them $70 back in 2013," said Assembly Majority Leader Louis D. Greenwald (D., Camden). "We know that $70 for a middle-class family does not fill the tank of their minivan to carpool their kids . . . and as baseball season begins, it doesn't buy cleats for all three kids."

Christie dismissed the critics, urging them to "end the nay-saying - join us to accelerate the New Jersey comeback this year."

Tax cuts, he said, keep jobs in the state.

Senate President Stephen Sweeney (D., Gloucester) said that argument was false.

"He's protected millionaires the entire time he's been here and our unemployment level is higher than the national average. So when I hear this stuff, how these [tax cuts] are the job creators, then our unemployment rate should be lower than everyone else's," he said.

Though most Democratic lawmakers sat silent during the 40-minute speech, Christie was frequently interrupted by applause - including a sustained ovation from the Republican side of the chamber when he said, "Just so there is no mistake in my intention: I will veto any tax increase again."

It is property tax relief - not income tax relief - that New Jerseyans tell pollsters they really want, Democrats have said. Property-tax-rebate programs received no increase in the proposed budget.

When pressed later, Democrats did not rule out supporting an income-tax cut of some kind. The budget would pay for the first phase of a 10 percent income tax cut with $183 million, but a separate bill would have to be approved by the Democrats to initiate the change in tax rates.

The liberal-leaning New Jersey Policy Perspective slammed the income-tax cut plan with a statement released while the speech was still going on, saying Christie had based his tax cut on "pie-in-the-sky revenue projections" unlikely to happen in a "stagnant economy."

In the first half of fiscal 2012, revenues only rose 3 percent. But in a briefing with reporters before Christie's budget address, Treasurer Andrew Sidamon-Eristoff said, "We believe that the economy of the state is, in fact, experiencing a comeback."

One way Christie found cost savings was by restructuring departments that provide services to vulnerable populations without eliminating funding to those programs, according to budget documents. The Department of Health and Senior Services will drop the "Senior Services" part, as that element would be moved into the Department of Human Services.

The new Department of Health would take charge of all hospital funding, which remains flat in Christie's budget. At the Department of Children and Families, the governor hopes to create a division for children with developmental disabilities.

Some other highlights of the budget proposal:

Christie wants to increase the earned income tax credit for the working poor, for a total average annual benefit of $550, while also providing for $350 million in small business tax cuts.

Of the $213 million in added state aid to public education, $121 million is direct funding for school districts, $14 million is for a program that allows students to attend school out of district, and $15 million is slated for preschools.

Higher education stands to get a 5.5 percent increase - with the biggest percentage hike, 12.8 percent, going to Rowan University. The added funds are not related to the proposed merger of Rowan with Rutgers-Camden - although Christie used his moment in front of the Legislature to push that cause again. He also appropriated $28 million more for tuition assistance and $1 million for a not-yet-created college scholarship program geared toward urban youth.

The Department of Corrections, due to a decrease both in overtime costs and prison population, will see a 2.8 percent - or $30 million - cut in funding. An allocation of $2.5 million is proposed for a mandatory drug court for nonviolent offenders, which is a key part of Christie's crime agenda.

Hagedorn Psychiatric Hospital in Hunterdon County, which is to be closed, would become a facility for homeless veterans.

Christie plans to make - as mandated by a law he championed last year - a $1.1 billion payment into the public-employee pension system. That was the minimum required, about a third less than actuaries recommended, but the biggest single payment in state history.

At the Department of Environmental Protection, Christie seeks to raise spending of state, federal, and other funds by $1.4 million. But some environmentalists complained that $210 million was being taken from the clean-energy fund, used to provide rebates on home weatherization, renewable energy, and energy efficiency. Others praised the governor for increasing aid for state parks.

New funding for individuals with developmental disabilities - $24.7 million - will expand community placements.

Christie used the budget address to push other priorities, particularly his education plans, which have barely moved in the Legislature.

It is unclear if the budget negotiations over the next several months will be more harmonious than they were last year.

After passing Christie's first budget two years ago, Democrats rejected his plan last year and sent him a budget with hundreds of millions of dollars in new spending for schools and the poor. Christie drew the ire of Democrats by taking $900 million out of that proposal before signing it.

This year, the income-tax proposal is likely to cause the most conflict. At the end of his speech on Tuesday, Christie returned to that idea.

"Why not cut income taxes for all New Jerseyans when our fiscal house is now in order?" he asked, setting off a series of rhetorical questions.

"Why not cut income taxes when we are providing for our most vulnerable?"

As Christie shook hands with lawmakers on his way toward the room's exit, he stopped to chat with Geoffrey D'Aries, 27, who suffers from cerebral palsy and uses a wheelchair.

"You made it!" Christie said. "How did I do?"

D'Aries, who attended Christie's State of the State speech last year, assured the governor. "You did very well," he said. "Thank you for inviting me."

D'Aries, of Chester, Morris County, said he would like to work for the governor's campaign team.

"He's very forthright," D'Aries said.

Overall spending: Spending in Gov. Christie's proposed budget for the year starting July 1 would be $32.1 billion - up 3.7 percent over this year. That amount would be the highest in five years, but nearly $1 billion less than state government spent in the budget year that began July 1, 2007.

Revenue forecast: Revenue from taxes and fees is expected to be up 7.3 percent over the current spending plan. The largest increases would be generated from corporate taxes, and smaller increases from sales taxes and the income tax, which Christie proposes to begin cutting in January 2013.

School aid: The state would contribute $8.9 billion to schools - up 2.5 percent. Details of how much each district will get are expected to be released this week. 

Municipal aid: Overall state aid to towns would drop slightly to $1.47 billion, from the current $1.48 billion. Cuts would come in transitional aid that goes to struggling cities, including Camden.

What Christie says: "Let us continue to be the example for the nation in getting our fiscal house in order, in addressing long-term pension problems, in fixing our schools, and becoming a haven and home for job growth."

What Democrats say: Income-tax cuts would help high-earners far more than those in the middle class. They say the focus should be on trimming property taxes.

Source: Associated Press EndText