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$34.5B budget plan said to include largest pension payment in NJ history
Gov. Chris Christie presented a $34.5 billion budget Tuesday, Feb. 25 that does not include new taxes or cuts, but provides the largest pension payment in state history, according to his office.
The $2.25 billion planned payment to the public employee pension fund, along with health care and debt costs, are eating up most of the state’s new spending, Christie said.
“Across the country, we are sacrificing university research, support for K-12 education, funding for the environment and energy and infrastructure of all kinds on the altar of these three things: pensions, health costs and debt,” Christie said during the address, which focused on making tough choices.
According to Christie, only 6 percent of new spending could be budgeted toward education, tax relief, public safety, higher education, drug rehabilitation, health care and critical services for the most in need.
In his address, Christie called for more work to be done on pension reform. In 2011, Christie and the legislature worked to reduce local and state pension liabilities by 32 percent, but Tuesday he said those cuts didn’t go far enough.
“With our long-term obligations only set to increase in the coming years, the problem isn’t going away by itself,” Christie said.
He said that if the state legislature does not act, New Jersey taxpayers will owe $52 billion to fully fund the pension system.
When you exclude pensions, health care, and debt service costs, Christie said discretionary spending in fiscal year2015’s budget is $2.2 billion less than FY 2008.
Despite the huge payment to pensions, the budget does allow for more funding for education, local government consolidation, and health care.
Christie’s proposed budget calls for $12.9 billion to be spent on education, a record amount, he said Tuesday.
Under the budget, $9 billion will be spent as direct aid to the state’s schools, which Christie said will assist districts in implementing the Common Core standards.
In his State of the State address, Christie said he wanted a longer school year and school day in New Jersey. His budget calls for a new $5 million Education Innovation Fund, which will create a “race to the top” program and call on school districts to put forward proposals on how to best implement increased student learning time.
An additional $14 million in tuition assistance grants are also included in Christie’s budget.
During the address, Christie called on the legislature to again pass all the legislation in his property tax “tool-kit”- which he says will help take some of the burden off property taxpayers.
He also has included $8.5 million in the budget to reimburse municipalities that engage in sharing services and consolidation.
Under Christie’s proposed budget, New Jersey will spend over $12 billion in federal and state funds on Medicaid and Family Care to cover 1.4 million people in the state. New Jersey will also receive $100 million in federal funding because the state has opted to expand Medicare under the Affordable Care Act.
Overall, Christie’s address stressed that New Jersey legislators will need to make tough choices now to be able to do more innovative spending in the future. He pointed to Detroit’s recent bankruptcy, and how a majority of that city’s debt came from retiree health benefits and pension costs.
“If we want a better future tomorrow, we must prepare today,” Christie said in the address. “We must make good choices now and we must make certain sacrifices.”
Now, the Democratic-controlled state Legislature has until July 1 to pass the budget.