“I think Democrats in the legislature, and Democrats in the counties, had become accustomed to rolling governors,” says Jay Webber, a state assemblyman and Christie’s pick to chair the New Jersey Republican State Committee. “They rolled Jon Corzine all the time — they didn’t respect him. I think they rolled [former Democratic governor] Jim McGreevey, and they rolled [former Republican governor Christine Todd] Whitman in her last term, which wasn’t as strong as her first term. I think Trenton had lost sight of what that office can do, and Chris Christie stepped in there and showed them, very quickly.”
It started in December of 2009. Governor-elect Christie was in the middle of a transition meeting with senior staff when he was presented with a startling document.
It was a chart, prepared by independent Wall Street analysts, showing the state’s cash balances over the previous four years and forecasting future balances. It wasn’t good.
“It was like a picture of a failing company,” says Richard Bagger, Christie’s chief of staff and a veteran of Trenton politics. “It just went down and down. In December it touched zero. Then in March 2010, it plunged into the red.”
That didn’t match the picture painted by the political appointees in the outgoing Corzine administration, who were telling Christie’s transition staff that the state’s operating budget would get it through the rest of the fiscal year. In fact, the state was down to only a few days of cash on hand, and was meeting payroll with expensive short-term borrowing.
But if Christie’s transition team had any doubts about which analysis was closer to the mark, within two hours of the governor’s being sworn in on January 19 career treasury staffers had confirmed the worst: The state was going to default on its obligations the first week of March. The only way out, Christie was told, was more short-term borrowing.
How did New Jersey, once an economic powerhouse, get so low? It starts, but by no means ends, with the recession.
New Jersey’s economy is intimately bound with, and its narrow tax base heavily reliant on, the financial sector. In the wake of the banking collapse, the state suffered a worse unemployment spike than even New York, precipitating what the state treasurer called a “historic revenue collapse.”
This meant that in his last budget, for fiscal year 2010, the outgoing Corzine saw a $7 billion shortfall appear as if from thin air. To meet it he cobbled together federal bailout bucks, tax hikes, worker furloughs, and deferred pension payments — but he didn’t take so much as an Allen wrench to the budget’s structural imbalances, namely, public spending that had doubled as a percentage of GDP over four decades to finance an increasingly Byzantine patchwork of regional “authorities” and “commissions” that crosscut existing state, county, and municipal governance; a morbidly obese pension system underfunded by at least $46 billion; and $52 billion in total outstanding debt — more than $5,000 per resident — backed by everything from cigarette-tax revenue to traffic tickets.