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February 22, 2011

Chris Christie's Budget Address: Welcome to the New Normal of Zero-Baseline Budgeting

As prepared.

There's a lot here. I'm only going to quote the passages with broad relevance -- I won't quote Christie describing his own previous actions or his making pledges specific to the 2012 New Jersey budget.

I think the most important thing here is the determination to end the business-as-usual style of baseline budgeting, where a previous budget is mostly just slightly rewritten -- with obligatory spending increases -- and presented as a new budget. Christie here rejects that and says that each year's budget starts at zero, and that every bit of spending must be specifically defended and justified, not just assumed to continue into eternity (with yearly increases of Cost of Living plus 3%, naturally).

He also hints at the sort of president he'd be with regard to tax cuts -- a stance many won't like. He demands that tax cuts be paid for (many conservatives reject that terminology and reject those who accept it). I think I agree with him: He talked about Obama's high speed rail and other giveaways as not the "big things," but the candy of government. I think tax cuts without a determination to actually cut spending are similarly candy -- tax cuts are always far more beneficial than any spending program, but I don't like the idea of the candy of tax cuts without the vegetables of spending discipline, given our horrific financial shape.

That said, he does in fact propose his own tax cuts -- but paid for, he says, by matching decreases in spending.

One key to changing direction has been changing our approach to the budget process.

Every year, the Office of Legislative Services puts out a projected deficit. The only problem is that this number assumes no one is actually managing the budget or setting priorities. That is yesterday’s New Jersey.

The old projection is a result of the old way of budgeting … assuming you cannot control the budget and guide it to a more sustainable place, but instead must just let it take its own course. To run away from hard choices, just because they are hard. To put the government on autopilot, with no strong leadership setting priorities.

No more.

For too many years, our government has operated under the belief that the baseline — the place you begin — is to continue to fund every program in the budget: regardless of the fiscal climate, regardless of the economy, and regardless of the effectiveness of the program. Not anymore.

Our process is based on the belief that to survive and to grow, you need to build a realistic budget from the bottom up. You fund what you need — this year — to succeed, not every relic from two decades ago that is still on the books.

The baseline is zero. Zero-based budgeting, which I promised in the campaign, has finally come to New Jersey.

You see, last year we were faced with two major problems.

As I stood before you early last year, the good people of our state had been battered. We had lost 108,500 jobs in 2008 and another 121,000 in 2009. The unemployment rate was the highest in 33 years. Taxes were up, but revenues were down.

And even in that environment, government had made matters worse by spending too much. Contributing to our $11 billion projected deficit were commitments that were made over many years and never revisited, never reduced, and never reformed.

Working together, we made some very difficult decisions.

We took the first steps toward reform, and made some very painful spending cuts. There are more difficult decisions this year, to be sure, and in the years ahead. We must continue to cut government spending to restore a chance at prosperity for New Jersey’s families.

But as a result of the decisions we started with a year ago, we have changed the paradigm. We have established a “New Normal.”

In the New Normal, we will shape the budget to make it more sustainable each year, and address priorities that will make New Jersey more successful each year.

We will no longer blindly fund commitments that prior legislators and governors have made … regardless of whether they were wise, and regardless of whether they yielded programs that even work.

In the New Normal, we can and will stop old commitments, so we can set new priorities to meet New Jersey’s 21st century challenges.

Last year’s budget, fiscal year 2011, was the beginning of this change. We set priorities and we funded them, in amounts we could afford. We reformed many programs that needed reforming. And we began to refuse to fund what wasn’t an absolute priority.

This year’s budget continues that model. It is not a budget that funds each and every program at the same level as last year. Instead, we’ve done something novel. We’ve actually identified key priorities and put together a budget that funds them.

Now, here’s what’s crazy about this new bottom-up approach to budgeting: We are simply doing what most people assumed state government had been doing all along.

This is the New Normal in Trenton. The old way of budgeting is over. Today marks the line in the sand that separates the way things used to be, and the way they are going to be. And we will not be going back.

I like that last bit, that this is the common sense approach that the public assumes politicians are taking -- but of course they're not.

For someone not running for president, Chris Christie sure has a general-election-friendly "this is not blue nor red but common sense" way of putting things:

As I promised you last year, if we did the hard things, New Jersey would be a national leader in fiscal discipline. This year, look at how other states are following New Jersey.

All across the country, Democratic and Republican governors are grappling with inherited budget deficits, skyrocketing pension and benefit costs, and state government cultures which embrace the status quo — no matter how destructive. They are just now coming to terms with the gravity of the situation we understood and responded to last year.

Today, they are standing up and saying just as I did last March, “the problems we have hidden for decades are evident for all to see. The day of reckoning has arrived.”

In New York, a Democratic governor has proposed dramatic reforms to Medicaid, because that program left on autopilot will lead both state and federal governments straight into a crash.

In California, a new Democratic governor has proposed to cut the number and pay of all state employees.

And in Wisconsin and Ohio, they have decided there can no longer be two classes of citizens: one that receives rich health and pension benefits, and all the rest who are left to pay for them.

Democrat or Republican, it doesn’t matter. We are all facing the same problems. These problems are bigger than either political party. The promises of the past are too expensive, and the prospects of the future are too important to stay on the old, failed course.

Across the country, we have come to a moment — the moment for real change and the return to fiscal discipline, which will create real jobs for all New Jerseyans who need them.

Some thought the change might come from the federal government. But that hasn’t been the case. It is spending more than ever. The change is coming from the states, and the charge is being led by New Jersey.

Across the Hudson River, Governor Andrew Cuomo’s budget also cuts the actual dollars spent by the state — for the first time in 14 years. Why? The reason Governor Cuomo gave is simple. He said, “New York is at a crossroads, and we must seize this opportunity, make hard choices, and set our state on a new path toward prosperity.” The challenge, the change, and even the choice of words are similar to where New Jersey was one year ago.

In Michigan, Republican Governor Rick Snyder has framed the issue the same way. He said, “This is our opportunity to say let’s stop living in the past and start looking toward the future. Many of us are going to have to sacrifice in the short term, but by making these sacrifices, we can all win together in the long term.”

Michigan is taking the road to fiscal discipline paved by New Jersey.

And even in California, Governor Jerry Brown proposed to cut take- home pay for state employees by 8 to 10%, because, in his words, “we have no choice,” and for years, California has had “gimmicks.” Now, he said, California must “return … to fiscal responsibility and get our state on the road to economic recovery and job growth.”

Sound familiar? These ideas are not red or blue; they are the black and white of truth.

He also wants people to know he's not cutting from assumed projected-increase levels but in actual dollars, and also that he keeps promises:

So my budget proposes total state spending of $29.4 billion, a reduction in actual dollars spent versus last year. We are reducing the size of the budget — in actual dollars, not against “projections” — two years in a row.

Also, we are balancing the budget without the one-shot gimmicks that Trenton had become known for before this Administration arrived in town. In the last budget of Governor Corzine, FY 2010, a full 13% of revenue was based on one-shot money. I railed against it during the campaign and we’ve now changed that culture as well. Last year, we cut that number in half, to 6%. In the budget I am I proposing today, we cut it by another two-thirds to 2%. That’s an 85% cut in the use of one-shot, non-recurring revenue. We promised to put an end to this practice in Trenton and, in one year, we are nearly there.

He takes a shot at our cowardly president:

We must do these things, not only to fill the hole created by the loss of over a billion dollars of federal stimulus money since 2010, but because it is the right thing to do. Medicaid’s growth is out of control. We must manage it better.

Even with $250 million of Medicaid savings in this budget, and additional projected savings from a $300 million global waiver to reform Medicaid, spending will grow by nearly $1 billion over last year.

That is the definition of an out of control program. Worse yet, we cannot make meaningful reforms because of the restrictions on New Jersey from Obamacare. States desperately need relief from that unfunded federal mandate.

Here's the passage about taxes:

Now, as I said in the State of the State, we are not cutting spending just for cutting’s sake. We are cutting spending so we can reduce the tax burden on the people of New Jersey. We are cutting so we can make New Jersey a home for growth. We are cutting taxes to create new jobs.

So in this budget, I am proposing a down payment on a better tax environment — a better environment for individuals, and a better environment in which to start and grow a business.

The budget includes $200 million in tax reductions.

Now, as you know, last Friday I vetoed a package of tax bills put forward by the Legislature. The reason was simple – we cannot enact tax cuts that we do not pay for. Our tax policy needs to be part of our long term planning, and it needs to fit within the context of a constitutionally balanced budget.

This tax cut package, every dollar of it, is paid for with spending cuts.

Responsibly changing New Jersey’s tax climate does not mean running deficits to cut taxes — it means cutting taxes in a balanced budget to create job growth.

The package I am proposing will provide almost $2.5 billion in job-creating tax relief and incentives over the next five years.

These reforms will be phased in carefully and are paid for as part of the state budget.

A few of the tax provisions are similar to those approved by the legislature. As I have said before, I agree with some of what was in that package. But we cannot have tax cuts that we do not pay for.

Some will disagree with his philosophy but even those who disagree, I think, will have to confess it's at least savvy politics.

And then he turns to education:

The need for reform, of course, is more urgent than ever. This is the third big challenge we must address this year. We need to reward excellent teachers, put an end to automatic tenure, and give parents trapped in failing schools a choice for a better future for their children. Once and for all, we must reward excellence and there must be consequences for failure. This is the way it is all across America — we must finally bring it to all of New Jersey’s classrooms.

Money alone is not the answer. If it was we would not be spending over $17,600 per pupil in New Jersey and still have over 100,000 students trapped in 200 failing schools.

If money was the answer, we would not have former Abbott Districts like Asbury Park spending over $33,000 per student and Newark spending $23,500 and have barely half the students in these districts be proficient in math.

We need reform, and we need to create choices for families who can’t afford to wait for their local schools to get better while their children’s lives are being wasted in failing classrooms, one year tragically on top of the next.

Last month, our administration announced the approval of 23 new public charter schools — the largest number of approvals in one cycle since charter schools were authorized in New Jersey in 1995. By this fall, 97 public charter schools will be operating in New Jersey — serving over 25,000 students.

In further support of reform, my budget proposes to more than double school choice aid and to increase funding for charter schools by more than 50%.

And beyond money, I propose we increase our capacity to authorize Charter Schools. I propose that all of New Jersey’s 31 public colleges become eligible to be authorizers, and that we streamline the process of getting authorized.

And I propose that we allow charter school conversion and a greater range of types of charter schools.

It has been over a quarter century since a Presidential Commission warned that our public schools were threatened by “a rising tide of mediocrity.”Acting Commissioner Cerf laid out our vision for accountability and responsibility at Princeton University last week.

Let me ask you, how many more children's futures are we willing to waste in order to support a failed status quo demanded by the monied special interests that stalk the halls of this building? Haven’t we waited long enough to act? The time to fix our schools is now.

For a RINO in a liberal state he sure is on the right side of a suspicious number of issues.

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posted by Ace at 04:14 PM

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