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Christie proposes business-friendly budget

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Chris Christie speaks during Tuesday's budget address. The $32.9 billion spending plan holds the line on business tax cuts and incentives.
Chris Christie speaks during Tuesday's budget address. The $32.9 billion spending plan holds the line on business tax cuts and incentives. - (Aaron Houston / NJBIZ)

Gov. Chris Christie on Tuesday unveiled a plan to expand Medicaid coverage, hold the line on business tax cuts and incentives, and increase spending by a modest 2.3 percent in his fiscal 2014 budget.

All told, the $32.9 billion spending plan lacks a major policy proposal, like last year's never-realized 10 percent income tax cut. Instead, the governor vowed to focus on rebuilding the state, promote tourism at the Shore and continue to reform structural problems in Trenton.

"The reforms we put in place, the investments we make, the discipline we instill, may not all yield results this year or in this term — but they are vital nevertheless," Christie said. "They are part of our obligation to leave state government, to leave New Jersey, to leave this country, better than we found it."

The budget revised downward fiscal 2013 revenue projections. The governor now expects revenue to come in at $31.3 billion for the year, rather than the $31.7 billion originally proposed. The latter number, which represented a 7 percent increase in revenue from fiscal 2012, had been immediately pegged as overly optimistic by legislative Democrats, who said they wouldn't consider Christie's income tax cut unless the revenue numbers came true.

Christie's 2014 budget projects a 4.9 percent increase in revenue over the revised 2013 estimate. The governor said he isn't proposing an income tax cut at this time, but he said he'd work to make it happen if Democrats were on board.

The budget does, however, include a $1.676 billion pension payment — the largest in state history.

Meanwhile, the governor agreed to let a number of business-friendly reforms continue as scheduled, such as the phase-out of the Transitional Energy Facility Assessment, the phase-in of the single sales factor formula and a 25 percent reduction in the minimum tax for S corporations. The governor also agreed to keep funding for the research and development tax credit level at $66 million.

Philip Kirschner

Philip Kirschner, president of the New Jersey Business and Industry Association, said Christie struck the right tone with the budget.

"We think it's a good budget," he said. "It emphasizes the economy. It emphasizes that the rebuilding of the economy is not complete until our tourism economy comes back. We need the rebuilding of the Shore and all the businesses that were there, and the infrastructure as all the homes that need to be repaired. That actually is going to help our economy and certainly help our citizens."

Christie proposed a $40 million contingency fund to help cover rebuilding gaps left after federal aid for Hurricane Sandy is spent.

As for Medicaid, Christie said he still isn't a fan of President Barack Obama's health care reform package, but he said expanding the state's Medicaid coverage makes the most sense for the state. The federal government will cover the added expenses of expanding the program through 2016, and cover 90 percent of the cost thereafter. Christie said the expansion would add 104,000 citizens to the Medicaid rolls.

Assembly Speaker Sheila Y. Oliver said she was happy to see the expansion, though she said Christie had little choice politically.

"There is no way, in a state like New Jersey, that the governor could walk away from Medicaid expansion money," she said.

Oliver said she's waiting to see more details on the budget, but she's concerned about a number of provisions, including Christie's decision to save some $392 million in 2013 by delaying homestead rebates from May to August. The move helps balance the 2013 budget by forcing the expenditure into the 2014 fiscal year.

Assemblyman Lou Greenwald (D-Voorhees) said the maneuver would hurt low-income residents.

"If you can't afford to fully fund the rebate, if you have to move almost $400 million in rebates to seniors from this year to next year, why would we be entertaining an income tax cut that overwhelmingly benefits 1 percent of the population?" Greenwald said.

Barbara Buono

Sen. Barbara Buono (D-Metuchen), the governor's re-election opponent, said Christie's speech amounted to an effort to gloss over a struggling economy. She noted the governor never mentioned the state's 9.6 percent unemployment rate, a number far higher than the national rate.

"If he really was serious about not abandoning the middle class and the working poor, then he wouldn't have vetoed the minimum wage bill," Buono said.

Christie did conditionally veto the Legislature's minimum wage bill, though he has said he would sign a modified version that phased the increase in and didn't link the wage to the consumer price index. The Legislature chose to send the question to November's ballot rather than concede the CPI issue.

Though the speech included a number of jabs from Christie, urging Democrats to enact reforms like the ones suggested in his tool kit package of bills, the governor also urged bipartisanship. He contrasted Trenton with Washington, where politicians haven't been able to pass a budget in three years.

"It seems to me our leaders in Washington, D.C., could learn from our example here," he said.

In a press release, New Jersey State Chamber of Commerce CEO Tom Bracken said he thinks the budget lays the groundwork for further partnership between Christie and the Legislature.

"We believe this budget will build on the optimism and positive environment created over the last three years by the bipartisan cooperation of the governor and the Legislature," he said.

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