Gov. Chris Christie proposed a $33 billion budget for fiscal 2014 that appealed to Democrats for its inclusion of pension plan contributions and Medicaid expansion but also put them on the defensive on the issue of tax relief.
"It holds the line on spending while funding the most important priorities like education for our kids and our reformed pension plan," the Republican governor said of his budget plan during a joint legislative session in Trenton on Tuesday. "And it does all that while spending less of the people’s hard-earned money than we spent six years ago."
Christie is proposing a state budget that is larger than what the state has spent in each of the last five years. But the proposal also is less than what the state spent in fiscal year 2008, and includes the largest pension payment for state workers the state has ever made — $1.7 billion — and a $40 million contingency fund to be used for Hurricane Sandy rebuilding expenses not covered by the federal government.
"Six years later, a budget that still spends less," Christie said. "How often does that happen in your life?"
Part of what will go toward paying for the budget is a projected increase of $200 million in the casino revenue fund that administration officials said will come mostly as a result of Internet gambling, although some lawmakers who sponsored the measure said they were skeptical.
Casino revenue taxes of $180 million would require Internet gambling revenues to total $1.2 billion — which may be possible but isn't projected by analysts to come until Internet gambling has been established for a few years, said Sen. Raymond Lesniak, D-Union, one of the measure's sponsors.
"That's more than any estimate I've seen," Lesniak said of the governor's projections. "At least, he's thinking big."
State Sen. Jim Whelan, D-Atlantic, said that level of revenue would only be possible once New Jersey sets up agreements with other states that would allow Atlantic City Internet gambling operators to take bets from gamblers in those states. Without those so-called reciprocal agreements, Internet gambling wagers could only be taken from in-state residents.
The administration has had to lower its estimates for the casino revenue fund this year to $235 million, a drop of nearly $50 million in part due to losses suffered following Hurricane Sandy and increased competition from other states, Treasurer Andrew Sidamon-Eristoff said.
"Casino revenue fund has obviously been a disappointment," he said. "It's a major contributing factor in the shortfall."
But Internet gambling and post-Sandy recovery is estimated to spur the casino fund into rebounding in fiscal year 2014 to $436 million, according to the administration's estimates.
One of the most watched elements of Christie's budget plan was whether the governor would advocate an expansion of Medicaid under the federal Affordable Care Act. Christie said that despite his opposition to the act, his decision to proceed was fueled by the availability of federal dollars set to save New Jersey taxpayers $227 million just in fiscal year 2014.
"Accepting these federal resources will provide health insurance to tens of thousands of low-income New Jerseyans, help keep our hospitals financially healthy and actually save New Jersey taxpayers money," Christie said.
One of the most contentious elements of Christie's budget address was on the issue of tax relief, which the governor had proposed last year through a 10 percent income tax cut and later changed to be in the form of property tax relief. At that time, Senate President Stephen Sweeney, D-Cumberland, Gloucester, Salem, also called for property-tax relief.
But Democrats later revised their proposal to allow the property-tax relief only if revenue projections came true, which they have not. The state Treasury Department estimates projections are short about $400 million.
Christie accused Democrats of reneging on specifically income? tax relief and asked them to reconsider, saying his adminstration "will figure out how to pay" for the tax relief if the Legislature concurs with his recommendation.
"If you do not, I am content to let the voters decide this in November," he said.
Assembly Speaker Sheila Oliver, D-Essex, in her rebuttal to Christie's address, criticized the governor for bringing up income tax relief that they said would benefit only the wealthy while at the same time proposing to delay distribution of a property tax rebate program for the poor and disabled from May to August.
"If you can't afford to fully refund the rebate, why would we be entertaining a tax cut that would benefit the 1 percent?" she asked.
Some local lawmakers responded to Christie's budget address along partisan lines, with Assemblymen John Amodeo and Chris Brown, both R-Atlantic, supporting the governor.
"New Jersey remains on the right path of fiscal restraint and responsibility," Brown said in a statement.
Amodeo said the governor showed his commitment to pension-plan reform by also fully funding it.
"It shows he's committed to righting the ship," he said.
Whelan, the Democratic senator, said he needs to hear more about the proposals.
"I'm not sure things are quite as rosy as the governor is suggesting," he said.
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