Gov. Chris Christie presented a $34.5 billion budget Tuesday afternoon that calls for no new taxes and a $2.25 billion pension payment, the largest ever of its kind.
According to Christie, discretionary spending in the new budget has been reduced by $2.2 billion since fiscal year 2008, representing an “era of fiscal restraint.”
The budget also calls for a payment of $2.25 billion in the state workers’ pension fund, up from the $1.7 billion contribution being made in the current fiscal year.
“That payment is nearly the equivalent of the total payments made in the ten years before we arrived by five different governors,” Christie said. “We’ve kept faith with our pensioners.”
But while Christie said the new budget honors the bipartisan pension agreement, he called repeatedly on the need for further reform. Without reform, taxpayers must still come up with $52 billion to fully fund the pension system, he said.
Christie added that nine out of every 10 dollars in the new spending plan goes to funding the “entitlements” of pensions, health benefits and debt services.
And due to those three obligations, Christie said the state can only dedicate 6 percent of new spending to other focus areas such as education, tax relief, public safety, health care and drug rehabilitation.
“We are in danger of having these costs overwhelm our budget, monopolize our resources and threaten our ability to continue to fund the priorities we care about most,” Christie said.
Christie invoked the bankruptcy situation in Detroit as an example of why entitlement reform was so critical, noting that the city was on the hook for $6.5 billion in retiree health benefits and $3 billion in retiree pension obligations against just $2 billion of cash.
“The problem for Detroit was poor management and an explosion of employee health and pension costs for promises made by politicians that they knew they could not keep,” Christie said. “This is the problem across the country.”
Separately, Christie touched on Medicaid expansion, local government consolidation and called on the Legislature to support the remaining 14 bills in his property tax “toolkit.”
Following the address, the business community applauded Christie’s budget, particularly in regards to news that it will include over $600 million in tax relief for businesses.
New Jersey Business & Industry Association first vice president David Brogan said Christie put forth a “fiscally responsible spending plan” that looks to promote economic stability.
“We are pleased that the budget maintains the commitment to continue phasing in business tax reforms agreed to by the governor and the Legislature in 2011,” Brogan said. “We look forward to seeing more of the details of the budget in the coming months and working with the administration and Legislature on a spending plan that serves to create the best business climate possible.”
New Jersey Chamber of Commerce president Tom Bracken said the unveiled budget was “another example of the sound fiscal policy” Christie and some members in the Legislature have supported.
“The fact this budget calls for no tax increases is good news for everyone in New Jersey,” Bracken said. “Keeping a firm lid on taxes and correcting antiquated tax laws is critical in maintaining the positive economic momentum we have seen these past five years.”
But Gordon MacInnes, president of liberal think tank New Jersey Policy Perspective, said that the message of cutting taxes hasn’t worked and instead, the state needs to invest in education and infrastructure in order to foster a strong economy.
“The false history is that the failure to cut taxes explains our economic malaise,” MacInnes said. “The governor has drained the state of billions in revenue through tax cuts and tax breaks, yet this strategy has failed to spur the kind of recovery our neighboring states and the nation as a whole have seen.”
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