With New Jerseyans shouldering the highest tax burden in the nation, Gov. Chris Christie told lawmakers it was time the state stop its "addiction to spending" and start finding ways to make it, and the tax burden, smaller.
In his first budget address to lawmakers on Tuesday, the Republican suggested doing that by cutting aid to schools, tax rebates to homeowners, laying off state workers and skipping pension payments.
Christie, who ousted Democratic Gov. Jon Corzine in November by running on a platform of smaller government, outlined his $29.3 billion budget proposal before a joint session of the Legislature, telling lawmakers that if they continue to increase taxes, people will leave.
"Previous administrations and legislatures have raised taxes 115 times in the last eight years alone," he said. "Raising taxes again on the people of New Jersey, the highest taxed citizens in the country, would be insane."
Christie's 2011 budget is slightly smaller than the current one, but given the growing costs of benefits and inflation and the loss of $1.3 billion in stimulus money, he had to make about $3 billion in cuts.
To balance the budget, which he is constitutionally required to do, Christie must also close a $10.7 billion deficit.
He will do that by slashing education money by more than $1 billion — $820 million for K-12 schools and $175 million for higher education. That comes on top of the $475 million cut in school aid that Christie made last month to rebalance the current year's budget.
"You are talking about cuts that will be devastating to public education," said Steve Baker, a spokesman for the New Jersey Education Association, a teachers' union.
Schools will lose up to 5 percent of their budgets. Poor urban schools will be hit the hardest because their budgets rely on a higher percentage of state aid, with some getting more than 90 percent of their budgets from the state.
David Sciarra, executive director of the Education Law Center, which represents students in the state's poorest cities, said any cut to aid school aid would require approval from the state Supreme Court.
"The governor cannot unilaterally disregard the court decision," he said.
Christie will skip $3 billion in pension payments, saying he it must be reformed before more money is poured into it; the system is already underfunded by $46 billion.
Under the proposal, no one will get a property tax rebate check this year to combat New Jersey's property taxes, the highest in the nation at an average $7,300 per household. When rebates return in the spring of 2011, senior citizens, the disabled and low-income wage earners will get a tax credit rather than a rebate check, and will get less than they received last year.
The proposal also "freezes" a rebate program that allowed low-income senior and disabled citizens to lock into property tax rates when they enroll in the program. Those already in the program will continue to keep those rates but no one else is allowed to join.
The budget also proposes a $445 million cut in aid to towns.
Christie is calling for a 2.5 percent spending cap — no exceptions — for schools, towns, and state government. That constitutional amendment would have to be approved by voters and wouldn't likely take effect until 2012. If approved, spending above the cap would require voter approval.
Towns are currently restricted by a 4 percent cap created under Corzine, but that cap doesn't include increases for such things as health care. They can also appeal to the state's Local Finance Board for increase beyond the cap under other circumstances, and many have done so.
Christie will save almost $9 million through the layoffs of approximately 1,300 state workers, starting in January. He didn't specify how many of those jobs were union-covered.
The Republican spent a good portion of his speech attacking the unions that campaigned against him, saying they used their "political muscle" to enrich their members while private workers were left holding the bag.
The result is two classes of citizens, he said: "Those who enjoy rich public benefits and those who pay for them."
The cuts hit the poor particularly hard.
His budget reduces the state tax credit for lower-income workers, known as the Earned Income tax Credit, a move Assembly Speaker Sheila Oliver called "a tax increase for the working poor."
The maximum state credit for a single parent with two children would drop about $250 from $1,259 to $1,007. The eligibility would remain the same and depends on family size. A single parent with two children earning less than $40,363 would qualify.
Cash welfare assistance for adults without children will also disappear and state health insurance for low-income families will be reduced to exclude any more adults from participating in the NJ FamilyCare program.
The program offers free or subsidized health insurance coverage to low-income children and their parents.
Democrats have criticized Christie for not reinstating an income tax surcharge on the wealthy, which ended Dec. 31. They estimate that would generate about $800 million in revenue and affect only 1 percent of taxpayers.
The Republican also suggested that the state stop funding the state's public television station, New Jersey Network, one of the few stations that carried his budget address live.