Christie freezes state spending to balance budget
With the state budget getting smaller and the unemployment rate still rising, Gov. Chris Christie stood before members of the legislature yesterday at the Trenton Statehouse to deliver a speech citing his plans to balance the budget.
Christie signed an executive order freezing the necessary state spending to balance the budget before he delivered his address. Plans include freezing spending of unspent technical balances across various state programs, including unspent funds to upgrade energy systems in state facilities and several long-term projects. He also plans to withhold school aid.
"New Jersey is in a state of financial crisis. Our state's budget has been left in a shambles and requires immediate action to achieve balance," Christie said. "Today, the days of Alice in Wonderland budgeting in Trenton end."
The fiscal year 2010 budget has a $2 billion gap, he said.
The budget originally projected 5.1 percent growth in sales tax revenue and flat growth in corporate business tax revenues, but instead, sales tax revenue is down 5.5 percent, corporate business tax is down 8 percent, and the unemployment rate is more than 10 percent, Christie said.
"The facts are that revenues are coming in $1.2 billion below what was projected last year, and [more than] $800 million in additional spending was done by the previous administration on their way out the door," he said.
Christie said some of the freezing will result in delayed or terminated projects, and some services will be reduced.
"Not everything is painless," he said. "But in total, we can reduce spending by [more than] $550 million this year by lapsing these unspent balances — by not spending these funds and applying them now towards our multibillion-dollar budget gap."
For example, InvestNJ, a program that aims to create more jobs, has a large unspent balance and a failed record in actually creating new jobs, Christie said. If the program is cut, it can save taxpayers $50 million, he said.
"Instead, I believe we should create, without significant public expense, a one-stop shop to clear away obstacles and speed the path to job creation — the New Jersey partnership for action," he said.
Christie said freezing some long-term projects that can afford delay like capital improvements to state buildings, correctional facilities and state parks, can save approximately $70 million this year.
But the biggest programs that need to be cut and will save the state a lot of money are those New Jersey takes the most pride in and have the most merit, Christie said. This includes more than $1 billion in reductions and reforms to programs such as New Jersey transit, pension systems and school aid.
"The state cannot continue to subsidize NJ Transit to the extent it does, so I am cutting that subsidy," he said. "The state cannot this year spend another $100 million contributing to a pension system that is desperately in need of reform."
The total unfunded pension and medical benefit costs are $90 billion, Christie said. The state would have to pay $7 billion a year to make them current.
"We don't have that money — you know it and I know it," he said.
Christie also plans to hold $475 million in school aid.
Christie said previous administrations underestimated New Jersey's budget gap, setting aside some $230 million in school aid but not offering a legislative solution to achieve the number.
"School aid is a large proportion of New Jersey's budget — especially of the amount which has not yet been spent in fiscal year 2010," Christie said. "So we cannot put our budget in balance without putting some school aid in reserve."
But Christie said the solution would assure every school district has the resources it needs. He plans to reduce aid so no district will have aid withheld in an amount greater than its surpluses.
"Our solution does not take one penny from an approved school instructional budget — not one dime out of the classroom, not one textbook left unbought, not one teacher laid off, not one child's education compromised for one minute," he said.
Christie said while some may view cutting across the board as fair, it would not be fair to some districts that rely heavily on state aid.
"I know this solution will not be popular. More than 500 school districts will be affected, and more than 100 districts will lose all state aid for the remainder of the year," he said.
Rutgers University Democrats President Alex Holodak said while the idea is not the best, if it works, he agrees with the governor.
But he hopes Christie does not freeze student aid for public universities.
"It's really important to put an emphasis on education, especially on the college level," said Holodak, a School of Arts and Sciences senior. "In the state that we're in, I don't think we can really afford to hold off on those things [like student aid]."
Rutgers University College Republicans member Benjamin DeMarzo said freezing certain programs and limiting spending is a responsible decision that could help the state.
"The state just doesn't have the money to make a lot of these payments. It's the fiscally responsible thing to do," said DeMarzo, a Rutgers College senior.
Christie told his audience that next year is likely to face similar obstacles in terms of the state budget and spending.
"The challenge next year will be even greater. The cuts likely will be even deeper. The reforms will, of necessity, be even more dramatic," he said. "But let us not make that problem even worse. Let us begin the process of reform today."