Governor Chris Christie cut more than $1 billion in spending and vetoed Democratic tax increases on New Jersey millionaires and corporations before signing a $32.5 billion budget for the fiscal year that starts tomorrow.
The second-term Republican removed a higher pension payment and money for women’s health care from the $34.1 billion plan sent to him last week by the Democratic-controlled legislature. He also rejected tax surcharges meant to pay for them.
Democrats passed their higher spending plan even after a judge ruled in favor of Christie’s proposal to chop a required pension payment to balance his budget. Lawmakers had sought to restore the record $2.25 billion payment that Christie pledged and then reneged on last month as revenue fell short amid lower-than-forecast income-tax collections.
“Through the use of his veto pen, Governor Christie is continuing to take the lead in responsibly managing state government while making the difficult choices to prioritize and fund essential services that New Jerseyans rely on,” according to a statement from his office today.
Shortfalls, credit downgrades and rising pension costs have dogged Christie this term. Standard & Poor’s has said the state may face a seventh downgrade, a record for a New Jersey governor, if he and lawmakers can’t end recurring deficits.
“Because the foundation of the legislature’s proposal is unsound, I must object,” Christie wrote in his veto message. “Rather than enacting responsible policies that will encourage and allow New Jersey’s economy and revenues to grow, the legislature appears to be intent on inhibiting economic growth with crushing taxes.”
The New Jersey Public Employees’ Retirement System, with about 770,000 active and retired members, is underfunded by $38 billion. Christie signed legislation in 2010 to make the required payments, plus seven years of extra contributions. His plan now is to skip those infusions and add just the actuarially required amounts: $696 million this year and $681 million in 2015.
Because of the lower payments, the state’s share of the pension gap will exceed $40 billion by 2016 as its funded ratio drops to 50.8 percent from 53.7 percent, Treasurer Andrew Sidamon-Eristoff told lawmakers in May.