Budget keeps state aid flat

Staff Writer

 Gov. Chris Christie Gov. Chris Christie Gov. Chris Christie seeks to maintain flat levels of aid to municipalities and school districts in his fiscal year 2016 budget despite making the largest-ever pension payment in New Jersey history.

During his Feb. 24 budget address at the State House, Christie outlined a new set of pension reforms and announced a recordbreaking commitment to school aid in the proposed $33.8 billion budget.

“We are making record investments in aid to our schools, and this year again I propose to do that for a fifth straight year, with an increase over last year to bring total school aid to over $12.7 billion,” he said during the 28-minute address.

“And we continue in this budget to support key priorities like [maintaining] municipal aid and property tax relief at current levels.” State aid will remain flat to municipalities in Monmouth and Middlesex counties in the coming year if the proposed budget is passed.

East Brunswick would receive $4.2 million in aid; Edison, $16.1 million; Woodbridge, $23.2 million; Freehold Township, $7.4 million; Middletown, $6.1 million; and Long Branch, $4.3 million.

Long Branch Mayor Adam Schneider said local officials have been anticipating flat state aid.

“It’s what we’ve been factoring in the last couple of years as we do our own budget projections,” he said. “I wasn’t thinking we were going to do anything different than that.

“Frankly, with what has gone on in the state, if you tell me I’m getting the same amount, I’m actually kind of happy.”

Monroe Township Business Administrator Wayne Hamilton said towns are still dealing with the impact of a 2009 cut in aid.

“Ever since his very first budget, we’ve cumulatively lost on the municipal side almost $3.5 million,” he said. “Every year, we’ve lost like $582,000.”

The proposed state budget has Monroe receiving approximately $2.3 million in aid, whereas the township received more than $2.8 million in 2009, according to Hamilton.

Another municipality still experiencing the impact of past cuts is Marlboro.

“We have been hit very hard by the state’s cut to state aid. Since 2007, we are down 33 percent,” Marlboro Mayor Jon Hornik said. “We’ve had to make up for that loss of revenue with a combination of policy changes and cuts to expenses.”

Marlboro will receive $2.3 million in aid in the proposed state budget — about $1.1 million less than the amount it received in 2007, according to Hornik.

Oceanport Councilman Joseph Irace said the borough anticipated receiving $582,000 in aid — the same amount as last year.

“I kind of think we always expect flat or slightly lower,” he said. “We went in thinking we were going to be flat, so it is not a surprise.”

The proposed budget commits nearly $12.8 billion to education, or $811 million more than the fiscal year 2015 allocation. This includes $9 billion in direct aid to school districts — an increase of $4.6 million.

Aid to the majority of school districts in Monmouth and Middlesex counties would remain flat, with only three local districts seeing an increase.

The Long Branch Public Schools would receive $42.2 million in aid; while the Woodbridge school district would be allocated $23.6 million and Old Bridge would get $44.6 million.

The school aid includes money earmarked to help districts prepare for the Partnership for Assessment of Readiness for College and Careers (PARCC) exams. The PARCC allocations range from $2,650 for the school district in Monmouth Beach to $142,700 for Woodbridge.

The budget anticipates $13.6 billion in income tax revenue, $9.2 billion from sales taxes, $2.6 billion from business corporation taxes and $8.3 billion from other revenue sources.

Christie said revenues continue to increase.

“For this coming year, we project that revenues will increase by 3.8 percent, in line with our recent experience,” he said during the address. “This means an increase of a little over a billion dollars a year in state revenues with no new taxes.

“And yet, all of that increase in revenues is eaten up by growth in three areas: pension, health benefits and debt service.”

Of the three categories, pension costs eat up the majority of the spending.

“The budget I put before you today would have New Jersey taxpayers make a $1.3 billion payment to the pension system for fiscal year 2016,” Christie said. “This is the largest single pension payment that has ever been made in New Jersey history.

“If we do not reform, next year we would be asked to spend nearly $8 billion on pension and health benefits.”

According to Christie, costs for pension and health care make up approximately 23 percent of the state’s budget.

Facing these escalating costs, Christie last year appointed the independent New Jersey Pension and Health Benefits Study Commission to come up with recommendations for making the system reliable for the beneficiaries, but manageable for the state. The commission’s recommendations include freezing and replacing the existing pension plan. Both the existing plan and the new plan would be transferred to a trust overseen by the New Jersey Education Association.

The state would make periodic contributions each fiscal year to pay off the unfunded liability of the existing plan over a period of 40 years. A constitutional amendment would be voted on this November to ensure that the state meets this obligation. The payment amounts and annual increases have not been determined.

Schneider said something must be done to tackle the issues involving the pension system.

“When you make a pronouncement of no new taxes and at the same time there is a significant shortfall in the pension, I don’t know where the money is going to come from,” he said.

“You are not going to cut your way out of the problem, you are not going to slash spending everywhere else and make up for the shortfall.”

Also included in the proposed budget is additional funding for housing assistance, preschool education aid, higher education, and mental health and addiction services.

However, funding would decrease to hospitals by $120.7 million, bringing the total to $864.4 million.

The Homestead Benefit Program, which is aimed at providing tax relief for seniors, will also see a $33.2 million reduction in funding in 2016, which Hamilton said will impact communities like Monroe, with a large senior population.

“On the other side, so many of our residents have been deprived of Homestead rebates — in Monroe that is almost 9,000 homes,” he said.

The state Assembly and Senate must pass the budget, sending it back to Christie’s desk for a final signature.