New Jersey Governor Chris Christie talked about his budget battles with New Jersey lawmakers during an entertaining speech in New York on Tuesday.
Speaking at the New York Historical Society during a conference on tax policy hosted by former President George W. Bush's institute, he said, “I agree with the President that the most important thing that you can do as governor for your economy is to institute pro-growth policies that grow the pie. However, optimism was a little difficult to find in January of 2010 in the State of New Jersey, and here’s why.”
He noted that in the eight years before he became governor, the state raised taxes and fees 115 times. In the decade before he became governor, New Jersey had zero percent private sector job growth, but the state also had the distinction of having the most government workers per square mile.
“That is an enormous achievement,” he quipped. “That took incredible work over eight years by three Democratic governors and a fully Democratic legislature. When I came into office in those first few weeks of January 2010, you would think to yourself the news couldn’t get any worse, and I was assured by my predecessor, Governor [Jon] Corzine, that he was leaving me a budget that was, as he said to me in our first meeting post-election, ‘on a glide path’ for the rest of the fiscal year. I have a different definition of the term ‘glide path.’ In my second week as governor, my chief of staff and my treasurer came into my office and said that if we did not cut $2.2 billion in spending in the next five weeks, that New Jersey would not meet payroll for the second pay period in March.”
Sixty percent of the money was already out the door, and he had to identify the necessary cuts in a $29 billion budget. “We had to find $2.2 billion, not in cuts to projected growth, in money that we essentially had to sequester, that had already been appropriated and could count on being spent across the state, in order to meet payroll, not in order to meet some lofty goal like cutting taxes, but in order to meet our payroll in what is the second wealthiest state per capita in America,” he said. “If you need any greater example of what happens to an economy when a state government over-taxes, over-spends, over-borrows, and over-regulates, come to the New Jersey of January of 2010.”
Christie said he had the choice of either negotiating with the Democratic leaders of the New Jersey State Assembly and Senate, or cut by executive order. “For those of you who have watched me for the last two and a half years, if you believe I made the first choice, then you need to leave now,” he said. “We sat in a room over the course of three weeks and we went over all 2,400 line items in the budget, and we cut $2.2 billion in the budget.”
He then presented the budget cuts during a speech before a joint session of the New Jersey legislature and told them he had fixed the problem with an executive order. The reaction from the Democratic leadership was not exactly gratitude. “They were calling me all kinds of names: Julius Caesar, Napoleon Bonaparte, those great leaders of the past I admired so much,” he quipped.
The next day, he encountered one of the Democratic leaders, State Senate President Steve Sweeney, a friend of his, on the way into the state capitol. He told Sweeney he had read in the newspapers about all the names he had been called. Christie offered to vacate the executive order and turn over the budget problem to the legislature to fix.
“This will tell you all you need to know about politics in New Jersey,” said Christie. “He looked at me and said, ‘Hey, Governor, no need to overreact.’”
A few weeks later, Christie had to present his fiscal 2011 budget, which projected an $11 billion deficit on a $29 billion budget, at 37 percent the largest deficit of any state in the country.
“Now my Democratic friends thought that was the time to move in for the kill,” he said. “They went back to their favorite thing—the President [Obama] will be talking about it today—‘We’re going to have a millionaire’s surcharge.’ Now I want to make sure you understand because people mess this up. You think that’s a millionaire’s tax. You see, in New Jersey, we already have a millionaire’s tax. This is a special millionaire’s tax in New Jersey. Here’s how it went. In New Jersey, they said the millionaire’s tax applies to everyone who made $400,000 a year or over. That’s New Jersey math, everybody. We all aspire to be wealthy. We all aspire for success. If you are not a millionaire, but you would like to feel like one, then come to New Jersey. Even if you aren’t a millionaire, we’ll tax you like one.”
The millionaire’s tax was 9 percent on everybody making $400,000 a year and over, and the lawmakers wanted to raise it to 10.75 percent on everyone making $400,000 and over. Sweeney managed to pass the bill in the State Senate with the tax increases and brought it to Christie’s office. Christie said he immediately took out his pen, vetoed the bill, and handed it back to Sweeney. “I said, ‘This is not where we’re going in New Jersey anymore,’ and he said, ‘We’ll be back,’ and I said, ‘We’ll see.’” Christie then went ahead and proposed a balanced budget without any tax increases, and cut baseline spending by 9 percent across every department in the state government.
“Everyone shared in the sacrifice,” he said. “They said that budget was dead on arrival, but we believe, especially in this Easter season, in resurrected life. So we resurrected that budget, and in fact the Democratic legislature ended up passing it with 99.8 percent of the line items exactly as we sent it. For the first time in a decade, New Jerseyans had a budget that did not increase taxes, that did not increase fees, that did not increase the cost of their government today. You see, you can’t start pro-growth policies until you get your house in order. You first have to step up to the plate and do the difficult things.”
Christie followed up by forcing the legislature to pass a 2 percent cap on New Jersey’s sky-high property taxes only a few days before the legislature’s July 4 holiday weekend was set to begin. While there was initial resistance, the spouses who were anxious for their holiday weekend convinced the lawmakers to pass it.
“They didn’t do anything on [July] 2nd, but all of a sudden on the morning of the 3rd, spouses from all over New Jersey were calling their husbands and wives in the state legislature saying, ‘Listen, we’re already at the New Jersey Shore. We are waiting for you. The kids are driving me crazy. Give him whatever the hell he wants.’ On the afternoon of the 3rd we came to an agreement on a permanent 2 percent cap on property taxes in New Jersey.”