Legislative Budget Committees Advance Proposed $34.7 Billion State Budget

TRENTON — New Jersey Democrats have unveiled and advanced a $34.7 billion state budget for the upcoming fiscal year, but its fate is still uncertain due to an ongoing legislative standoff over a separate bill to make changes to the state's largest insurer, Horizon Blue Cross Blue Shield of New Jersey.

The proposed legislation was released late Monday night and advanced out of the Senate and Assembly budget committees with little to no debate, setting up the possibility that it will be voted on by the full Senate and Assembly on Thursday — two days before the July 1 deadline for a balanced budget to be signed into law.

If the deadline is missed, most of the state government will be required to shut down.

The proposal makes several changes to the budget put forward by Gov. Chris Christie in late February, notably to school aid awards to the state's nearly 600 public school districts. It also boosts funding in several areas, such as domestic violence prevention, cancer research, legal services and prisoner re-entry programs, and provides pay increases for home health aides and other health care providers.

The budget proposal also incorporates Christie's plan to dedicate all state lottery proceeds to the public employee pension system. Doing so is expected to immediately reduce the pension's unfunded liabilities and the state's required payment.

The budget is smaller than Christie's $35.5 billion plan because it removes the lottery funding from the general fund, but the actual spending is up slightly from the governor's proposal.

The budget is Christie's last as governor, and he said Monday night on his monthly radio show, "Ask the Governor," that he's ready to sign one. But he gave no indication that the Democrats' proposed changes would remain intact if the budget is sent to him as written.

Christie has the authority to line-item veto any budget spending or language, and he is believed to have made approval of the Democrats' school funding plan and other spending hikes conditional on passage of the lottery dedication and a separate Horizon bill. 

That bill would require the nonprofit insurer to expand its board to include additional public appointments, post the company executives' pay on its website, and allow the administration to review Horizon's reserve funds and divert any amount it deems excessive to a new fund for drug treatment and other health care programs.

The Senate Budget and Appropriations Committee voted Monday to approve a proposed compromise that makes some changes to Horizon, including a cap on its reserves. But Assembly Speaker Vincent Prieto, D-32nd of Secaucus, has maintained that he would not take up a Horizon-specific bill before the budget deadline.

Both major party candidates running to replace Christie have come out against the Horizon legislation, arguing that the changes need to be more carefully considered and not rushed through during the last days before the deadline.

Democrat Phil Murphy voiced his concerns over the weekend, and Republican Kim Guadagno, who is Christie's lieutenant, opposed the legislation on Tuesday via a statement on Twitter that indicated "major changes" to the state's health care system require more input from stakeholders such as hospitals and doctors.

"There are a number of parties that need to be part of the discussion that aren't a part of it now, and it should not be done in the last minutes of the budget process," Guadagno's campaign said in the statement.

Christie has given no indication as to whether the so-called "compromise bill" is acceptable, and Senate President Stephen Sweeney, D-3rd of West Deptford, has said he would not allow a vote on any budget without assurances that the school funding and other changes proposed by the Democrats would survive the governor's veto pen.

The changes to school aid are particularly sensitive, as the funding is considered one of the single biggest factors in determining how much in taxes property owners must pay to local districts.

The plan calls for a $100 million increase in district school aid, plus $25 million to expand preschool programs and $25 million in extraordinary special education aid. It also calls for $31 million in existing aid to be redistributed from school districts that have previously been "held harmless" despite enrollment losses or demographic changes to underfunded districts whose aid has not kept pace with enrollment increases.

Democrats previously planned to redistribute $46 million in school aid to underfunded districts, with a cap on any single district's loss at no more than 1.5 percent of their total operating budgets.

The cap was changed as a result of negotiations with Christie so that no district loses more than 2 percent of the total aid it was due to receive under his February budget proposal. The change was described as minor, but would likely result in less severe cuts to districts such as Southampton, which was expected to lose close to $200,000 in aid rather than a $42,000 reduction proposed under the new budget.

During his radio show, Christie praised lawmakers for including his lottery dedication in the spending plan, calling it "the cap on our efforts to make the pension more solvent," but he was less enthusiastic on the school aid changes, which keep the funding formula approved by his predecessor, Democrat Jon S. Corzine, intact rather than rewrite the formula as he proposed earlier.

"I don't like the (formula). I've made that clear, and all this does is jigger it around," Christie said. "This would not be the Christie School Funding Reform Act."

Republican and some Democratic lawmakers on the budget committees also expressed concerns about the school funding component.

"I'm certainly happy knowing that our underfunded districts will get more money," Sen. Jennifer Beck, R-11th of Red Bank, said Monday before her vote. "But I'm really uncomfortable with the cuts that have been proposed, because I think they are probably an additional property tax burden to many overtaxed residents."

Sen. Jeff Van Drew, D-1st of Dennis, described the cuts as a "harsh" way to deal with funding discrepancies. He would have preferred that underfunded districts receive an increase but that other districts not lose any aid.

"There's a lot I like about this budget, but the school funding is a big issue to me," Van Drew said. "A lot of blue-collar people will see their property taxes go up because of it."

The Senate committee approved the legislation 9-4, with Beck and Van Drew among the no votes. The Assembly approved advancing the spending plan by a 9-0 vote, with all four Republicans abstaining.

Assemblyman Troy Singleton, D-7th of Palmyra, was among the yes votes on the Assembly panel, but he expressed reservations.

Senate Budget Committee chairman Paul Sarlo, D-22nd of Wood-Ridge, said the budget proposal reflects bipartisan compromises, particularly on school funding.

"There's a lot of compromise in here," Sarlo said before the vote. "It begins the process of funding the school funding formula. There's additional funding for it. At the same time, we begin rolling back the hold-harmless provision and enrollment cap."

Original Article