Advancing his vision for a New Normal in state budgeting, Governor Chris Christie today presented a $29.4 billion budget for Fiscal Year 2012 that cuts real spending for a second consecutive year. The Governor's Budget proposal includes $200 million in focused tax cuts, provides additional property tax relief, increases school aid and funds a reformed state pension system, while preserving or increasing funding to protect our state's most vulnerable citizens. The Fiscal Year 2012 Budget marks a departure from the Trenton tradition of budgeting to meet deficit projections that embrace wish-list spending by legislators and assume continuous funding increases that irresponsibly ignore actual revenue sources and the fiscal health of the state.
The Governor's Budget -- which reduces real spending by 2.6 percent from the current fiscal year -- hits the reset button on the state budgeting process and starts with the refreshing assumption that budgeting and spending must be reality-based and zero-based. The New Normal means developing a bottom-up approach -- establishing priorities and funding them based on revenue that is actually available and predictable versus the old approach of assuming every line item and program will automatically be funded at the same or higher level than prior years.
"The old way of budgeting and thinking must be stricken from our collective minds if we are to successfully emerge from this fiscal crisis with permanently reformed budgeting and spending habits," Governor Chris Christie said. "This is a new paradigm for state government -- a New Normal -- that cuts and spends responsibly, incentivizes our local governments to do better with what our taxpayers entrust to them, and causes businesses to feel welcome and want to stay and expand or relocate to our state."
The Governor's Budget proposal adheres to necessary spending and budgeting discipline, but also meets New Jersey's most vital spending priorities. Among those priorities in the budget:
* Increases education aid to every school district in New Jersey by a total of $250 million;
* Fulfills the statutory commitment to make a $506 million payment to a reformed state pension fund, representing the first funding to the defined benefit plans since fiscal year 2009;
* Provides $200 million in job-creating, strategic tax cuts that are responsible and sustainable;
* Doubles funding for the Homestead Rebate to provide direct property tax relief in the form of a property tax credit under the newly named Homestead Benefit program;
* Protects municipal aid and keeps funding at fiscal year 2011 levels to help towns meet the new 2 percent property tax cap (while decreasing by 10 percent the category of Special Transitional Aid to cities, in keeping with the Governor's pledge to end cities' reliance on the aid as they adopt best-practices budgeting to improve fiscal and management reforms); and
* Increases and secures New Jersey hospital funding by a total of $20 million, and increases funding for student financial aid by the same amount.
The Governor's Budget takes all possible steps to maintain the safety net for New Jersey's most vulnerable and at-need individuals and families. From prescription drug aid for seniors to helping low-income tenants stay in their homes, the Governor's Budget includes billions of dollars and:
Preserves critical spending and fully funds the fiscal year 2011 increases to the Pharmaceutical Assistance to the Aged and Disabled (PAAD) and Senior Gold Prescription Assistance Programs without increases in co-pays or eligibility -- keeping it one of the most generous such benefit programs in the nation;
Allocates $20.4 million to help the developmentally disabled lead richer, happier lives through new community placement and services, and funds day programs and other services; similarly, the budget continues and expands funding for the requirement that the state expand the number of residential and community settings for New Jersey's mentally ill;
Preserves the current level of support for higher education, after years of cuts, while increasing student aid programs by $20 million and providing $15 million for capital improvements at community colleges;
Provides resources to keep 4,300 low-income citizens in their homes and apartments, including $25 million from the New Jersey Affordable Housing Agency Trust Fund and $9 million from the Housing and Mortgage Finance Agency; and
Avoids an increase in NJ Transit fares and expands bus service to select growth markets.
The damage caused by years of fiscal mismanagement, coupled with the lingering effects of the national recession, will continue to restrain state spending for years to come. The reality is that the New Normal of the current economic and fiscal climate necessitates more painful choices in how the state allocates finite taxpayer dollars. Facing up to those realities, the proposed budget continues on the path of making difficult, often painful choices in nearly every department. Funding in even worthwhile, popular programs is reduced or eliminated in order to fund priorities.
Governor Christie will continue to insist that the shared sacrifice be spread among state employees as well, including in payment of a fair share of medical costs. By increasing co-payments and premiums to levels still below what federal employees pay, the state will save $323 million that will be used to pay for other critically important programs -- and prevent increases in some of the highest sales, income and property taxes in the nation.
Finally, to pave the way for the best possible outcome for our state and its people as we deal with the New Normal and emerge from recession, the Governor intends to better position our businesses and attract new ones with tax cuts, reform and incentives to spur job growth and business expansion. To that end, he proposes a comprehensive but phased-in program of $2.5 billion in job-creation incentives over the next five years. As part of the program, Governor Christie is proposing for Fiscal 2012 tax cuts and reforms resulting in approximately $200 million in savings for businesses.
The package outlined by the Governor increases the state's competitiveness in a responsible and sustainable manner by providing critical tax reform and incentives across a variety of tax-policy areas, including: loss carry-forward relief for small businesses, a reduction of the S-corporation minimum tax, increasing the credit allowed for research and development investments, exemptions for business software technology reinvestment, increasing funding for economic development programs, and the phasing-out of the Technology Energy Facility Assessment to provide needed relief from New Jersey's already-high energy costs.
Governor Christie has committed to only putting in place tax cuts and incentives that are paid for within the context of a Constitutionally-balanced state budget. By providing for a phase-in of the program, the fiscal impact rises with the expected expansion of the state's economy while minimizing the impact on the state budget each year.
The budget proposal, a representation of the Governor's commitment to maintain fiscal discipline, also outlines a bold reform agenda to take on the big issues facing New Jersey, including the Governor's comprehensive reform plans to restore fiscal sanity to out-of-control pension and health benefits systems, make 2011 the Year of Education Reform to bring the opportunity of a high-quality education to every child, and the pro-growth, responsible package of tax reforms and incentives to create Jersey Jobs and increase New Jersey's competitiveness, as outlined above.
Attached to this release is a document providing an overview of this year's budget. an overview of this year's budget.