Christie to Propose NJ Budget Amid Storm Recovery

Gov. Chris Christie will lay out his fourth state budget Tuesday amid mounting fiscal pressures that include a half-million-dollar revenue shortfall that could require late-year spending cuts to keep New Jersey in the black.

The state's economy has been growing at just under 4 percent through the first seven months of the fiscal year, but that's less than half of the growth projection on which Christie built the current budget. If the shortage continues, spending cuts will be required because the state Constitution does not allow deficits to be carried forward to the next fiscal year.

"How we end this year will impact tremendously next year. We want to make sure the services that the residents of the state of New Jersey depend on every day are there for them," said Assemblyman Vincent Prieto, a Democrat who chairs the Assembly Budget Committee.

Christie was keeping his budget plans to himself late last week, though he acknowledged having already made "all the major decisions" on the plan he'll propose for the 12 months beginning July 1. He refused to say how his plan would impact funding for public schools, municipalities or Medicaid, or whether he would revive a plan to cut taxes 10 percent, which the Legislature quashed. He also would not discuss whether spending cuts would be part of his budget message.

"Obviously if there's a shortfall there will be reductions in order to make those up," Christie said in response to a question last week in Little Ferry. "And I'll announce those when I need to announce them."

With Christie and the entire Legislature facing re-election in November, neither party may be looking to create budget drama this spring.

One wild card is Sandy and its impact on state revenues. The storm hit New Jersey hard in lost revenues from property taxes, income and business taxes, and casino revenues, which are 10 percent below last year's collections. Eventually, however, the state is expected to see a boom in construction jobs and its portion of $60 billion in federal stimulus money for the recovery.

Christie plans to use some of the federal money to bridge budget gaps blown wider by the superstorm.

"The administration has as a top priority dealing with the gaps — the gaps in insurance coverage, the gaps in people's ability to elevate their houses and what they can afford they're getting from insurance, another key gap is property tax gaps," said Assembly Republican Budget Officer Declan O'Scanlon.

Democrats will have little recourse other than to go along with the governor's plan to plug budget holes, said political pollster Patrick Murray of Monmouth University.

"There is nothing the Democrats can do," Murray said. "If they propose new spending, it undermines their argument that the governor is over estimating revenues. Politically speaking, this is a chess match and the governor has more moves than the Democrats."

Once Christie proposes a budget, it will be up to the Democratic-led Legislature to review the plan and negotiate a compromise with the administration before the new fiscal year.