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Christie’s Mexico Delegation Includes Aides, Executives

By John Reitmeyer and Melissa Hayes, The Record

TRENTON, N.J. — The delegation joining Gov. Chris Christie in Mexico this week includes the head of New Jersey’s Economic Development Authority and executives from major corporations, but also a former U.S. ambassador to Brazil and some of Christie’s closest advisers.

The three-day trip, which is being billed as a trade mission, is receiving financial backing from Choose New Jersey, the non-profit business advocacy group that has supported Christie and also paid for his first international mission, to Israel in 2012.

Christie is scheduled to arrive in Mexico City Wednesday morning and has a packed schedule that includes a meeting with Mexican President Enrique Pena Nieto, according to details released by his office. Meetings with Mexican business leaders are planned for Wednesday, and on Friday the governor is scheduled to travel to the nearby state of Puebla.

Joining Christie on the trip is a 15-member delegation, Christie’s office announced on Monday. The group includes some of his closest aides and advisers, including Robert Grady, a private equity fund manager who also runs New Jersey’s $80 billion public employee pension system, and Richard Bagger, a former Christie chief of staff now senior vice president for corporate affairs at Celgene Corp., a Summit-based pharmaceutical company.

Another Christie confidant, Michele Brown, who serves as chief executive of the New Jersey Economic Development Authority, is also in the delegation.

Choose New Jersey, the non-profit organization that aims to improve the state’s business climate, is being represented by board member Laurence Downes, and by Tracye McDaniel, the organization’s president and chief executive officer.

The group, founded in 2010, receives support from major corporations, including Bank of America, Prudential and Verizon. Companies that give $150,000 annually for three years get “board member” status, and those contributing $25,000 annually for three years receive “partner” status, according to the organization’s web site.

Federal tax records indicate the group raised $2.88 million in 2012, and spent $3.15 million. A spokeswoman for Choose New Jersey did not return a call seeking comment on Monday.

In 2012, the organization spent $42,000 on Christie’s five-night trip to Israel, including costs of accommodations and meals for Christie staffers. Taxpayers paid about $40,000 in security costs for the trip, which also included time in Jordan.

Before the trip to the Middle East, McDaniel said the group’s involvement was to help demonstrate “New Jersey is out there and we mean business.”

Also in the delegation for the Mexico trip is Ralph Izzo, chairman of Public Service Enterprise Group; Greg Brown, chief executive of Motorola Solutions; and Clifford Sobel, a former U.S. ambassador to Brazil who is now managing partner at Valor Capital Group.

The delegation also includes Leo Cervantes, owner of Highland-based Chilangos Restaurant; Pedro Matar, owner of the El Aguila restaurant chain; Al Zapanta, president of the U.S.-Mexico Chamber of Commerce; Mauricio Doehner, vice president of corporate affairs for Mexican cement producer CEMEX; Fermin Garcia, pastor at Unity Church Group in Tijuana, Mexico; Martin Perez, president of the Latino Leadership Alliance of New Jersey; and Raul Rendon Ponce, founder of Minnesota-based BioPlastic Solutions.

Although the trip is being billed as a trade mission — New Jersey and Mexico share more than $5 billion worth of goods annually — it also comes as Christie is considering whether to run for president in 2016 and as immigration and the U.S. border with Mexico have become major issues.

Bagger, Downes, Grady and Sobel all made contributions to Christie’s campaign for re-election last year. The governor won 51 percent of New Jersey’s Latino vote.

Several staff members are accompanying Christie to Mexico.

Tim Larsen, Christie’s chief of photography and visual communications, arrived in Mexico City early Tuesday morning followed later in the day by Maria Comella, the governor’s deputy chief of staff for communications, and Lauren Fritts, the director of digital media. Two members of Christie’s security detail arrived in Mexico on Tuesday afternoon.

Photo: Fiscal Summit via Twitter

Federal Tax Policy Taking Heat From Christie Boosted His Budget Last Year

By John Reitmeyer, The Record (Hackensack, NJ)

TRENTON, NJ—The same federal tax policy that Gov. Chris Christie is now blaming for New Jersey’s $807 million budget shortfall helped save his budget last year when he was facing another sizable gap, according to a Record analysis of income tax data.

Last year, budget documents show Christie boosted his income tax projection by $406 million, even as he was lowering the forecast for other state revenues by $812 million.

New Jersey would eventually do even better than Christie had thought once all April and May income tax revenue was counted, taking in a combined $600 million more than was collected over those two months the previous year, according to The Record’s analysis.

At the time, officials from the state Department of Treasury acknowledged that federal tax changes — namely higher rates for the wealthy — played a role in producing the windfall.

But this year, Christie and his administration are saying something entirely different about the same higher tax rates, which were enacted in early 2013 when President Barack Obama and Congress decided to end Bush-era cuts for the nation’s highest income earners to avoid the so-called fiscal cliff.

Now, it’s those higher federal rates that have brought on New Jersey’s $807 million budget shortfall and thrown the state’s $33 billion budget into disarray with just two months left in the current fiscal year, Christie told reporters at a State House news conference on Tuesday.

“What we’re being told initially is this is the effect of the change in the law … by the Obama administration and the Congress to increase tax rates on upper-income individuals,” he said. “Remember, it’s the top 1 percent in the state that pays 40 percent of the income tax, so when you start to make changes, they’re going to change their behavior.”

But Rep. Bill Pascrell (D-NJ) said Christie is taking the easy way out in blaming federal tax policy changes for all his budget problems. He should have been able to predict this year’s drop-off in income tax collections after enjoying last year’s huge gains, the congressman said.

“The expiration of the Bush tax cuts for the wealthy was no secret,” said Pascrell, a member of the House Ways and Means Committee, which is responsible for federal tax bills. “Governor Christie was not complaining about state revenues seeing a windfall of $400 million last year due to people shifting income from one year to another.”

“Any responsible budget would have accounted for this in the first place,” he said.

Christie’s press secretary, Michael Drewniak, called Pascrell’s comments “partisan-based, not reality-based.”

GOP Assemblyman Declan O’Scanlon said other states are experiencing similar problems as a result of the federal tax changes, under both Democratic and Republican administrations.

“There’s no question this was due to the change in federal tax policy,” said O’Scanlon, the ranking GOP member on the Assembly’s Budget Committee.

New data from the New York-based Nelson A. Rockefeller Institute of Government sheds some light on how states like New Jersey, Connecticut and Pennsylvania, among others, struggled with projecting income tax collections amid the “unintended consequences of the fiscal cliff.” The answer may lie in how capital gains were reported by the very rich over tax years 2012 and 2013.

“The weak income tax in the fourth quarter and the weakness in the preliminary data for the first quarter suggest that the capital gains may have declined substantially in 2013 despite the strong stock market,” the report’s authors said.

More definitive information will come out once all April and early May state tax collections are counted this year, the report said.

But New Jersey’s budget problems stretch beyond just the current fiscal year. The $34.4 billion spending plan Christie has put forward for the fiscal year beginning July 1 is also in trouble. That budget assumes $1 billion in income tax growth beyond the benchmark for the current fiscal year, a mark that itself is well above actual tax collections.

State lawmakers are preparing for changes to be announced later this month as they face a June 30 deadline to adopt a new spending plan, one that the state constitution says must be balanced.

Moody’s Investors Service noted the severity of New Jersey’s financial predicament in comments it made public on Wednesday, calling the budget shortfall “a credit-negative development.”

The Wall Street ratings agency said the state has already lowered its revenue forecast and cut roughly $700 million this fiscal year to offset another budget shortfall not related to federal tax policy changes. New Jersey is likely turn to one-time revenue solutions to address the $807 million shortfall, Moody’s said in its notice to investors.

“Given that the state has relied on one-time solutions to solve midyear gaps in the current year and past several years, it is highly likely that one-time measures will be part of this solution,” Moody’s said. “The state’s continued reliance on one-time fixes underscores its financial weakness.”

Photo: Peter Stevens via Flickr

Legislative Panel On N.J. Bridge Scandal Wants Interview Transcripts From Report

By John Reitmeyer, The Record

TRENTON, N.J. — The co-chairs of the legislative committee investigating the lane closures at the George Washington Bridge say they want to see transcripts of the interviews conducted by the lawyers Gov. Chris Christie hired to compile the report that cleared him of any role in the closures.

The panel could soon move to subpoena the interview transcripts and seek additional oral testimony, Senate Majority Loretta Weinberg and Assemblyman John Wisniewki said Monday. Both are Democrats.

“What I would want to see are all the interviews,” Wisniewski said. “If we don’t have them, we’ll subpoena them.”

A report issued last week by lawyers from the firm Gibson, Dunn & Crutcher said more than 70 witnesses were interviewed, including Christie himself, to help determine why two of the three lanes used by the motorists who come onto the bridge in Fort Lee were closed for several days last September.

The report found that Christie was innocent, instead casting blame largely on former Christie Port Authority appointee David Wildstein and the governor’s former deputy chief of staff Bridget Kelly. The lawyers said the lane closures appeared to have been carried out to punish Fort Lee Mayor Mark Sokolich, though it did not conclusively confirm suspicions that it was for not endorsing Christie’s re-election bid last year.

The legislative committee led by Weinberg and Wisniewski sent subpoenas to the governor’s office and several other individuals and organizations earlier this year seeking documents related to the lane closures.

The panel just recently received thousands of documents from the Christie administration. But both lawmakers said they don’t think transcripts from the interviews the lawyers conducted for their investigation have been turned over to the committee.

“The next step will be to update our committee and with the guidance of counsel to figure out how best to get the documents upon which Mr. Mastro based his ‘exhaustive inquiry,’” Weinberg said Monday.

She also said the team of lawyers led by Randy Mastro has not provided a list of the 70 witnesses it spoke to.

“We don’t even know who he interviewed,” Weinberg said.

AFP Photo/Jim Watson

Christie Admits Sandy Recovery ‘Has Not Gone Perfectly’

By John Reitmeyer, The Record (Hackensack, NJ)

BELMAR, NJ — From dunes to dredging to getting more people back in their homes, New Jersey Governor Chris Christie spent more than an hour Tuesday talking about New Jersey’s ongoing recovery from Superstorm Sandy.

Belmar was hit hard by the 2012 storm, and many people in the region are still working to recover and rebuild as New Jersey starts to get ready for another summer tourism season.

Christie updated an audience of about 650 people on the latest recovery news, including what the state is doing as it prepares to receive another $1.4 billion in federal aid.

He said work on building and repairing dunes will kick into high gear this spring, but stop by the summer to prevent any inconvenience to beachgoers. Another tourism ad campaign will also be launched this year, but 2013’s “Stronger Than the Storm” jingle will be replaced with something new.

And the latest funds from the federal government will also help whittle down the waiting list for those who still have not been provided the federal grants they need to get back in their homes. That has been one of the biggest complaints New Jersey residents have been lodging about the state’s recovery effort over the last year and a half.

Once a strength for Christie, the Sandy recovery has started to weigh on his approval rating, according to recent public opinion polls. The governor acknowledged the state’s Sandy struggles as he spoke to the audience during the Belmar town-hall-style event.

“I’m happy about the things that have been done, but I am not content,” he said. “Let me be once again the guy to admit that this has not gone perfectly.”

Later, Christie took several questions from the audience, much of them on the specific problems or concerns individual residents have been struggling with.

Therese Daidone of Brick told the governor a frustrating tale of having to wait for approval of a federal grant before she can rebuild, but of also being stuck on a waiting list for that approval this long after the storm hit.

Christie told her the recovery effort “is not an exact science” and that “it will have moments of aggravation.”

Though Sandy dominated the event, Christie was also asked questions about school funding, the state Supreme Court and state colleges.

And there were none of the boisterous protests at the Belmar meeting that have occurred at some of Christie’s other recent public events as he continues to face questions about the September lane closings at the George Washington Bridge.

A small group of protesters outside the event held signs advocating for a more effective medical marijuana law in New Jersey. And inside, a man quietly held a sign at times expressing his concerns about waste from the hydraulic fracturing process that some energy companies are using to extract natural gas.

AFP Photo/Andrew Burton

Pension Reform, Once A Christie Calling Card, No Longer A Success Story

By John Reitmeyer, The Record

TRENTON, N.J — Embedded Tuesday in New Jersey Gov. Chris Christie’s somber talk about pensions — a mind-numbing topic — was a sharp pivot reflective of a dramatically changed political moment.

Christie has regaled audiences across the country with stories of how he teamed up with Democrats and pulled New Jersey’s debt-plagued pension system back from the brink of insolvency. His victory lap after a 2011 bill-signing on pension reforms took him to California for a speech before Nancy Reagan and to the libertarian Cato Institute in Washington, D.C.

He also boasted during the nationally televised keynote speech at the Republican National Convention in Florida of how the reforms would save taxpayers $132 billion over the next 30 years.

And with his eyes seemingly fixed on a run for president in 2016, Christie again held up pension reform shortly after notching his landslide re-election victory last November.

“Maybe the folks in Washington, D.C., should tune in their TVs right now to see how it’s done,” Christie said in his victory speech in Asbury Park.

But on Tuesday, in his latest budget address in Trenton, Christie, without directly acknowledging a reversal, said the pension system he once claimed to have fixed is again a major problem, part of what’s now grown into a “looming crisis.” He then compared New Jersey — held up just a few months ago as a model for Washington to follow — to recently bankrupt Detroit.

New Jersey’s public employee pension system is now underfunded by $52 billion, he said, nearly back to the $53.9 billion measured before passage of the 2011 reform bill, which forced public workers to pay more for their benefits and ended most cost-of-living increases.

“The reality is that the aggressive reforms we enacted together have only bought us time,” Christie said.

But for Christie, pivoting back to the pension system and the broader burden of public employee benefits also puts him back on a much-needed offensive. After spending the last few weeks fending off questions raised after The Record published documents indicating his own staff was involved in the September lane closures at the George Washington Bridge, Christie was back out on the town-hall circuit on Wednesday, pressing for new, but undefined, pension system changes in Morris County.

“Detroit is giving us a preview of what could happen to us,” Christie warned in Long Hill.

To the Democrats who joined Christie on those 2011 reforms in the face of fierce resistance from the state’s powerful public employee unions, the governor’s need for a new distraction is naked.

Christie has returned to the pension issue because “he’s looking to pick a fight with somebody,” Democratic Senate President Stephen Sweeney, told The Record on Thursday.

Sweeney, a primary sponsor of the 2011 reform bill, said all the state needs to do is stay the course, since part of the broader reform effort also called for New Jersey to again make a full pension payment, something that’s being phased in over the next several years.

“Nothing has changed,” Sweeney said. “If we stay the course, we’re fine.”

That position is nearly identical to comments last year by a spokesman for Christie’s Department of Treasury after the total unfunded obligation in New Jersey’s pension system hit $47.2 billion.

“Once you hit the full contribution, the unfunded liability should start to flatten,” said then-Treasury spokesman Bill Quinn.

But focusing only on the unfunded liability is a mistake, Christie spokesman Kevin Roberts said Thursday, because the state pension payment, scheduled to rise to a record, $2.25 billion in the fiscal year beginning July 1, is the more immediate problem.

New Jersey has less money to invest in education, tax relief, health care and other priorities as long as billions have to be spent each year to cover the cost of public employee pension benefits and other entitlements, he said.

“The point is that even in the context of the 2011 reforms, which started us down the right path of bringing the rising obligations under control, that these costs continue to mount for taxpayers and are squeezing out other priorities,” Roberts said.

He also defended Christie’s use of $52 billion as the latest figure for the unfunded pension burden faced by New Jersey taxpayers. The state’s share is actually $37 billion, not $52 billion, according to the latest actuarial reports. The larger figure includes all unfunded liabilities for local governments as well, something that’s not a factor for the increasing pension payment in the state budget.

Roberts said it’s not “unfair or blurring of lines” to add in the pension burden on local governments when talking about the state budget because the local share is covered by property taxes levied by towns in the same predicament.

“As these costs grow, do they raise taxes or do they cut services, and how much cost pressure can they really sustain? It varies town to town, but the problem is a systemic one,” he said.

But for Sweeney, all the new talk about the pension system is rooted in a still struggling state economy. Sweeney, who put forward two bills Thursday aimed at boosting the economy, said more jobs would bring in the revenue needed to make the pension payment more affordable.

Attacking public-worker benefits is “going back to the old playbook,” Sweeney said.

When asked for a response, Roberts instead referred to other comments Christie made Wednesday in Morris County.

“Let’s not start running for governor now, OK? The great thing, especially about the state Senate is, everybody wakes up in the morning, looks in the mirror and sees a governor,” Christie said.

AFP Photo/Eric Thayer