>Christie Says N.J. ‘Careening Toward Becoming Greece’ (Update1)
May 25, 2010, 11:57 AM EDT
By Terrence Dopp
May 25 (Bloomberg) — New Jersey Governor Chris Christie said the state is “careening our way toward becoming Greece” and can’t afford the cost of benefits and pensions for current workers.
The governor, speaking today to members of the Manhattan Institute, said his state must reduce its tax burden and control government spending. He has proposed a constitutional amendment to cap growth in property taxes, the main source of funding for schools and towns, at 2.5 percent a year.
“Higher taxes are not going to solve the problem,” said Christie, a Republican who took office Jan. 19. “We’ve got to change the course.”
New Jersey’s tax revenue will fall $767 million short of targets over the next 13 months, the state Legislature’s chief budget analyst told lawmakers today. The $29.3 billion spending plan Christie proposed in March for the fiscal year starting July 1 “will have to be modified to respond to this reality,” analyst David Rosen said.
Christie already proposed $10 billion of spending cuts to close a record $10.7 billion budget deficit. He declined to say following his speech how he plans to close the additional gap.
Pensions, Benefits
Greece agreed this month to cut wages for government workers, raise sales, fuel and alcohol taxes and overhaul the state-run pension system in return for 110 billion euros ($136 billion) in emergency loans from the European Union and the International Monetary Fund.
New Jersey, like Greece, has a high proportion of public workers who have been entitled to benefits such as free health insurance that outstrip taxpayers’ ability to pay for them, Christie said. In the past decade the state added 11,000 public- sector jobs as it lost more than 120,000 private positions, he said.
Politicians in New Jersey have bowed to public unions for too long, failing to cut teacher benefits and enacting civil- service laws that have tied governments’ hands in trimming workforces, Christie said. Over the last decade, municipal spending has grown by 69 percent, and property taxes have climbed by 70 percent, according to the governor’s office.
The average New Jersey household paid $7,281 in property taxes last year, the highest rate in the nation, according to the state Department of Community Affairs.
“Things that used to be considered sacred cows, the third rails of politics, no longer are,” said Christie. “They’ve been replaced by the issue of affordability.”
–Editors: Stacie Servetah, Pete Young
To contact the reporter on this story: Terrence Dopp in Trenton at tdopp@bloomberg.net
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net
