Christie Pats Self on Back as He Unveils Largest N.J. Budget

(Bloomberg) -- Chris Christie, presenting his final budget as New Jersey's governor, said he'll leave the state in better shape than the “failing and bloated” one he inherited in 2010.

As he unveiled a $35.5 billion spending plan, his largest yet, he rattled off a list of accomplishments, including a smaller government workforce, tax reductions and fewer regulations. The 54-year-old Republican attributed the state's lagging employment growth to Democratic lawmakers' refusal to agree to additional cuts.

“Because of the hard decisions made over the past seven years and the targeted investments we made to grow the economy and not grow government, I am proud of the FY 2018 budget I am presenting to you today,” Christie said.

That assessment was dismissed by Senate Majority Leader Loretta Weinberg, an 82-year-old Democrat from Teaneck who said the governor was operating in an “alternate reality,” one at odds with her constituents' struggles with high property taxes and less funding for women's health care and public schools.

“Thank goodness this is the last one,” Weinberg, speaking to reporters in Trenton, said of Christie's spending plan.

His proposed budget for the fiscal year that begins July 1 includes a $2.5 billion pension payment, higher than this year's by $650 million. Still, that's about half the most recent actuarial recommendation for the system, which has a $135.7 billion shortfall after years of increased benefits and skipped or reduced payments. New Jersey's pension system is the least funded among U.S. states, leading to credit-rating downgrades and higher borrowing costs relative to other governments.

During his budget address, Christie proposed contributing lottery revenue to the pension system for 30 years, lowering annual payments and immediately reducing the unfunded liability by $13 billion.

New Jersey's lottery provides about $1 billion annually for more than a dozen programs, including some for education, veterans and chronic-care hospital patients. Those programs would “be supported by the general fund,” the governor's office said in a statement, without elaboration.

Assembly Speaker Vincent Prieto, 56, a Democrat from Secaucus, called the proposal “smoke and mirrors,” with potential to run afoul of the state constitution and to create a budget hole.

Another Christie proposal would press Horizon Blue Cross Blue Shield of New Jersey, the state's largest health insurer, to establish a fund “to support our most vulnerable population who access charity care and Medicaid.” Christie said the company has more than $2.9 billion in surplus.

“As the sole insurer with this unique non-profit status and historically charitable mission, Horizon shares in the financial obligation of caring for our most vulnerable citizens,” the governor said.

Horizon, in a statement on its website, said it was organized as a not-for-profit entity, and the governor's characterization of a hefty reserve fund was “just plain wrong.” It is enough, the insurer said, to cover 75 days of claims, or one day of hospitalization for each insured.

The state budget counts on revenue growth of 3.6 percent. Tax collections so far this year have trailed Christie's targets.

Highest Taxes

New Jersey residents pay the nation's highest property taxes. Christie has blamed schools, the largest recipient of those levies, and criticized a funding formula that gives extra money to the 31 poorest districts. His efforts to send less to those areas have been rejected by the state Supreme Court.

Last year, the governor proposed that the state distribute an equal amount of aid for each student regardless of income, a move that would redirect money from cities to suburbs. In recent months, he set aside that priority. During his budget address, he asked lawmakers once again to help him revamp an “unfair and broken” school-funding system.

Christie is spending his last year combating New Jersey's drug-abuse crisis. That's a focus that comes with costs, including a television campaign starring the governor. That's also a shift from the fiscally focused Christie of his first term, when the governor won approval from the Democratic-controlled legislature to cut employee pension and benefit costs.

The governor's 2018 budget includes an additional $1 million to support addicted college students. It also includes $64 million for the state's drug-court program and $2.8 million to help connect overdose survivors with support services.

Tax Cuts

Christie, who campaigned for president on his opposition to tax increases, agreed in October to a 23-cent-boost in the gasoline tax in exchange for reductions in the sales levy and elimination of the estate tax. Over eight years, the budget will lose $8.4 billion from the cuts, according to Fitch Ratings.

Treasurer Ford Scudder said the budget was calculated with higher trends of national consumer spending and confidence in mind. Christie's tax cuts were the right move in light of a 30-year pattern of residents relocating to more affordable states, he said.

“You can't balance the state budget on the backs of unemployed workers, or people who aren't in the state,” Scudder said in a briefing with reporters.

Christie's approval among registered New Jersey voters last month hit 17 percent, the lowest for any U.S. governor in more than 20 years of surveys by Quinnipiac University. A year ago he scrapped his presidential run, which took him out of state for the majority of two years, amid public skepticism about his administration's role in creating George Washington Bridge traffic jams.

One former ally has pleaded guilty in that political-retribution scheme, devised to punish a Democratic mayor who didn't support Christie's re-election. Two others convicted last year, Bridget Anne Kelly and Bill Baroni, are awaiting federal sentencing. Christie has said that though he had no part in the operation, it tainted his chance to be Donald Trump's running mate.

To contact the reporter on this story: Elise Young in Trenton at eyoung30@bloomberg.net.

To contact the editors responsible for this story: Michael Shepard at mshepard7@bloomberg.net, Michael B. Marois, William Selway