Chris Christie's New Crisis: $800 Million Budget Shortfall

Friday, 09 May 2014 02:06 PM

By Drew MacKenzie

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Embattled New Jersey Gov. Chris Christie is facing a new crisis and it's much bigger than Bridge-gate – a more than $800 million budget gap that may hurt his chances of becoming president.

Financial analysts have concluded that the Christie administration caused the shortfall by "overly optimistic" projections that it would collect far more taxes than the state actually did receive.

Last month, Standard & Poor's cut the state's credit rating while also attacking the governor for his budget practices that created the problem. Fitch Ratings, one of the "Big Three" credit rating agencies, also recently reduced its rating on the state's debt after officials reported an $807 million shortfall.

Now Christie and state lawmakers have just two months to close the financial gap, which goes against the Republican governor's campaign message that he was the architect of an economic "miracle" in the Garden State, Politico reported.

Chris Chocola, head of Club for Growth, said that if Christie makes a run for the White House in 2016, his conservative anti-tax group plans to carry out an in-depth study of his economic policies.

While wondering whether "the substance matches the rhetoric," Chocola told Politico, "I've never looked forward to a [review] more than Christie'’s, assuming he's running. And the reason is because you know there's a lot of verbiage around him, and I think he certainly gets a lot of attention by his style."

Mark McKinnon, a onetime strategist to former President George W. Bush, suggested that Christie's chances of becoming the 2016 GOP nominee may depend on how he solves the cash crunch.

"Ultimately, governors live or die politically on the economic performance of their state," he said. "If the economy gets much worse in New Jersey, Gov. Christie may want to close another bridge."

He was jokingly making the point that another bridge shutdown would take away from the glare surrounding the state's financial dilemma.

Christie has taken the brunt of the blame for the scandalous closure of access lanes last year from Fort Lee, N.J., onto the George Washington Bridge that cased three days of bumper-to-bumper backups.

Moody's has compounded the state's woes by warning that it would be a "challenge" to balance the budget this year, while noting that the state might have to make fiscal year-end cuts to large projects or borrow money from its emergency funds.

"What makes New Jersey stand out among the other states right now is that this is a large revenue shortfall to be confronted with very late in the fiscal year," said Baye Larsen, a senior analyst with Moody's, which gave the state a negative credit rating outlook in December, meaning more downgrades may follow.

"Having a relatively large gap open up with only two months of operations left means that they have to make some very big decisions to address that."

Politico pointed out that Christie has stated that to correct the embarrassing cash crisis, he may to make major cuts or slow down the delivery of pension payments to government workers.

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