Gov. Christie signed a $34.7 billion budget into law early Tuesday morning, bringing an end to New Jersey’s three-day government shutdown.
State parks, which were closed over the weekend, were open to the public for the Fourth of July holiday.
That includes Island Beach State Park, just south of Seaside Heights, where Christie was photographed lounging on the beach with his family Sunday even as the park was closed to the public. That set off intense public backlash, especially on social media.
Government will reopen Wednesday. Now that the standoff in Trenton is over, here’s a recap.
Q: Why did the government shut down?
A: The direct cause was the Legislature’s failure to pass a budget by July 1, the start of the new fiscal year. The New Jersey Constitution says “all moneys for the support of state government … shall be provided for in one general appropriation law covering one and the same fiscal year.” In other words, the Legislature and governor cannot pass a short-term funding bill to avert a shutdown. Without a balanced budget for the full fiscal year, Christie had to shut down government, though he was able to maintain essential services.
Technically, there was nothing Christie could do to reopen government until he received a budget. But it’s more complicated than that.
Q: Why didn’t the Legislature send Christie a budget on time?
A: The irony here is that the Democrats who control the Legislature actually agreed on the budget. It added $325 million in spending to what Christie proposed in February. Most significant is that those legislative add-ons included $150 million in additional school funding, with $25 million for expanded pre-K and $25 million for special education. The school-funding deal also shifted aid from historically “overfunded” districts to “underfunded” ones that had received flat aid for years, even as enrollment grew.
The real sticking point was over an entirely separate legislative debate: Christie wanted to restructure the state’s largest health insurer, the nonprofit Horizon Blue Cross Blue Shield of New Jersey.
And he told Democratic leaders that he would sign their additional spending into law only if they passed legislation that made substantial changes to Horizon.
One faction of Democrats, led by Senate President Stephen Sweeney (D., Gloucester), wouldn’t send Christie a budget without also passing legislation on Horizon, because they feared he would follow through on his threat to veto their spending wish list.
Another faction, led by Assembly Speaker Vincent Prieto (D., Hudson), argued that the insurance company had nothing to do with the budget and that linking the two amounted to political “extortion.”
Prieto was particularly concerned with a provision that would have required Horizon to dedicate “excess” surplus to benefit its 3.8 million policyholders and the general public health. Horizon’s reserves didn’t belong to the state, he said, adding that the Christie-backed proposal in the Senate amounted to a “tax” on the insurer’s policyholders.
Q: What does the new Horizon law do?
A: It establishes a “cap” on Horizon’s surplus; any amount of money that exceeds that surplus would be returned to policyholders. The cap applies to the amount of capital the insurer may maintain in its reserves to account for unexpected health-care costs. In the insurance industry, this is known as risk-based capital. Christie and lawmakers said this provision was modeled after Pennsylvania’s regulations.
“We have finally capped the excess profits of Horizon,” Christie said Monday night. Horizon’s 2016 reserves were under the cap, which is 725 percent of risk-based capital.
The reserves won’t be used to create a state fund for drug treatment and other public health programs — which is what Christie had originally proposed.
The legislation also adds two seats to the insurer’s board, to be appointed by the Assembly speaker and Senate president. Christie argues that this will bring accountability to the insurer, which he has accused of hoarding profits at the expense of the poor.
It also requires Horizon to provide the state with annual reports that detail executive compensation.
“No more operating in the shadows for Horizon,” Christie said late Monday.
Q: Why was the debate over an insurance company considered so important that it triggered a shutdown, disrupting the Fourth of July weekend?
A: No elected official has offered a good answer to this question. Over the weekend, we published an article explaining the political forces at work that helps explain the impasse. Ultimately, though, Horizon Blue Cross Blue Shield of New Jersey has nothing to do with the state’s $34.7 billion budget. The shutdown was an ego-driven mess that reflected poorly on everyone in Trenton.
Q: Politically, who “won” the shutdown?
A: No one. Christie and legislative leaders agree that the shutdown was avoidable and unnecessary.
Q: Does Christie regret lounging on the beach with his family while Island Beach State Park was closed to the general public?
A: Emphatically, no. “I think I’ve proven over the last eight years that I don’t care about political optics,” Christie said Monday night. He also said, “Shame on those people who wanted to make this as if we were taking advantage of something.”
Speaking at length on the backlash he had incurred after NJ.com posted aerial photos Sunday of Christie and his family on the otherwise closed beach, where the governor has a residence, Christie said it was his right to be there, that he chose to spend time with his family, and that he wasn’t going to cancel on his son, who a month earlier had invited friends to travel there.
Of his remark that he “didn’t get any sun,” Christie said he interpreted a reporter’s question as “Were you like, out laying out getting a tan today?” He said he didn’t count going out on the beach for 40 minutes “after I’ve been working all morning” as “getting sun.”
The impression that he was vacationing instead of working is “the only thing … implied over the last 24 hours that bothered me,” Christie said.
Dismissing the photo coverage as “B.S., kind of gotcha journalism,” Christie reiterated that he was with his family. “If I was sitting next to a 25-year-old blonde … that would be a story,” he said.