Gov. Christie has crossed a line rarely, if ever, crossed by a governor.

He has reached into the Legislature's budget and proposed chopping $3.5 million from the State Commission of Investigation, which would leave it with $1 million.

"What they're doing is a complete dismantling," said Lee Seglem, assistant director of the watchdog agency. "A stellar 40-year record of protecting the taxpayer will go down the tubes."

These are extraordinary times, argues the Christie administration. State officials are seeking $11 billion in cuts to balance Christie's $29.3 billion budget for the next fiscal year.

The administration says the SCI's work of going after gangs, mobsters, and dirty politicians can be performed by the state comptroller or inspector general. But SCI supporters say only the SCI is independent of the administration, and it has a unique mission that goes beyond uncovering criminal acts. The SCI probes the consequences of government incompetence and blind spots in the law. And it recommends statutory and administrative changes.

In recent years, the SCI has shown how the Department of Corrections allowed gangs to flourish in prisons, how New Jersey failed to recover millions of dollars for the hospital charity-care program, how Treasury Department officials took gifts from a vendor and ignored his padded bills, and how the state Department of Community Affairs and local governments permitted shoddy home construction. In most instances, governors and legislators responded by changing the rules and recovering wasted or stolen funding.

Right now, the SCI is conducting several investigations involving state agencies.

Born in the 1960s

The SCI was born in the late 1960s as the country was opening its eyes to the Mafia's influence on business, entertainment, and politicians.

Soon after a series in Life magazine detailed the cozy relationship between a U.S. representative from Hudson County and the mob, Assistant State Attorney General William J. Brennan III told the state chapter of the journalism fraternity Sigma Delta Chi that three members of the Legislature were "entirely too comfortable with organized crime."

One of the legislators owned some Mercer County land in the path of I-295 with two mobsters, another was involved in loan-sharking, and the third was a character witness for a mobster accused of roughing up a state trooper. None were prosecuted.

But Brennan's remarks sparked news stories and legislative hearings resulting in the 1968 formation of the SCI and an interagency task force led by the FBI. That task force's work resulted in federal indictments of 122 public officials, including the conviction of Newark Mayor Hugh Addonizio on corruption charges.

In the late 1970s, it found that a few local law enforcement officials had dismissed suspicious deaths as suicides, including the gunshot killing of a policeman's wife. As a result, Trenton leaders gave county prosecutors a significant role in murder investigations, said Richard Norcross, a former commander in the Camden County Prosecutor's Office who now heads the East Coast Gang Investigators Association.

Norcross, who was shot in 1995 while a Haddon Heights police officer, was especially moved by a 2006 SCI investigation showing that violent, convicted criminals may have had trouble buying guns in New Jersey but could buy bullets with ease. Soon after the report, the Legislature banned the sale of ammunition to convicted violent criminals.

Knowledge of the mob

The agency has teamed up with others, including the FBI, where an SCI staffer known for his encyclopedic knowledge of the mob works on a task force.

"The thing we benefit the most from them, which goes along the line of organized-crime and public-corruption and gang investigations, is that they are an independent body of the New Jersey government," said Aaron T. Ford, an assistant special agent in charge of the FBI in Newark, N.J. He said the SCI's independence was a good match for the FBI's independent streak.

Christie has made no secret of wanting to consolidate the state's watchdog agencies, calling them redundant. Seglem, however, said his agency consulted with others to make sure they were not overlapping and to give help.

Senate President Stephen M. Sweeney (D., Gloucester) and others argue that the SCI is the only investigative arm that the Legislature can ask to root out wrongdoing in the massive state government, controlled by the governor.

"Obviously, we're not going to stand for it," Sweeney said of Christie's proposed cut. "This is a body that's done very good work and is an investigative body for the Legislature. He has the comptroller and the inspector general."

Sweeney said the governor's reach into the legislative budget breached the wall between the two branches. He said the Legislature would fight to restore the money.

"He could reach in and say we shouldn't have any legislators," Sweeney said. "I bet you he would like that."

But other legislators view it differently.

Morris County Assemblyman Alex DeCroce, the Republican leader of the lower house, said that while he respected the SCI's work, "these are unusual times." He suggested that when the state's financial problems were solved, the agency could be restored.

"Knowing the governor as I do, he would not be making these decisions if he didn't have to," said DeCroce, echoing the administration's argument.

Christie is New Jersey's former U.S. attorney and had a perfect winning streak, convicting more than 130 public officials.

His press secretary, Michael Drewniak, said the roles of the comptroller, inspector general, and SCI overlapped and could be more focused if consolidated.

"Chris Christie is by definition a watchdog. He doesn't want to dilute the capabilities of watchdogs over government," he said.

The $3.5 million cut would result in the loss of 43 positions, leaving eight employees. Seglem said the agency already had trimmed $2 million from its budget, recognizing the state's fiscal crisis.

And by its nature, he said, the SCI has saved the state millions of dollars.

It recently found $65 million in excessive cash, health, pension, and sick-time benefits given to public workers, and $22 million in tax revenue lost because organized-crime figures were manipulating the motor-fuel industry.

"We pay our own way. The savings we generate pay for our budget many times over," Seglem said.

Even with its record, Rider University political scientist Ben Dworkin said, "it's one of the smaller things the Democratic Legislature and governor would be fighting over. It could get lost in the shuffle because it's small and legislators are worried more about municipal and school aid than the SCI."

The agency's fate won't really be known until the final hours of intense budget negotiations between the governor and Legislature, which will play out between now and June 30.

"It's in those last-minute negotiations where something like SCI can be saved or left out in the cold," Dworkin said.

Contact staff writer Cynthia Burton at 856-779-3858 or cburton@phillynews.com.