As he proposes his second budget, Gov. Christie is still faced with a weak national recovery that helped boost state tax revenues a little but is not generating the jobs the state needs.
At the end of the year, New Jersey's Treasury Department reported that the income tax revenues were running a little ahead of projections, but sales tax numbers were just slightly under what was expected.
And while the state's unemployment rate dropped to 9.1 percent, the state actually lost 13,000 private sector jobs and 3,000 government jobs.
In his last budget plan, Christie had to close between a $10 billion to $11 billion dollar budget gap, roughly a third of the state's budget, making it the biggest shortfall by percentage in the nation.
Christie won't confirm an estimate on this year's gap, but Democrats who control both houses of the legislature suggest it’s about the same as it was last year. Christie delivers his budget address on Tuesday.
In addition to this very mixed economic picture, Gov. Christie's budget proposal has to account for the drop-off in federal stimulus funds that last year provided a billion dollars towards closing the $10 billion dollar budget gap.
His $800 million dollar cut last year to local public school aid is still generating challenges from the floor at his Town Hall meetings.
In his last budget plan, Christie reduced the state's payroll by 1,300 out of a workforce of 65,000. As he crafts the spending plan for next year, he also has to keep his game face on for upcoming negotiations with public employees, whose contracts expire in June.
No doubt the bitter clash between Wisconsin Republican Gov. Scott Walker and state workers has turned up the heat in Trenton where Christie has expressed support for Walker. This Friday, national AFL-CIO President Richard Trumka will headline a public worker rally in front of the Trenton statehouse.
Peter Wooley, of Fairleigh Dickinson University Public Mind Poll, said Christie's austerity approach to the state budget has gotten traction with public union households.
"When we asked public union households if Christie was on the right track in holding the line on spending rather than raising taxes, 57 percent said yes and just 25 percent said no." Wooley said that's a sign that Christie has the potential to make the kinds of inroads Ronald Reagan made into traditionally Democratic leaning union households.
Christie balanced his last $29 billion dollar budget by not making a required $3 billion dollar pension payment. Out on the town hall circuit, Christie has said that due to bipartisan mismanagement of the state pension funds, there is currently a $54 billion dollar unfunded liability. He’s said without concessions on both pensions and health benefits, state workers face the prospect that the plans will go under.
"According to an independent analysis New Jersey is one of 11 states with pensions that will be bankrupt by 2020," Christie has warned.
Gov. Christie said first he wants to see the state's retirement age raised and public workers pay more for their health and pension benefits. Democratic Senate President Stephen Sweeney, himself a longtime union official, has his own set of comprehensive proposals that he says will bring down costs to taxpayers. But Sweeney says any compromise has to include Gov. Christie making a long over due contribution to the pension fund.
Both Senate President Sweeney and Christie have said the state's biggest budgetary challenges will be dealing with the skyrocketing costs of Medicaid, a joint state and federal program that provides health coverage for the poor. Both men hope that the Obama administration will grant the state some relief from the regulations.
Right now, New Jersey has 1.2 million people on its popular Family Care Insurance program and Medicaid programs.
At a Washington appearance, Christie said Medicaid wasn't just a New Jersey problem. "We have to reform Medicaid because it's not just bankrupting the federal government. It's bankrupting the states."
Last year, Washington sent states billions of dollars to cover the increase in demand for Medicaid driven by high unemployment. That aid is used up but the demand remains. Democratic Senate President Sweeney said that puts the State deeper in a budgetary hole.
“I think the train wreck has already happened because we’re in a very difficult spot," said Sweeney. "And again, we’re gonna have to work with the administration to find a solution. You know, it’s here.”
Gov. Christie has raised the possibility that he'd make cuts to the program that is more than a billion dollars in the red. Advocates of President Obama's Affordable Health Care Act say it will bring relief for the states, but it doesn't fully kick in until 2014.
New Jersey also has over 1 million people with no health coverage who often turn to the state's hospitals as a stop gap. Last year, Governor Christie added in $60 million dollars to help the hospitals cover that charity care.