New Jersey Gov. Chris Christie (R) had two news stories on Monday that might affect his political future. First, his post-bridge scandal polling has stabilized, with 50 percent approving of the job he is doing and 42 percent opposing. More important, he signed a balanced budget while vetoing about a billion dollars in new taxes. His staff boasted in its budget rundown, “At $32.5 billion, the Fiscal Year 2015 budget signed today is more than $1 billion lower than the budget sent to him by the Legislature and that spends $2.3 billion less than the Fiscal Year 2008 budget on items not related to public employee pensions, health benefits, and debt service.” The rub, however, was that after a court fight, Christie made only the current year’s pension payments for state employees, a necessity so long as he adheres to his no-tax-hike pledge.
In a phone interview yesterday Christie told me, “Where we came out in a year with unpredictably low revenue was protecting our essential services and paying our pension bills.” He clarified that he is paying the current pension tab but not “paying for the sins of my predecessors,” namely paying down the unfunded liability. That, however, was not what was envisioned in his 2011 pension reform deal struck with the legislature.
Gov. Chris Christie signed a $32.5 billion state budget today that all but abandons a first-term plan to repair New Jersey’s derelict pension system, slicing $1.57 billion from a payment required by law for public workers’ retirement funds.
With his new budget — which makes modest funding increases to schools and hospitals and is 1.2 percent smaller than the one he signed last year — Christie held firm on a promise to block major tax increases in New Jersey. He vetoed a pair of Democratic bills that would have hiked rates on millionaires and businesses and reaped an extra $1.1 billion for the pension funds. . . .
Conservatives and business groups welcomed those vetoes, saying higher taxes would have stunted New Jersey’s already anemic economic growth. Democrats and liberal advocacy groups accused Christie of balancing the budget at the expense of the middle class while neglecting to address New Jersey’s long-term fiscal woes.
Christie wants to stress adherence to his pledge not to raise taxes. “I’m refusing to do that,” he said. “It’s just unacceptable. Listen, we didn’t increase spending in a lot of areas.” Education funding, for example, is essentially holding steady at just under $13 billion. Despite his push for drug sentencing reform and mandatory drug counseling for nonviolent convicts, he was able to raise funding in that area by only $1 million. Christie is certainly burnishing his fiscal conservative credentials. “If you look at discretionary spending, we’re spending $2.2 billion less than in 2008. That is real dollars. That’s not just spending $2.2 billion less of an increase. We have 6,000 fewer state employees through attrition.”
Christie’s real problem and the item that threatened to throw his budget out of kilter is, like many states, entitlements. In 2011, he took one crack at reforming state employee pension and health benefits (saving $127 billion over 30 years), but it didn’t come close to solving the problem. His move yesterday threatens to unravel one of his key accomplishments and to undermine the state’s credit rating, his critics say.
Christie is promising to address the pension issue, but after the budget is done. “What I want to do is re-engage the legislature on entitlements after the budget,” he said. “Forty of 50 states have some problem in varying degrees.” Putting aside pensions for a moment, he said that the average employee gets a health insurance plan worth about $22,700 — $19,000 of which is paid for by the state. “That’s just not affordable,” he said. Indeed, when 57 percent of increased revenues over the last four years has to go just to pensions, health benefits and debt, the state will need to make some major adjustments. “Everything is on the table except taxes,” he said. He promises to roll out his own plan this summer. “I’m prepared and willing to do it. You’re going to see me on the road, at town halls [selling his plan],” he noted. Whether the legislature is amenable to any further reforms remains an open question, especially if a new deal would be fodder for Christie’s presidential ambitions.
While getting bashed by the media and by Democrats in the state, Christie also has taken heat from the right for expanding Medicaid under Obamacare. That’s allowed him to maintain and extend coverage. But, he argues, like some other governors he also has implemented reforms. In the case of Medicaid, the state did get a waiver from the Department of Health and Human Services to expand its managed care program that will save tens of billions of dollars. “I want to see what it yields,” Christie said. But he names Mike Pence of Indiana and Scott Walker in Wisconsin as two governors who have their own reform plans that may provide further cost savings. The Obama administration was emphatic early on in denying waivers. “It’s too early to say” whether they’ve changed their ways, Christie told me. “They were better, but they are not nearly as flexible as they should be.”
New Jersey’s unemployment rate has come down, but it’s still not attracting business and growing at the rate of some other states. Christie argues that he can do only so much as a governor with a Democratic legislature. “Certainly we were able to [accomplish] regulatory reform. We’ve cut about one-third of regulations,” he said. “I’ve been asking for tax reform. All I get back are tax increases. Essentially we’ve been able to hold the line.”
The recovery from Hurricane Sandy is still a major focus. “About 40 percent of my time is spent on Sandy stuff,” Christie said. Business is brisk at the Jersey shore this summer, but he concedes, “There is a significant amount left to go.” That includes fully rebuilding the housing stock. With over $37 billion in damage, the feds’ contribution of $10 billion to $12 billion has left a gap that the state must make up.
The most recent Gallup poll shows voters’ approval of the executive branch at the national level is at an all-time low. Christie rejects the idea this is about disillusionment with government in general. “It is this president,” he said with characteristic bluntness. “With the [Department of Veterans Affairs], the IRS and Obamacare, people look and say: ‘These guys don’t know what they are doing. They’re completely incompetent.’ Because government isn’t functioning the way it should, it’s really angering people.” Putting on his hat as head of the Republican Governors Association, he argued that GOP governors are almost all winning their reelection races because they have accomplished reforms voters want.
The question remains whether Christie’s latest budget maneuver will be regarded as a sleight of hand or a bold move to protect taxpayers. In sticking to his anti-tax pledge and holding the line on spending, Christie is gamely trying to put the bridge scandal behind him — although the legislature’s investigation seems to drag on. A lot rides on his ability to enact the budget and then to strike a deal on entitlements. If he does that, he’ll go a long way toward re-establishing his credibility as the can-do governor. If not, he may lose what street cred he has and become yet another pol who didn’t keep his promises.
With the 2016 presidential field far from settled, no affirmative decision by Christie as to whether he will run, the bridge investigation incomplete and major fiscal issues still ahead, Christie’s presidential prospects are uncertain. His donor base has been flirting with Jeb Bush, but Bush may not run and those same big donors will be looking for a credible candidate. In Christie’s favor, none of the senators or lesser-known governors has yet to break out of the pack of contenders.
Whether Christie runs for president or simply wants to leave behind a legacy that makes the bridge scandal a “footnote,” as he put it, he will have to show he can govern. He sounds buoyant and fully engaged; now he’ll have to deliver. This summer will be a critical one for Christie.