Stalemate over Horizon grinds Trenton to a halt

PoliticoNew Jersey- It’s a stalemate — for now.

Democratic leaders in the state Legislature appear willing to send Gov. Chris Christie a landmark bill that would dedicate lottery revenue to the state’s troubled pension system.

They say Christie agreed this week to their plan to change how the state funds schools. And the governor has also agreed, sources say, to sign tens of millions of dollars in Democratic spending items he’d veto, line by line, if it were any other year.

But all of that — and hopes of avoiding a state government shutdown — hinges on what seems to be the governor’s greatest obsession: Reforming the state’s largest health insurance company and, in the process, extracting hundreds of millions of dollars from its reserve funds to support anti-addiction programs.

Even as Senate Democrats worked Thursday to craft a compromise bill, Assembly Speaker Vincent Prieto drew a line in the sand, saying he wouldn’t consider any bill related to Horizon Blue Cross Blue Shield of New Jersey before the June 30 budget deadline.

“We’ve done things that are difficult and that’s been part of the negotiations process,” Prieto told reporters on the Assembly floor. “But there are certain things that are just not part of this budget.”

That presents a problem. Christie told Prieto and Senate President Stephen Sweeney on Tuesday, during a private negotiating session in his office on West State Street, that he wanted the Horizon legislation as part of a deal on all of those other initiatives, according to numerous people briefed on the conversation.

Prieto said he’d already made enough compromises, agreeing to Christie’s changes to the school funding plan and, probably, to move his lottery proposal. He said he hopes to introduce a budget on Monday, though he’s still in negotiations.

“I’m not looking for a government shutdown,” Prieto said. “I’ve made a lot of concessions with school funding, with many things. So, if somebody wants to shut down government, it ain’t going to be me.”

Meanwhile, Sweeney was shopping two alternative Horizon reform proposals to his caucus.

Christie wants lawmakers to authorize the state Department of Banking and Insurance to take "excess surplus" from the insurer's $2.4 billion capital reserves, add public members to its board and post executive compensation online.

While Christie's proposal doesn't explicitly refer to Horizon, it would alter the definition of a nonprofit health services corporation. Horizon is the only licensed one in the state.

The first proposal, presented by Sweeney, is a modified version of Christie's plan, which specifies the state couldn’t conduct its review until March 2018, meaning Christie’s administration would not receive any of the funds, according to a summary obtained by POLITICO New Jersey.

The second proposal, which is being drafted by Sen. Joseph Vitale, would institute a series of public hearings to establish an "appropriate" range for Horizon's capital reserves. Vitale also said his proposal would involve "reconstituting" Horizon's board, though he said he was still working out the details.

“We still have more work to do and more talking to do with our members before we go anywhere with it,” Sweeney said. “We want to make sure that we don’t do anything that could put ratepayers at risk.”

Prieto said he’s willing to consider a compromise, but only after the budget break — a position that could hold up everything else.

He said there’s no way he would support a proposal that just targets Horizon, calling it “a bad bill.” He’s open to something that includes other nonprofits, although he declined to specify which ones he had in mind.

“There is a sense out there that there’s an urgency to do this bill. There’s no urgency to do a different type of bill,” he said. “If there’s no money grab than there’s no reason for this to be had. And I’m not going to be party to anything of this nature.”

Other issues seem to be much closer to settled.

Both Sweeney and Prieto said they didn’t have issues with changes Christie had sought to their school funding plan. Their proposal would increase aid to underfunded districts by $146 million in the fiscal year that starts July 1, a figure partially funded by shifting $46 million from overfunded districts to underfunded districts.

The two leaders declined to say what Christie had sought, but both said they were fine with his request. Prieto called the amendments “small tweaks.”

The governor’s lottery proposal also had some level of sign-off in both houses by Thursday afternoon. The idea, which Christie proposed in his budget address in February, involves transferring the state’s lottery — estimated to be worth more than $13 billion — to the books of three public employee pension funds.

Doing so would provide a guarantee of about $1 billion in annual revenue and decreasing the amount the state needs to contribute to the system. New Jersey hasn’t made a full payment to the pensions in more than two decades.

Sweeney said he didn’t have any reservations about the plan.

“I really don't,” he told reporters after a voting session ended. “It doesn't hurt the pension at all.”

Prieto was far more tepid, but seemed like he would reluctantly move the legislation as part of a bigger deal. Sources said Wednesday that many members of the Democratic caucus were luke-warm to the idea during a backroom meeting, and Prieto seemed to be on the same page.

The speaker said the proposal, regardless of what he thought of it, would be an enormous win for the governor — a lame-duck headed out of office with a 15 percent approval rating.

“I think that would be, for him, a tremendous, tremendous win and a tremendous legacy as he could tout — that he’s done the most for pensions,” Prieto said.

There was no clear path forward as lawmakers, after passing more than 200 bills, packed up their belongings and headed out of the Statehouse on Thursday.

With the budget deadline eight days away, the odds of a state government shutdown — the first in more than a decade — seemed to be increasing. Christie, who made no public appearances on Thursday, had already said it wouldn’t be on him if lawmakers don’t send a budget his way.

Sweeney, asked about the odds of that happening, said he had no clue: “Listen, who knows?”