Perhaps no governor this year has done more to encourage supporters of fiscal responsibility and upset supporters of spending as usual than Republican Chris Christie of New Jersey.
Standing with Christie is his director of policy, Gregg Edwards. Before joining the Christie administration, Edwards ran the Center for Policy Research of New Jersey, which advocated many of the policies Christie has enacted or is working toward.
Christie took office in January and immediately signed executive orders cutting government employee salaries and benefits. He has also called for $820 million of cuts to education funding and other reductions of New Jersey’s $11 billion out-of-balance budget.
He has stood toe-to-toe with the New Jersey Education Association, arguably the state’s most powerful government employee union, and in April won a stunning victory when voters defeated hundreds of school district budgets—nearly 60 percent of all school budgets. Christie had called for the defeat of the budgets.
Budget & Tax News Managing Editor Steve Stanek recently spoke with Edwards about the Christie administration’s efforts to put New Jersey’s fiscal house in order.
Stanek: There are a lot of angry government workers in New Jersey right now. What are you hearing from residents generally?
Edwards: One empirical piece of data we all know: For the first time since 1976, a majority of school district budgets were defeated, and voter turnout also was way up. Those two things say to me the governor’s message on spending and pubic employee compensation is resonating. [Editor’s note: Christie called for the defeat of budgets in districts that did not agree to freeze teachers’ pay. About 145 of the state’s nearly 600 districts froze pay.]
I twice successfully ran for school board, so I know something about school district election dynamics. I would have never guessed he could have effectuated an increase in voter turnout like that, and that so many of the budgets would have gone down to defeat.
Stanek: Property taxes are always a big issue in New Jersey. The governor has made reforms that have the education lobby and municipal officials very upset.
Edwards: Property taxes consistently rank as the first, second, or third issue on any public opinion survey in this state. We do have, depending how you look at it, the highest property tax burden in the country, in part because we rely so heavily on the property tax to fund local governments.
Because of the state’s budget problems, among the cuts we’ve made are state aid to schools and municipalities. To help schools and municipalities, the governor has also proposed a series of initiatives to give them the ability to better control their budgets. For instance, a few years ago the legislature took away a school board’s right to impose the last best offer when they could not get agreement on a contract. The governor has proposed giving that power back. [Editor’s note: New Jersey teachers are not allowed to strike.]
He has also proposed a way to impose long-term spending discipline. He wants caps on annual property tax increases of 2 ½ percent. That cap could be overridden by voter referenda. We’re proposing a combination of tools, like last best offer, and imposing institutional discipline at the local level, not so much to cut the property tax but to put better control on spending.
We do spend lot of money on education. New Jersey each year has either the highest state average cost per pupil or the second highest. We sometimes swap places with New York. We also have the highest average police and fire salaries in the country.
Stanek: How have lawmakers been reacting to all this?
Edwards: In the very beginning the governor had substantial bipartisan support for bills to reduce retirement benefits, and for the first time we imposed for all public employees a health insurance payment. We also capped how much unused vacation time and how many sick days people could use [at retirement time]. That was the first major piece of legislation that passed.
A lot of people looked at that and were impressed. They were difficult votes to cast, yet there were overwhelming majorities and substantial bipartisan support to get it done.
As for the budget proposal itself, there are a lot of cuts. Legislators have reacted negatively to some of that stuff. That’s to be expected.
The previously approved budget, the one we have now, is roughly a $30 billion budget. This one we’re working on is proposed to be about $27 billion. And unlike the previous year, when cuts should have been made, federal money was available, which kept spending up.
We had more than $2 billion of federal aid that was spent at once, and another billion or so in tax increases that were sunsetted and went away. So that money’s not available now.
Democrats have announced they will push for renewal of an income tax surcharge on high-income earners. We expect that will be the big fight. The governor has said over and over he will veto tax increases. [Editor’s note: Several days after this interview, Gov. Christie vetoed the income tax surcharge.]
We should know how everything turns out by June 30. That’s when the budget is supposed to be finished.
Steve Stanek ([email protected]) is a research fellow at The Heartland Institute and managing editor of Budget & Tax News.