Budget is coming down to the wire in New Jersey

New Jersey Gov. Chris Christie is preparing for a government shutdown amid an impasse with state lawmakers, hours before a midnight budget deadline.

Christie sent a letter to cabinet members Thursday outlining a contingency plan should the legislature fail to enact a budget before the July 1 beginning of fiscal 2018. The Republican governor blames a refusal by Assembly Speaker Vincent Prieto, D-Secaucus, to call for a vote on a bill that would earmark $300 million of surplus funds from nonprofit public insurer Horizon Blue Cross Blue Shield toward treatment programs for opioid addiction. He has committed to signing a $34.7 billion Democratic budget proposal that boosts school funding should the legislature pass the Horizon bill and legislation that dedicates New Jersey Lottery revenue toward the state pension system.

Emile Wamsteker/Bloomberg

“I'm ready to go, the Senate president is ready to go, the entire Senate body is ready to go and the speaker's got to decide, is the speaker going to close state government to protect the multibillion-dollar insurance company?” said Christie to reporters Thursday. “You have a bipartisan agreement here, he should get on board.”

Prieto says he opposes the Horizon bill, but supports the lottery measure, which Christie argues will increase the pension fund’s value by $13.5 billion and immediately raise the funded ratio from 45% to 59%. The Senate passed both bills Thursday

“The budget bill has nothing to do with reworking the state’s largest health insurer in four days,” said Prieto in a statement Thursday. “I will not negotiate on that bill as part of the budget process.”

New Jersey lawmakers are scrambling to avoid the state’s first government shutdown since 2006. S&P Global Ratings analyst Sussan Corson noted in a June 22 report that while general obligation debt service would not be affected by a late budget, appropriation bonds could be impacted. The state’s earliest debt service due date that would need appropriation from the 2018 budget is Aug. 15 for a $54.6 million interest payment on state pension bonds, according to Corson.

Christie, whose term as governor expires on Dec. 31, has seen 11 bond rating downgrades since he took office in 2010 stemming largely from underfunded pensions. New Jersey has GO bond ratings of A3 by Moody’s Investors Service, A-minus by S&P Global Ratings and A by Fitch Ratings and Kroll Bond Rating Agency. Only Illinois has worse ratings among U.S. states.