The highlights of last year’s Budget Address were Gov. Christie’s tax cut plan which got scant attention this year and “The Jersey Comeback,” which has long since been buried in high unemploymet, excessive home foreclosures, and a weak economy. In today’s speech we heard good news when Gov. Christie pledged to meet the required pension contribution, signed on to Medicaid Expansion, and proposed several beneficial new programs. However, he failed to mention that in spite of inflation most departments will have their budgets cut, including Agriculture, Children & Families, Consumer Affairs, Environmental Protection, Health, and Human Services.
People will now have time to examine the budget details, wherein lies the devil. Although he promised to “balance the budget without gimmicks,” he postponed the scheduled Homestead Rebate this year and transferred the payment to the next budget year. He made no mention of raising the Earned Income Tax Credit back to its former 25% level.
Revenue growth: In the 2011/12 Budget Christie ended up with a shortfall of $123 million. In the current 2012/13 budget, which forecasted an unrealistic 8% increase, he is currently behind by $350 million through January. His proposed budget for 2013/14 forecasts an increase of 4.9%. Moody’s Analytics in February is forecasting US GDP growth of almost 2% through mid-2013… growth will rise to close to 3% during the second half and stay near 4% in 2014-15. Thus Christie’s latest forecast is optimistic but much closer to the realm of the possible.
Medicaid Expansion: The governor surprised many by signing on to an option under the Affordable Care Act which will increase access to medical care for low-income New Jerseyans and save the state money. Hooray! Note: individual governors have been able to negotiate certain conditions with the feds. He did not mention whether he did so as well.
Sandy Aid: Christie created a $40 million contingency fund. This money will help, although foundations alone have raised far more money for Sandy victims. Christie’s fund may well prove inadequate. Federal sequestration would make the matter worse.
Pension Fund: Fortunately, he said he will make a contribution of $1.675 billion into the fund, but that amount was required by law, and he was warned by rating agencies that to do otherwise would downgrade New Jersey’s credit rating.
Gun Safety: He touted the State’s gun buy-back program and called for bail reform to prevent repeat offenders from committing violence, but did not address gun safety proposals.
Transportation Trust Fund Last year instead of spending $260.6 million in cash for road projects as promised, Christie used those funds to plug a budget gap. In the new budget he plans increased expenditures although the source of funding is not immediately clear.