Politics

The 'Chris Christie' Way

New Jersey's new governor has a take-no-prisoners style, but there are signs he is learning the art of the deal.
by | August 2010

Rush Limbaugh loves him. George Will has called him the most interesting governor in the country. John Fund thinks he could be the next Republican president.

Though he's only been governor of New Jersey for a mere six months, Chris Christie already is adored by conservatives nationwide. To them, Christie is the blunt-talking scourge of public employee unions; he is the ultimate fiscal conservative single-handedly changing a state that's known for anything but fiscal conservatism.

The real Christie record is more complicated.

Yes, he has taken on the unions and cut spending. But he's also slashed New Jersey's property tax relief program. Yes, he's pursued long overdue reforms. But he's also replicated one of the major causes of New Jersey's fiscal mess by failing to pay money into the pension system. Still, Christie's mystique isn't just about what he's done. It's about how he's done it. Early on, Christie never found a battle he didn't want to pick or a position he was willing to compromise. His tell-it-like-it-is style wasn't just a persona for public consumption -- it was how he governed.

At times, this approach served Christie well. He won pension reforms in his first weeks in office. When he refused to sign a budget with income tax increases, the Legislature backed down.

But it also quickly became clear that Christie, who declined to be interviewed for this story, couldn't always win on his own terms. His approach resulted in impasses over Supreme Court appointments and education reform. It seemed destined to result in another impasse over a cap on property taxes -- Christie's top goal.

That's when something surprising happened: New Jersey's stubborn governor proved that he has what it takes to make a deal.

It's hard to argue that New Jersey doesn't need to tighten its fiscal belt. Christie confronted what his administration described as a $10.7 billion budget shortfall for fiscal 2011 -- proportionally one of the largest in the country -- on top of shortfalls that emerged in the 2010 budget. The state projects deficits of nearly $46 billion in public employee pension obligations and $58 billion in retiree health-care benefits. The state's Transportation Trust Fund is expected to run out of money for new projects next year.

The remarkable thing about New Jersey is that these revenue shortfalls are occurring despite the state's wealth and unusually high taxes. Its sales tax rate of 7 percent and top income tax rate of 8.97 percent are among the country's highest -- and the state's property taxes are the nation's highest per capita. "Over the last few decades, New Jersey has developed an acute spending problem," says Andrew Sidamon-Eristoff, who as state treasurer is Christie's top budget official. "The day of reckoning is here."

New Jersey's pain has been Christie's opportunity -- an opportunity he has pointed toward almost all of his work life. Christie, who grew up near Newark, dabbled in Republican politics from the very start of his professional career -- albeit with mixed results. He won a seat on the Morris County Board of Chosen Freeholders in 1994, but thanks to feuds with fellow Republicans, lost a race for the state Legislature and his bid for a second term.

Christie was more successful as a lawyer and lobbyist, which helped him win an appointment as U.S. attorney in 2001. That's where he made his reputation. He secured corruption convictions against more than 130 public officials in New Jersey, including state senators and county executives. As a result, when Christie declared his campaign for governor, he was viewed as the Republican dream candidate.

But even for a dream candidate, New Jersey is a tough place for a Republican to win. Democratic Gov. Jon Corzine fought back with a brutal campaign that focused heavily on Christie's record of traffic violations and claimed his policies would prevent women from getting mammograms. Christie was badly bloodied, but in the end, the desire for someone new was too strong. Christie won a narrow victory with 49 percent in a three-way race, making him the first Republican to win statewide in New Jersey in 12 years.

Since then, the governor has treated his win as though it were an overwhelming mandate. A case in point: During his final year in office, Corzine teamed up with Democrats in the Legislature to raise income taxes on wealthy individuals. This year, the Democrats who control the Legislature wanted to continue this tax. Christie didn't, and he wasn't delicate about saying so. "They can package it however they want to package it," he said. "They can send it to me with a bow on it. They can send it to me in a nice box gift-wrapped. They can throw it over the transom and leave it there, hoping nobody smells it. No matter how they send it to me, it is going back. It is going back with a veto on it. We are not raising taxes in the state of New Jersey this year."

Democrats did send Christie the millionaire's tax increase; he vetoed it immediately. The showdown had the makings of a budget impasse. The Democratic majorities in the Legislature weren't large enough to override the veto, but of course Christie couldn't enact his budget without the Legislature.

The impasse, though, never materialized. The Legislature blinked. Democrats complained bitterly of the cuts to schools, seniors, the poor and disabled. "It's a bull's eye the governor has put on the poor and the middle class," says Senate President Stephen Sweeney. "If we can all pay more, why do the rich get a tax cut?" Still, they allowed a budget to become law with only minor changes from what Christie had proposed, supplying him with enough votes to pass with unified Republican support. Once a veto override on the millionaire's tax failed, Democrats abandoned it.

Part of the reason the Democrats relented is that their differences with the governor were smaller than either side let on. The millionaire's tax would have brought in less than $700 million, meaning drastic cutbacks still would have been necessary. But part of the reason probably has to do with Christie's tough talk -- he made clear that he would not concede. The Legislature got the message.

Christie's fight with the Legislature looks like a lover's quarrel compared to his feud with public employee unions, most notably the New Jersey Education Association (NJEA). As the governor sees it, public workers' salaries and benefits are out of control. And he makes a pretty good case. In 2001, New Jersey lawmakers gave workers a major pension boost without any money to pay for it. Many public workers in New Jersey haven't had to pay anything for their health insurance. As many private-sector workers lose their jobs and benefits, the NJEA wouldn't accept Christie's demand that teachers accept a pay freeze.

Christie isn't just disagreeing with the NJEA on policy. He's also saying that the union is built on a form of corruption. Union dues, he suggests, are a way for union leaders to siphon money into their own hands.

It's in this spirit that he has referred to the NJEA's large headquarters in Trenton as "the palace on State Street." When a teacher complained about his policies at a town hall meeting, he suggested she could quit. "The fight is about who is going to run public education in New Jersey," Christie said in one speech. "The parents and the people they elect? Or the mindless, faceless union leaders who decide that they are going to be the ones who are going to run it because they have the money and authority to bully around school boards and local councils?"

As Christie lobbed these insults, the NJEA wasn't shy about suggesting that the governor is the real bully. One official with the union even half-jokingly wished the governor dead (he apologized). In this way, Christie has succeeded in making his fight with the teachers' union the story of the year in New Jersey. This has been a mixed blessing for the governor. Tens of thousands of people, most of them union members, showed up at the state capitol to protest the millionaire's tax veto. His approval ratings quickly sank below 50 percent.

Still, the feud has helped force action. One of the Legislature's first acts this year was a series of benefit trims that, among other things, forced all state and local workers to contribute 1.5 percent of their salaries to health insurance premiums. Next, Christie made the case that local voters should reject school budgets in districts without teacher pay freezes as a way to force reduced spending. In the April votes, 58 percent of districts rejected their plans, the most in at least 34 years.

In a state where public employee unions long have had substantial power, Christie has the momentum. That's the record that conservatives would love to see emulated elsewhere.

"It's wonderful for all of the eyes of the nation to be focused on New Jersey for a positive reason," says Tom Kean Jr., the Senate minority leader.

The eyes of the nation, though, have missed some of the governor's moves that don't quite fit the crusader storyline. One of Christie's gutsiest decisions will lead to middle-class taxpayers having less money in their pockets. It's a decision that, if you wanted to be ungenerous about it, you'd probably call a large tax increase.

Property tax rates in New Jersey are set at the local level and administered by local governments, but because the taxes are sufficiently loathed, state officials have felt obliged to try to blunt their impact. For years the state has been sending property tax rebate checks, which show up just weeks before election day.

Corzine reduced the rebates, focusing the relief more on seniors and middle-class property owners. As a candidate, Christie promised to restore them. As governor, he flip-flopped. New Jersey residents will not receive any rebates this calendar year. Christie balanced his budget by slashing this tax relief. Next year, the rebates will be replaced with tax credits on property tax bills -- a change that will save the state money on borrowing and postage costs.

That move represents a dramatic break from the past. At the same time, though, Christie is continuing one of Trenton's worst habits: gaming pension funding.

When the stock market is up, lawmakers feel they can afford to take a pass on appropriating funds for the pension system. Their rationale: Returns on investment will provide the needed money. However, when the economy is down and the stock market is not meeting promised returns, lawmakers still fail to make payments. Their rationale: The budget is stretched thin. The result is that over the past decade, New Jersey never once has paid what it needed to meet its pension obligations, often putting in far less. "If you don't make a mortgage payment for 15 years," says NJEA spokesman Steve Baker, "you can't blame your bank when you're in debt."

This year Christie's budget skips out entirely on the actuarially recommended $3 billion payment. "Our pension system," Christie said during his budget address, "must be reformed before we can, or should, fund a broken, out-of-control system." But the decision guarantees that when the state finally addresses the pension liability, it will be dealing with a system that's even more broken than it is today.

Despite these complexities, Christie's style has seemed simple. In his early days in office, he was unfailingly pugnacious. In this regard, most attention focused on how Christie speaks. "When you ask me questions," the governor said when a reporter asked about his confrontational style, "I'm going to answer them directly, straightly, bluntly -- and nobody in New Jersey is going to have to wonder where I am on an issue."

The truth, though, is that this isn't just a matter of style. The way Christie speaks reflects the way he has governed. Christie has chosen to stand on principle, even when it meant creating disputes he easily could have avoided.

Take the case of John Wallace. In New Jersey, Supreme Court justices serve an initial seven-year term, after which the governor decides whether they should be replaced or receive tenure until the mandatory retirement age of 70. Governors have treated the reappointment process as nothing more than a way to make sure justices have not proven to be unfit for office. Since the state's 1947 Constitution created this system, no governor had rejected a justice for tenure -- until Christie.

No one questioned whether Wallace, regarded as one of the court's more moderate Democratic appointees, was fit. But Christie, a critic of the court's liberal record, rejected him anyway. The result is a standoff with the Senate in which it appears Christie's nominee won't get a hearing anytime soon.

Even more remarkable was a disagreement between Christie and one of his own appointees. Education Commissioner Bret Schundler, a Republican with solid conservative bonafides, struck a deal with the NJEA to win its support for the state's application for the federal Race to the Top competitive grant program, compromising on issues like merit pay for teachers.

For a brief moment, there appeared to be peace between the NJEA and the Christie administration. It didn't last. Christie said he hadn't been consulted on the compromise. The governor nixed the deal, rebuked Schundler and submitted his own application. The decision allowed the governor to stand by his views on education reform -- judging teachers on the basis of student performance, not teacher seniority. But it also hurt the state's chances of winning in Race to the Top, for which union support is a key factor.

The Supreme Court and Race to the Top are important issues, but they haven't been the governor's central focus. Instead, his signature priority is a tighter cap on property tax increases. This proposal, more than anything else Christie has done so far, could limit the size of state and local government in New Jersey for years to come.

In a way, the cap is a discordant response to the state's fiscal problems. New Jersey has a structural deficit. The only two ways to fix a structural deficit are to spend less money or raise more revenue-limiting revenue won't fix the imbalance. But the Christie administration made the case that the property tax cap will work in conjunction with a package of 32 other bills. These proposals -- things like overhauling the public employee arbitration process -- are designed to ease spending pressure on local governments and provide relief to taxpayers.

Christie's initial proposal would have prevented year-over-year rate increases beyond 2.5 percent, unless a 60 percent majority of local residents voted for a larger increase. It included far fewer exemptions than the state's current 4 percent cap, which was approved in 2006.

Democrats were willing to deal. Sweeney, a union leader who nonetheless has been critical of the NJEA, made a counteroffer. His proposed 2.9 percent cap would have been a statute, not a constitutional amendment, and it would have had more exemptions than the governor wanted.

Even with both sides proposing caps, a deal looked unlikely in the early summer. Christie's goal was to place a constitutional amendment before voters in November. That required legislative action in July, and the budget didn't wrap up until late June. The compressed time frame, Democrats' wariness of a constitutional amendment and, most of all, the governor's reluctance to bargain all pointed toward inaction.

When Christie called the Legislature into a special session in early July to consider the cap, though, he did something unexpected: He said he would be willing to concede on the constitutional amendment. A statute would be better than nothing.

After that, things moved quickly. Within days, Sweeney and Christie had a deal. They agreed on a statutory property tax cap that was lower than what either proposed initially: 2 percent. But local voters will be able to override the cap with a simple majority vote, not the governor's 60 percent supermajority. The agreement also included key exemptions. Local governments can raise property taxes by a larger amount to pay for rising public employee health-care and pension costs. In this way, the cap won't punish local governments for the long-term obligations that, to a significant extent, are outside the control of today's elected officials.

In the end, Christie had won a real, if partial, victory. He did it by abandoning, for a moment anyway, the combative style that conservative admirers have celebrated. "Some of you came into this chamber today expecting that I would offer you a take-it-or-leave-it proposition," Christie said as he announced to legislators that he was dropping the constitutional amendment. "I don't know why anyone would think that about me."

Josh Goodman
Josh Goodman  |  Former Staff Writer
mailbox@governing.com

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