TRENTON -- In his final state budget address, Gov. Chris Christie on Tuesday proposed using money generated from New Jersey lottery ticket sales to shore up the state's ailing government worker pension fund and offered to jettison his own controversial education funding proposal in favor of collaborating with state legislative leaders.
Delivering a speech to the Democratic-controlled state Legislature that reflected a sober reckoning of New Jersey's shaky financial position, the Republican governor proposed $35.5 billion in state spending. Most of the $1 billion in added spending -- a 2.9 percent increase over the budget Christie signed last June -- will absorbed by sharp increases in employee health care and pensions.
"As you can plainly see, my fiscal year 2018 budget continues to prioritize important spending to help the state grow and to help those who most need it despite the escalating costs of fulfilling our pension and health benefit obligations that continue to erode the state's ability to address all of the important issues we want and need to address as a state," Christie said.
But while the budget told one story, his speech told another as Christie -- whose historically low approval ratings have fallen into the teens -- sought to rehabilitate both his public persona and his legacy as governor.
With more than a dozen candidates running to succeed him in a crowded governor's race this year, Christie -- whose final term ends in January -- claimed that New Jersey is in better shape than it was when he took office in 2010.
"This is a better state today -- a much better state today -- than it was seven years ago," he said.
The claims come even though the state has witnessed 10 credit-rating downgrades on Christie's watch and have faced multiple revenue shortfalls. Some Democrats dismissed his comments today as being far too rosy.
"He really has been hanging out with Donald Trump too much," state Senate Majority Leader Loretta Weinberg (D-Bergen) said of Christie, a longtime friend and adviser to the Republican U.S. president. "This is a whole alternate reality that just doesn't fit the picture."
State Assemblyman Jerry Green (D-Union) said this was "the most depressing" of the state budgets he has seen New Jersey governors unveil over the last 25 years.
"He just laid out so much without saying where the money is going to come from," Green said. "Next year, we are the ones who have to foot the bill."
Christie's biggest surprise was his plan to use proceeds from state lottery ticket sales to pay for public worker pensions' ever-increasing tab.
The lottery, which is expected to bring in $965 million this year, helps fund education programs, psychiatric hospitals, centers for people with developmental disabilities and homes for disabled soldiers.
Under the state Constitution, lottery proceeds must be spent on state institutions and state aid for education. The state pays a number of costs on behalf of local school districts that can be categorized as aid, including the employer share of the Teachers' Pension and Annuity Fund.
The governor estimated this quick injection of cash would reduce the pension fund's unfunded liability -- $66.2 billion -- immediately by $13 billion and each year reduce the amount actuaries recommend the state chip in.
"If implemented correctly this action would increase the value and stability of our pension funds immediately and would please bond investors and credit rating agencies, also giving greater confidence to New Jersey's public employees," he said.
State Senate President Stephen Sweeney (D-Gloucester) said if Christie's lottery plan "makes sense" to help fix the pension system, state lawmakers "will be happy to do it."
After leaving school officials hanging, Christie ultimately did not use the budget to tear up the state's school funding formula, which bases aid on a school district's ability to raise taxes. He had hinted in recent months that it might replace it with a formula that provides districts a flat per-pupil aid -- something school leaders and advocates worried would force deep cuts in urban districts.
Christie boasted that his "fairness formula" reopened the conversation around education funding, and offered to work with legislative leaders to reinvent the formula over the next 100 days.
"Everything is on the table," he said. "No idea out of bounds for discussion. I am willing to work with you to solve this problem without any pre-conditions on the ideas brought to the table."
Nearly all of the increase in education spending is dedicated to pensions. There is no increase in formula aid, the main source of state money schools can spend on the classroom. And though Christie has touted seven consecutive years of increased school aid, there's been little change in state funds that schools can spend on students during his tenure.
The budget assumes $125 million in public employees health care savings that would first have to be approved by state committees.
The governor's budget projects a 3.6 percent increase in revenues. It's a modest raise, in part because Christie and the Legislature agreed to give up hundreds of millions of dollars in taxes this year as part of a deal to replenish the state's Transportation Trust Fund.
Christie has been dogged by slow growing revenues, as New Jersey's haven't rebounded as strongly as other states following the Great Recession that started in 2008.
Past budgets, often undermined by disappointing tax collections, set up showdowns with Democratic lawmakers and unions as he slashed contributions to the public pension fund to keep spending and revenues in balance.
Christie took sharp aim at this year's governor's race, warning the state Legislature and voters not to be fooled by election year promises that will reverse his "promise of a smaller government made and kept."
"The people in this room are the only folks who may be able to spare the public the exploding tax rates which would inevitably come in the wake of someone actually trying to keep those election year fantasies," he said.
Christie continued to pledge state resources to combat the state's heroin and opioid crisis. Fighting addiction has dominated his public schedule for the past several month, and said Tuesday it will "continue to be in the next 10 months a top priority in my tenure as governor."
To that end, he used the speech to pressure the state's largest insurance company, Horizon Blue Cross Blue Shield of New Jersey, to create a permanent fund that would pay for low-income people to get drug treatment.
The governor did not specify how much money Horizon should put up, but he needled the insurer for enjoying its status as a not-for-profit health corporation "despite making billions of dollars" and sitting on "an abundant surplus" of $2.9 billion. He noted Blue Cross Blue Shield of Massachusetts on its own limited the distribution of prescription painkillers and linked people with addictions with treatment programs
"I am confident Horizon will embrace this opportunity and partner with us to establish this permanent, sustainable fund," Christie said. "They will not turn their back on the people of New Jersey who pay their salaries and, as the people's representatives, we will partner with them to make sure it happens by June 30."
Sweeney said he was "glad to have this budget address not be confrontational."
"What I heard was we have four months together let's get some things done," the state Senate president said. "We have always wanted to get things done here."
NJ Advance Media staff writers Matt Arco, Claude Brodesser-Akner, Adam Clark, and Susan K. Livio contributed to this report.
Brent Johnson may be reached at bjohnson@njadvancemedia.com. Follow him on Twitter @johnsb01. Find NJ.com Politics on Facebook.
Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.