Christie's team eyes budget cut up to 25%

Gov.-elect Christopher J. Christie's transition team is eyeing state budget cuts of up to 25 percent as it grapples with a slew of fiscal problems, including a deficit that could exceed $8 billion.

In a memo sent yesterday, current cabinet members were instructed to draw up plans for spending cuts of 15, 20, and 25 percent, though some programs were left off limits.

Members of the transition team also have said that they were considering scaling back eligibility for some government programs, potentially including Medicaid and other health-care programs, to bring New Jersey's regulations more into line with those in surrounding states. In addition, Christie's aides are looking at ways to trim state employee benefits, according to a high-ranking member of the transition team.

The cuts requested in the memo, which are due Jan. 6, would be for the 2010-11 budget Christie is to propose in March. They are on top of $839 million in reductions Gov. Corzine outlined yesterday to deal with shortfalls in the state's current $28.6 billion fiscal plan.

Christie's top budget advisers have signaled that the state's financial problems are so severe that steps once considered unthinkable may be necessary.

"This is probably the time, when Gov. Christie takes office, to have a serious conversation about long-term reform," Robert Grady, a cochairman of Christie's budget task force, said recently. "Reform that will put the state on better footing."

Aides are analyzing the budget plan to "engage in a real prioritization of what is essential, as opposed to things that are merely desirable but cannot be afforded," said Richard Bagger, the task force's other cochair and Christie's incoming chief of staff.

That task was reflected in the memo to cabinet leaders. It came from Corzine's Treasury Department but was sent at the request of Christie's team.

"The current situation requires the State to review its operations, to determine which functions should continue and which no longer are necessary," the memo said.

In recent years, budgets have been cut, but often with trims that have left programs in place. Christie has signaled that he is looking for more definitive change.

He is inheriting an $8 billion budget shortfall and $33.9 billion in debt as well as a transportation fund near bankruptcy and a badly underfunded pension system. The state's unemployment fund, battered by years of raids and soaring benefit claims, is facing its own deficit and could trigger a tax increase on businesses next year.

Amid these problems, Christie successfully pushed Corzine to roll back a tax on the wealthy that yielded $900 million annually. A central plank in Christie's campaign platform was his argument that the state had become too expensive, chasing off residents and businesses.

"Revenue enhancements" - the bureaucratic term for tax increases - "will not be considered at this time," yesterday's memo said.

Democrats, who control the Legislature and thus will have a big say on the budget, are with Christie on his fiscal approach, to a point.

"The results have the potential to be horrific, but these are not ordinary times, and I don't think there is an alternative other than watching us slip deeper into the red," said Senate Budget chair Barbara Buono (D., Middlesex), who will soon become Senate majority leader.

She added that budget cuts must be balanced with the needs of residents already hit by the national recession, however.

Because some programs are not being reviewed by the cabinet, the cuts Christie requested yesterday would trim at most $2.7 billion, according to a source close to the budget.

That would leave Christie with billions more in savings to find. State operations cost roughly $4.2 billion, so eliminating every aspect of overhead would cover only half the budget gap.

Christie has months before he has to lay out his plans formally. He has said he would introduce his budget proposal on March 16, and the spending plan must be signed by June 30.