NYT - Beneath Budget Noise in New Jersey, Some Consensus

June 8, 2010
Beneath Budget Noise in New Jersey, Some Consensus
By RICHARD PÉREZ-PEÑA

TRENTON — As lawmakers here try to hammer out the toughest state budget in decades, it has seemed a clash between political visions, pitting an unfeeling, program-slashing Republican governor against unthinking, tax-and-spend Democratic legislators.

At least, that is how it can sound among the combatants, those in government and the interest groups trying to sway them with the June 30 budget deadline nearing. But much of the noise is about things that are not, strictly speaking, part of the state budget — like Gov. Christopher J. Christie’s urging voters to reject local school budgets in elections in April and his proposed constitutional amendment to cap property tax increases.

Listen closely to the actual budget debate, and there is widespread agreement that New Jersey’s finances are in stunningly bad shape — even by current woeful national standards — making the deepest cuts in memory inevitable no matter who is in charge.

In his first months in office, Mr. Christie has proposed a $29.3 billion budget, the smallest in five years, closing a projected $11 billion deficit with hits to municipalities, schools, mass transit, property tax rebates, tax credits for the poor, tuition aid to students and many other areas. The Democrats who control both houses of the Legislature have cried foul about some specifics but have been fairly quiet about the broad contours.

“A lot of what he’s cutting, it had to happen,” acknowledged Stephen M. Sweeney, a Gloucester County Democrat who is president of the State Senate. “The state’s out of whack. Everyone can see that.”

Despite talk early this year of a showdown, Mr. Christie and legislative leaders now call it unlikely that a stalemate will leave the state without a budget at the deadline and force a government shutdown.

Sheila Y. Oliver, the Assembly speaker, said that another governor might have chosen different cuts and some tax increases, but that “even a Democratic governor would have had to make major cuts, one way or another.”

In fact, a Democratic governor did: Jon S. Corzine, who lost his re-election fight last year to Mr. Christie, made the state budget smaller each of the last two years, cutting billions in spending as the recession took hold. Yet the state’s fiscal condition kept deteriorating, battered by a steep downturn, a heavy reliance on the financial sector and decades of unsound policy choices.

After Mr. Christie took office, he and the Legislature had to close a gap of more than $2 billion just to make it through the rest of the fiscal year. And state officials recently said that revenues were coming in lower than anticipated, worsening the problem.

At a time when many, if not most, states face their gravest budget crises since the Depression, New Jersey has the third-biggest deficit, as a percentage of revenue, trailing Illinois and Nevada, according to the National Conference of State Legislatures. In raw dollars, the $11 billion deficit in New Jersey for the next fiscal year is the second largest, behind California — and larger than the $9 billion gap facing New York, a much bigger state that is rarely held up as a paragon of sound budgeting.

New Jersey is also among the heaviest borrowers, and one of the worst performers in setting aside money to meet pension and retiree health obligations — failings that could make budgeting more painful for decades.

“New Jersey has, unfortunately, a long history of pretty bad decisions by people in both parties, so even without this recession, there would be no easy, painless way of addressing it, no matter who the governor was,” said David L. Crawford, an economist and a consultant.

The primary budget clash has been over whether to resurrect the so-called millionaire’s tax on the highest incomes, enacted under Mr. Corzine, which expired last year.

The Legislature recently passed the tax, but even many Democrats were not enthusiastic about it, watching the governor brand them as people who “believe in bigger government, higher taxes and more spending.” Some lawmakers said that by making the tax a standalone bill that the governor could veto, which he did, they were tacitly conceding that it was more of a statement than something they intended to fight for.

Mr. Christie has proposed cutting state aid to school districts, which his critics said would force districts to raise property taxes and lay off teachers. The governor got into a heated exchange with the teachers’ unions that went far beyond the state budget, accusing teachers of politicizing classrooms, demanding that they accept a pay freeze and contribute part of their salaries to cover health benefits, and urging voters to reject local school budgets.

Ben Dworkin, director of the Rebovich Institute for New Jersey Politics at Rider University, predicted that the enacted state budget would contain nearly everything Mr. Christie sought, with legislators of both parties voting for it and letting the governor take the heat if the cuts proved unpopular.

“He’s made it into a fight with public employee unions rather than a fight about how to fund the schools, and a fight over restraining wasteful local government rather than the state budget,” Mr. Dworkin said. “It’s been smart politics.”

Mr. Christie, for his part, was optimistic during a recent radio call-in show. “I think we’re in a very good position to get it done by June 30, if not earlier,” he said. “We’re going to have a budget that’s very close to the one I submitted.”