By Jon Hurdle
TRENTON, March 16 (Reuters) - New Jersey Governor Chris Christie's plan to fill a yawning budget deficit with spending cuts rather than tax increases puts him at odds with the majority of U.S. states struggling to balance budgets in the weak economy, analysts said on Tuesday.
Christie used his fiscal 2011 plan to close the nation's biggest per-capita state budget gap by cutting spending on pensions, schools and cities while capping future increases with new constitutional amendments.
Christie, a former federal prosecutor who campaigned on lower taxes and smaller government, has warned for months that he would make deep spending cuts in an effort to revive the finances of a state facing some $34 billion in debt.
The Republican governor, who took office in January, said in his budget address a projected $10.7 billion deficit for fiscal 2011 would be closed by cutting pension spending by $3 billion, limiting increases in school aid to $1.7 billion and cutting public transit subsidies by $272 million, among other measures.
Overall, state spending will be cut to $28.3 billion, 5.3 percent less than the current-year budget, which was re-balanced to allow for lower-than-expected revenue and higher welfare spending in the nationwide recession.
MAJORITY OF STATES CHOOSING TAX INCREASES
In taking such an anti-tax stance, Christie is setting himself apart from 30 states that included tax increases in budget-balancing plans for fiscal 2010, which ends in June, said Jon Shure, deputy director of the State Fiscal Project at the Center on Budget and Policy Priorities.
'Christie is rejecting the approach that the majority have taken,' Shure said. 'If he gets his own way, he will have pretty much rejected revenue in favor of spending cuts.'
Christie is taking a similar approach to that of California Governor Arnold Schwarzenegger, who has avoided tax increases in his fiscal 2011 budget proposal for filling a $20 billion budget gap, Shure said.
But given that both states' legislatures are controlled by Democrats, it is difficult to predict whether New Jersey and California will adopt the budget measures proposed by their Republican governors, experts said.
New Jersey's fiscal plan has been published before those of most states and could attract attention and gain influence as a means of coping with fiscal woes, said Arturo Perez, a budget analyst at the National Conference of State Legislatures.
Nearly every U.S. state is facing its worst fiscal crisis since the Great Depression, Perez said. 'There's a decline in revenue across the board, and states are facing an extended period of dealing with this situation,' he said.
In California, ratings agencies are concerned over how Schwarzenegger and lawmakers will close the budget gap and the potential for a cash shortage weighing on state government.
California's financial condition remains precarious due to a steep drop in revenue due to the recession, double-digit unemployment, financial market turmoil that slashed collections from personal income taxes and a weak housing market.
Those concerns are weighing on Wall Street and contributed to Moody's Investors Services' recent decision to assign a Baa1 rating to $2 billion of tax-exempt California bonds. Keywords: ECONOMY NEWJERSEY/ (ellen.wulfhorst@reuters.com; +1 646 223 6283; Reuters Messaging: ellen.wulfhorst.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
TRENTON, March 16 (Reuters) - New Jersey Governor Chris Christie's plan to fill a yawning budget deficit with spending cuts rather than tax increases puts him at odds with the majority of U.S. states struggling to balance budgets in the weak economy, analysts said on Tuesday.
Christie used his fiscal 2011 plan to close the nation's biggest per-capita state budget gap by cutting spending on pensions, schools and cities while capping future increases with new constitutional amendments.
Christie, a former federal prosecutor who campaigned on lower taxes and smaller government, has warned for months that he would make deep spending cuts in an effort to revive the finances of a state facing some $34 billion in debt.
The Republican governor, who took office in January, said in his budget address a projected $10.7 billion deficit for fiscal 2011 would be closed by cutting pension spending by $3 billion, limiting increases in school aid to $1.7 billion and cutting public transit subsidies by $272 million, among other measures.
Overall, state spending will be cut to $28.3 billion, 5.3 percent less than the current-year budget, which was re-balanced to allow for lower-than-expected revenue and higher welfare spending in the nationwide recession.
MAJORITY OF STATES CHOOSING TAX INCREASES
In taking such an anti-tax stance, Christie is setting himself apart from 30 states that included tax increases in budget-balancing plans for fiscal 2010, which ends in June, said Jon Shure, deputy director of the State Fiscal Project at the Center on Budget and Policy Priorities.
'Christie is rejecting the approach that the majority have taken,' Shure said. 'If he gets his own way, he will have pretty much rejected revenue in favor of spending cuts.'
Christie is taking a similar approach to that of California Governor Arnold Schwarzenegger, who has avoided tax increases in his fiscal 2011 budget proposal for filling a $20 billion budget gap, Shure said.
But given that both states' legislatures are controlled by Democrats, it is difficult to predict whether New Jersey and California will adopt the budget measures proposed by their Republican governors, experts said.
New Jersey's fiscal plan has been published before those of most states and could attract attention and gain influence as a means of coping with fiscal woes, said Arturo Perez, a budget analyst at the National Conference of State Legislatures.
Nearly every U.S. state is facing its worst fiscal crisis since the Great Depression, Perez said. 'There's a decline in revenue across the board, and states are facing an extended period of dealing with this situation,' he said.
In California, ratings agencies are concerned over how Schwarzenegger and lawmakers will close the budget gap and the potential for a cash shortage weighing on state government.
California's financial condition remains precarious due to a steep drop in revenue due to the recession, double-digit unemployment, financial market turmoil that slashed collections from personal income taxes and a weak housing market.
Those concerns are weighing on Wall Street and contributed to Moody's Investors Services' recent decision to assign a Baa1 rating to $2 billion of tax-exempt California bonds. Keywords: ECONOMY NEWJERSEY/ (ellen.wulfhorst@reuters.com; +1 646 223 6283; Reuters Messaging: ellen.wulfhorst.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.