newjerseynewsroom.com

Introduces $29.4 billion 2011-12 state budget

BY TOM HESTER SR.

NEWJERSEYNEWSROOM.COM

Proclaiming a “New Normal” in Trenton when it comes to state government spending, Gov. Chris Christie Tuesday announced his proposed $29.4 billion 2011-12 budget.

Christie, in a 45-minute address to a joint session of the Legislature, announced he wants to double the amount of property tax rebates middle class families and senior citizens and the handicapped would receive to ease the transition of local governments to holding property taxes to a 2 percent annual increase.

Under the governor’s budget, senior and disabled homeowners with incomes up to $150,000 would receive double the benefits they are currently receiving as direct credits on their property tax bill. Non-senior homeowners with incomes up to $75,000 would also see their property tax relief double. Christie made no mention of rebates for renters.

Christie also announced he will cut Medicaid aid to low-income New Jerseyans by $300 million. The proposed cut follows a $250 million reduction in the program in the last budget.

The governor also proposed to fund the state P.A.A.D. and Senior Gold Prescription Assistance Programs at the same level as the current budget. He said there would be no changes — no co-pay increases and no eligibility changes.

“This level of funding means New Jersey will still have some of the most generous prescription assistance programs in the nation for our seniors,” Christie said.

Christie said cities and towns would receive the same amount of state aid they received in the current budget — about $1.3 billion — and that he wants $250 million set aside in addition to the $10 billion the state currently provides in school aid. He also wants to increase funding for charter schools by 50 percent.

The governor said there would be no state aid reduction for high education and at the same time he proposes increasing state support for student aid programs by $20 million.

State charity aid to hospital would be increased by $20 million.

“But at the same time, to make room for these priorities, we must reform Medicaid, a federal program simply running out of control,” Christie said. “In this budget, we propose to move our aged, blind, and disabled recipients into modern managed care, and move their pharmacy benefit to modern managed care as well — saving a total of $41 million while still providing vital services. We must do these things, not only to fill the hole created by the loss of over a billion dollars of federal stimulus money since 2010, but it is the right thing to do. Medicaid’s growth is out of control. We must manage it better.

The governor said the proposed budget includes $200 million in tax reductions. He said total spending will be down by 2.6 percent when compared to the current budget.

Christie said the proposed budget would provide almost $2.5 billion in job-creating tax relief and incentives over the next five years. “We will cut the minimum S-corporation business tax by 25%,” he said. ‘Again, this will make us more competitive in the region and encourage small businesses and entrepreneurs.”

The governor said he is prepared to immediately make a $500 million payment to the financially-struggling state-run public employees pension fund immediately. “This would be the first payment made since fiscal year 2009, by anyone, Democrat or Republican, he said.

Christie said the situation with public employee health benefits is even more dire than that with pensions. The current liability is greater is $67 billion. He said the burden on the budget to fund these benefits is growing — from 3.3 percent of the state budget as recently as fiscal year 2002 to 9 percent today — a near tripling of the burden on taxpayers to pay for these rich benefits for a privileged few, at an annual cost of $4.3 billion. He said the budget cost of these benefits is projected to grow another 40 percent in the next four years.

“The problem with health benefits is the same as with pensions: the current plan is not sustainable, and our employees do not contribute enough,” Christie said. “The average New Jersey public employee contributes only 8 percent of the cost of his or her health benefits. By contrast, the average federal employee contributes 34 percent. Private sector New Jerseyans typically pay even more than that, while also paying high taxes to support the rich benefits of public employees.

“Meanwhile, New Jersey public employees are offered far less choice: 3 plans, versus a choice of 269 for federal employees,” the governor said. “More competition; more choice; lower cost to taxpayers — that is my plan. The time to change this system is now. We must bring this system into line with comparable public systems. I propose that by 2014, the state should pay 70 percent of the cost of employee health benefits, and the employee should pay 30 percent.

“As things stand today, our pension system has an estimated deficit of $54 billion,” Christie said. “Without action, 30 years from now the difference between our assets and liabilities will be a staggering $183 billion. The burden on the budget and the taxpayer will be unsustainable. The annual state contribution — the annual contribution — would grow to $13 billion per year.”

Describing the “New Normal,” Christie said, “For too many years, our government has operated under the belief that the baseline — the place you begin — is to continue to fund every program in the budget: regardless of the fiscal climate, regardless of the economy, and regardless of the effectiveness of the program. Not anymore.

“Our process (his administration) is based on the belief that to survive and to grow, you need to build a realistic budget from the bottom up,” the governor said. “You fund what you need — this year — to succeed, not every relic from two decades ago that is still on the books.

“The baseline is zero. Zero-based budgeting, which I promised in the campaign, has finally come to New Jersey“ Christie said. “We took the first steps toward reform, and made some very painful spending cuts. There are more difficult decisions this year, to be sure, and in the years ahead. We must continue to cut government spending to restore a chance at prosperity for New Jersey’s families. But as a result of the decisions we started with a year ago, we have changed the paradigm. We have established a “New Normal.”’

Christie strayed from his prepared remarks to again call for change in how public school teachers are evaluated and given seniority. He wants student achievement considered in how an educator is evaluated and he wants job protection based on ability not seniority. The proposals are opposed by the New Jersey Education Association, the statewide teachers union and strongly questioned by the Democratic-controlled Legislature.

“Let me ask you, how many more children's futures are we willing to waste in order to support a failed status quo demanded by the monied special interests that stalk the halls of this building?,” Christie said. “Haven’t we waited long enough to act? The time to fix our schools is now.”

A balanced budget must be approved by June 30.