TRENTON — New Jersey Gov. Chris Christie Tuesday delivered his first state of the state address, pledging to reform the state’s tax structure and continue spending cuts.
In his speech, the Republican governor pushed his ongoing initiatives: fiscal discipline, further pension and health-care reform to help address growing retirement costs, and education reform, including increasing the number of charter schools in the state.
Christie gave little details on how he would cut taxes, but said he would include an initial installment of a tax-reform plan in his fiscal 2012 budget proposal. He said that lower income and corporate taxes would spur economic growth.
“If New Jersey is to truly become a home for growth, we need to reform the taxes we place on business and individuals and begin to roll them back,” the governor said in a 38-minute speech before a joint session of the Legislature. “So we need comprehensive tax reform — and by that I mean changes that are considered together, not in a piecemeal approach.”
Christie said he would not support tax cuts that the state cannot absorb and would only sign an economic incentive package with a balanced budget.
He is set to present his fiscal 2012 budget proposal to lawmakers on Feb. 22. Fiscal 2012 begins July 1.
The Office of Legislative Services estimates a $10.5 billion deficit for next year. Christie cut an $11 billion fiscal 2011 deficit, in part by skipping a $3 billion payment to the state’s pension fund. For the fiscal 2012 spending plan, the governor faces a new statutory requirement to pay $506 million into the fund. The full recommended fiscal 2012 pension payment is $3.5 billion.
Democratic lawmakers have said that the governor must include a pension payment in the fiscal 2012 budget in order to move ahead with additional retirement reforms. Last year, lawmakers passed legislation regarding pension and health care benefits for future employees. While Democratic leaders are open to changing benefits for current employees, they insist the state must support its pension fund.
Democrats control the Senate and the General Assembly.
“Yes, we believe the system needs to be fixed, but there’s not enough reforms in the world to fix the pension if you don’t make your payment,” Senate President Stephen Sweeney told reporters after the governor’s address.
Christie is seeking to increase the retirement age to 65 from 55, roll back a planned 9% pension benefit increase, boost employee contributions, and end automatic cost-of-living increases for retirees.
“Without reform, the problem is simple — benefits are too rich, and contributions are too small, and the system is on a path to bankruptcy,” Christie said in his address.
The state and its municipalities have a combined unfunded pension liability of $53.9 billion, including a $37.1 billion unfunded obligation at the state level. Unfunded other-post-employment benefits for the state and its local governments total $66.8 billion.
In addition, New Jersey has $32.8 billion of outstanding general obligation and appropriation debt.
Sweeney and other Democratic leaders said the governor has failed to lower taxes in the state as many local governments have raised property taxes to help offset cuts in municipal aid and education. New Jersey has some of the highest property taxes in the nation.
“It’s a shift down onto the local [governments] and the counties,” Sweeney said. “It’s a bait-and-switch and that’s what the governor has done all along here.”
New Jersey’s credit is rated double-A by all three major rating agencies.