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New Jersey Gov. Chris Christie proposed a $32.9 billion budget Tuesday that allows more poor residents to enroll in Medicaid and increases public school aid but defers property tax rebates for three months because of a projected budget shortfall.
Christie touted the budget, the fourth and final spending plan of his first term, as a blueprint that seeks fiscal stability without forgetting about the state's most vulnerable residents. The Democratic-led Legislature must approve the plan.
"We are meeting the needs of our people in this budget, we are doing it by spending less than the state spent in fiscal year 2008," he said in an afternoon budget address at the Statehouse.
The proposal comes as the state rebounds from Superstorm Sandy, the worst natural disaster in state history.
Christie's budget is based on nearly 5 percent revenue growth. The governor is counting on federal Sandy relief funding to stimulate the state's still-sluggish economy and help coastal communities rebuild. Some 25 municipalities lost at least 5 percent of their tax base after Sandy, because of destroyed homes and closed businesses. The first $1.8 billion in Sandy relief money is due in April. But New Jersey could see $100 million less than expected unless there's a deal in Washington to eliminate federal cuts set to take effect Friday. Preschool classes and regional airports could also be shuttered.
Christie's proposed budget could be thrown into turmoil by the end of the week — to the peril of the state's property holders — if President Barack Obama and Congress fail to strike a deal on looming federal budget cuts.
Christie proposed adding $40 million to the current-year budget to cover Sandy-related expenses not reimbursed by the federal government.
"This will ensure that we can move ahead with maximum speed, and that those things that fall through the cracks will not bankrupt families, businesses and local governments," Christie said.
Christie's budget for the fiscal year that starts July 1 contains no major surprises. It abandons the 10 percent tax break he proposed last year that the Democratic-led Legislature refused to go along with. Christie and all 120 members of the Democratic-led Legislature face re-election in November.
The proposed budget adds nearly $100 million to public education and allocates $2 million for an education project that will allow 200 low-income students in failing public schools to attend school elsewhere on scholarship. A similar proposal has stalled in the Legislature, in part because it permits the taxpayer-funded scholarships to be applied to private and parochial school tuition.
The budget also expands the Medicaid rolls by 104,000 by allowing the federal government to take over costs, Christie said.
While making it clear he's no fan of the Affordable Care Act, Christie said he decided to accept federal funding for three years that allow the expansion.
"Refusing these federal dollars does not mean that they won't be spent. It just means that they will be used to expand health care access in New York, Connecticut, Ohio or somewhere else," Christie said.
Including New Jersey, 22 states and the District of Columbia have signed on to the expansion and 13 states have rejected it. The rest are still considering what to do.
Under 2010 federal law, Medicaid expansion was initially mandatory. But the U.S. Supreme Court made it optional for states.
One casualty of the budget proposal is homeowner tax rebates. Senior, disabled and low-income homeowners expecting rebate credits in May would instead see them in August. The deferral would allow the state to cover a projected $407 million shortfall in the budget that expires in June. New Jersey's constitution doesn't allow deficit spending.
State residents already pay the highest property taxes in the country, averaging $7,870 per household.
The budget also makes a $1.6 billion payment to the public employee pension system, a commitment the administration made when landmark pension and health benefits changes were enacted two years ago. Those changes required union workers to pay more for retirement and medical benefits, changes Christie said were necessary to shore up the underfunded systems.
Associated Press reporter Geoff Mulvihill contributed to this report.