GAFallsMalok.JPG

Gov. Christie is banking on $52 million from a Passaic River settlement to balance his upcoming $32.9 billion budget.

TRENTON — How confident is Gov. Chris Christie that he will settle a stubborn, years-old lawsuit involving the contamination of the Passaic River?

If you look at his budget proposal, he considers it a slam dunk.

Christie is banking on $52 million in revenue from a possible settlement with towns and companies that line the Passaic River to help balance his upcoming budget. The settlement — which still faces many legal and political hurdles — would help clear the way for the state to pursue a much larger award against the major companies state officials believe are ultimately responsible.

The governor is also banking on $60 million from other, undefined legal settlements. It’s the first time Christie has included such revenues in his budget, and Democrats and a Wall Street ratings agency say betting on revenue from potential legal settlements is risky, especially given the weak condition of the state’s fiscal safety net.

While the combined $112 million in projected legal settlement revenue represents less than one percent of the proposed $32.9 billion budget, it is one-third of the $300 million in surplus Christie projects to have on hand when the books close next year.

"If you have the money teed up, that’s one thing. But this appears to be a stretch," Assembly Budget Chairman Vincent Prieto (D-Hudson) said. "We have little margin for error, and this really needs to be looked at."

The inclusion of the settlement revenue caught the attention of Standard & Poors, a Wall Street rating agency that last month issued a critical report of Christie’s budget and his reliance on what it called "untested" revenues.

Christie spokesman Michael Drewniak said projecting money from potential legal settlements is no different than the administration’s projections of sales tax revenues.

2 trchristie HINDASH.JPG

CONNECT

WITH US

On mobile or desktop:

• Like Star-Ledger Politics on Facebook

• Follow @JarrettRenshaw on Twitter

And check out our redesigned mobile site by visiting NJ.com from any mobile browser.

"It’s just part of the budgeting process," Drewniak said. "Based on our knowledge of the facts, we anticipate revenue from a particular source. This is no different."

The underlying lawsuit, which involves a potential cleanup cost of up to $4 billion, has entangled 85 public entities and 210 private entities. It stems from the 1950s and ‘60s and a now defunct Newark chemical company that dumped cancer-causing chemicals into the river, byproducts of Agent Orange made for the military during the Vietnam War.

Two companies that succeeded the chemical company were sued by the state, and they responded by filing a countersuit against towns and other entities, saying they were responsible for other pollutants in the river and should help pay any cleanup bill.

The countersuit has dragged the case to a grinding halt. But now the state wants the towns and companies to pay up to $195,000 each to settle the case, leaving all but the original firms in the lawsuit.

For the settlement to go through, at least 75 percent of the private companies and at least 50 percent of the public entities named must agree. Also, the judge must sign off on the settlement, and it faces likely opposition from the remaining companies.

Christie’s budget proposal calls for the first $12 million of any settlement to go into a fund to help clean up environmentally damaging spills, with the remaining proceeds, capped at $40 million, earmarked for the state budget.

Jeff Tittel, the head of New Jersey’s chapter of the Sierra Club, said using the settlement money to pay for things like the state’s electricity bills and payroll is a slap in the face to residents along the river’s bank who have suffered from years of pollution and neglect.

"The money should go to the people who have been made sick by the contamination and to help the cleanup," Tittel said.

Assemblyman Declan O’Scanlon (R-Monmouth), the ranking Republican on the Assembly Budget Committee, said the governor’s reliance on legal settlement revenue does not trouble him.

"For me, it depends on how responsible the administration is," O’Scanlon said. "This administration has been extremely conservative, and they’ve earned my trust. If they’re all but certain they are getting them, then I’m confident it will happen."

MORE POLITICS