Christie Pushes E-Cigarette Tax to Plug $807 Million Deficit

New Jersey Governor Chris Christie, seeking cash in the face of a $1.06 billion shortfall, proposes leaning harder on smokers with a tax on electronic cigarettes.

The only U.S. state that spends none of its own money to combat nicotine addiction, New Jersey would use the estimated $35 million in annual revenue for general spending. Christie’s plan follows a deal on tobacco bonds in March that contributed to a credit downgrade for $2.4 billion in state general- obligation debt.

The proposed tax highlights Christie’s struggle to return the state to fiscal stability. The 51-year-old Republican is trying to persuade Democratic lawmakers to trim spending after his administration overestimated revenue projections for three straight years.

“As far as fiscal distress goes, we are veterans in this state, and we have either raised taxes or we have reneged on obligations to close a gap,” said Peter Woolley, a politics professor at Fairleigh Dickinson University in Madison. “Thirty-five million dollars in the scheme of things sounds like a lot, but really isn’t.”

Christie has proposed a record $34.4 billion budget for the year that begins July 1 even as the current spending plan is endangered. An $807 million gap he disclosed last week brings the shortfall to $1.06 billion, according to Moody’s Investors Service.

Moody’s called that a “credit negative development” in a report by Baye Larsen, a senior analyst.