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Sells budget in four interviews: Bloomberg TV and Radio, CNBC and NJ 101.5 FM

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(FULL TRANSCRIPT)

CHRIS CHRISTIE, NEW JERSEY STATE GOVERNOR, TALKS TO MARGARET BRENNAN ABOUT STATE'S BUDGET MANAGEMENT

MARGARET BRENNAN, IN BUSINESS, BLOOMBERG NEWS: Now here on "In Business" we have been tracking some of the difficulties that states across this country have been facing when it comes to their own budgets and their own, some say, fiscal crises. Well, today we're looking at the state of New Jersey, their governor here, Chris Christie just unveiled his $29.3 billion budget for fiscal year 2011.

It calls for major cuts in school aid, letting go of over a thousand workers and skipping New Jersey's pension contribution, all with the intended consequence of closing the gap there -

CHRIS CHRISTIE: Yes.

BRENNAN: In your budgets and cutting back on a sizeable deficit. Now I want to ask you, Governor, thank you first for coming in studio.

CHRISTIE: My pleasure.

BRENNAN: Today. No one likes deficits of this size and the global markets have been battling with the consequences.

CHRISTIE: Sure.

BRENNAN: Of them certainly. But the way that you are making some of these cuts here is causing some concern that they're coming at great social cost, rather than at a tax increase.

CHRISTIE: Well.

BRENNAN: Why are you doing it this way?

CHRISTIE: This is why. New Jersey already has the highest marginal income tax rate in America.

BRENNAN: Of course.

CHRISTIE: We already have the second highest sales tax, sixth highest corporate business tax and the highest property taxes in America. So I think we've maxed ourselves out on the revenue side. I'm just simply not going to make New Jersey even less competitive than it is already if we want to have economic growth and put our people back to work. We have 9.9 percent unemployment, above the national average. So with a $10.7 billion deficit it was time to scale back the size of government not just at the state level but also at the local and school board level as well. That's what this budget is setting the stage for.

BRENNAN: Now, you've cut, as we cited, there are 1,300 jobs. You've said that you would like to be able to control more, pull back a little bit more. Are you going to be privatizing some positions there?

CHRISTIE: Some of that will be as the result of privatization. Some of it will be pure layoffs. It's going to depend on what report I get back from my privatization advisory board, which I appointed this past week and will report to me by May 31st. But that's what's going to happen, either through privatization or through layoffs, probably a combination of the two.

BRENNAN: Now, you talked about New Jersey having very high property taxes, highest in the country. When you were campaigning, though, you were talking about a property tax rebate. You've been in office now a short amount of time, a lot is on your plate, but to go back on that promise already has caused some criticism. It's going to be tough for you here. Now, what made you have this change of heart? I mean did you get in office and see that things were far worse than when you were on the campaign trail?

CHRISTIE: Yes, $3 billion worse. Governor Corzine told everyone we had an $8 billion deficit for this coming year. We're at $10.7 billion. And what we're doing with the property tax rebate program is to restructure it. It's not being eliminated. We're going to take away sending checks. We had a, you know, issue revenue in anticipation notes.

BRENNAN: You're suspending it until May of 2011.

CHRISTIE: Until May and it's going to be a direct credit on property tax bills come May.

BRENNAN: Mm-hmm. The millionaire's tax, the tax as it's been billed, right?

CHRISTIE: Yes.

BRENNAN: Over $400,000 in income.

CHRISTIE: It's bad advertising. Yes, $400,000.

BRENNAN: Right. There are some though who would say these costs, these cuts to social programs are hurting the lower income tax bracket when the higher income tax bracket - you know the argument.

CHRISTIE: Sure.

BRENNAN: Could afford that a little bit more. Are you going to be rolling that out extending it?

CHRISTIE: No. Absolutely not, and by the way, the Democrats had the opportunity to do that.

BRENNAN: Even though you say things are worse than when you were campaigning?

CHRISTIE: They are, but you know what? The top one percent of taxpayers in New Jersey pay 40 percent of the income tax. In addition, we've got a situation where that tax applies to small businesses. I'm simply not going to put my foot on the back of the neck of small business while I want them to try to grow jobs by giving more revenue to New Jersey. In addition, the Democrats had the opportunity to do this. That tax expired December 31st.

BRENNAN: Right, and you're not renewing it?

CHRISTIE: I'm not renewing it and they could have renewed it with Governor Corzine in lame duck in January, and they didn't. So this is about politics. This isn't about policy.

BRENNAN: Now, you were going through how tough it is to stomach tax increases. Let me talk a little bit about the salaries and the pensions and the benefit plans in your state. Now, we have some graphics here laying out as we've looked across the country, the Bureau of Labor Statistics now says that often in the private sector benefits, pay out plans are actually less than some state employees.

CHRISTIE: Yes.

BRENNAN: Not what you would - not what you would expect. Hourly wages actually like $6 higher on an average per hour. That's not including benefit costs there.

CHRISTIE: That's right.

BRENNAN: So when you are looking at contracts for existing state employees and their pensions, in June 2011 when they come up, when they expire, are you going to be renegotiating those?

CHRISTIE: Oh, absolutely. Yes, I mean, there's no question that we're going to have to.

BRENNAN: You are going to be asking those employees to pay more into their.

CHRISTIE: For their health benefits.

BRENNAN: Pensions.

CHRISTIE: Into their pensions, and to give concessions on wages as well. And just as importantly it's school districts because teachers pay nothing right now. Zero towards their health insurance benefits. Family health insurance benefits that run anywhere from $18,000 to $24,000 a year that the taxpayers pay for that teacher and their family from the day they're hired until the day they die - fully paid medical benefits.

BRENNAN: So the teachers union can be expecting that in 2011, June 2011?

CHRISTIE: Well, the teachers union can be expecting that coming now in this budget that we're going to be trying to force that to happen because we simply can't afford this level of benefit anymore, and your statistics show it.

BRENNAN: We have just about one minute left for this. I want to ask you because when you're talking there about the unions and about defined pension plans, defined benefit plans, the question of the entire electoral process comes up here. Unions are key here in winning elections. They are key in building coalitions. Is it possible to really build political goodwill, go through the political process, and still ask for them to take these cuts that are going to be very hard to stomach?

CHRISTIE: Sure. Listen, I'm living proof of it. The teachers union spent over $3 million in the campaign in November trying to beat me. The CWA, the AFL-CIO - they all worked against me and spent significant sums of money, millions of dollars, in addition to the $30 million Governor Corzine spent to try to defeat me. And I'm here and I'm the governor of New Jersey. My job now is to serve the people, the taxpayers of this state.

BRENNAN: Quickly, with we have to go, are you going to opt out of health care if it becomes federal law?

CHRISTIE: Let's see what the law is first. Then I'll make that decision.

BRENNAN: Not ruling it out though?

CHRISTIE: I'm not ruling anything in or out.

BRENNAN: All right. Thank you so much, Governor Christie.

CHRISTIE: Thank you.

BRENNAN: For coming in to talk to us about this budget today.

CHRISTIE: Appreciate it. Thanks.