New Jersey Gov. Chris Christie proposed a $32.9 billion budget Tuesday that allows more poor residents to enroll in Medicaid and increases public school aid but defers property tax rebates for three months.
Christie's proposal for the fiscal year that starts July 1 comes as the state rebounds from Sandy, the worst natural disaster in state history. The budget counts on federal funding to stimulate the state's still-sluggish economy and help coastal communities rebuild. Some 25 municipalities lost at least 5 percent of their tax base after Sandy, because of destroyed homes and closed businesses.
The budget also adds nearly $100 million to public education and expands the Medicaid rolls by 300,000 by allowing the federal government to take over costs.
However, many homeowners expecting property tax rebates in May will have to wait. Seniors, the disabled and low-income homeowners will see them in August.
The deferral will allow the state to cover for a projected $407 million shortfall in the budget that expires in June. New Jersey's constitution doesn't allow deficit spending.
The budget also makes a $1.6 billion payment to the public employee pension system, a commitment the administration made when landmark pension and health benefits changes were enacted two years ago. Those changes required union workers to pay more for retirement and medical benefits, changes Christie said were necessary to shore up the underfunded systems.
Christie's proposed budget contained no major surprises but could be thrown into turmoil by the end of the week — to the peril of the state's property holders — if President Barack Obama and Congress fail to strike a deal on looming federal budget cuts.
The first $1.8 billion in Sandy aid is due in April. But New Jersey could see $100 million less than expected unless there's a deal in Washington to eliminate federal cuts set to take effect Friday. Preschool classes and regional airports could also be shuttered.
Christie proposed adding $40 million to the current-year budget to cover expenses not reimbursed by the federal government.
"This will ensure that we can move ahead with maximum speed, and that those things that fall through the cracks will not bankrupt families, businesses and local governments," Christie said.
The Republican governor has told residents of hard-hit towns whose homes survived the storm to expect to pay higher property taxes. But that could be a bitter pill for New Jerseyans recovering from Sandy. State residents already pay the highest property taxes in the country, averaging $7,870 per household.
Budget Officer Declan O'Scanlon, who represents some of the shore towns, said a portion of the Sandy aid was earmarked for property tax relief to cushion the blow.
"Regarding Sandy and property taxes, the way we're going to hopefully resolve that is with federal money," O'Scanlon said. "That's been done before in other jurisdictions where they've had massive storms like this."