TRENTON —Gov.

Chris Christie

's budget includes an across-the-board cut in state aid to school districts that will equal up to 5 percent of their budgets for the current fiscal year, a move the administration expects to be challenged in court, according to three state officials familiar with the plan. By basing the aid calculation on districts' budgets, the overall reduction of about $820 million is at odds with New Jersey's school funding formula, which dictates that more money go to districts with the neediest children, officials said. That formula, which survived a Supreme Court challenge last spring, replaced the longstanding "Abbott" system that sent the bulk of the aid to 31 poor urban districts. The cuts to schools come on top of $475 million that Christie sliced from school aid in the current fiscal year. Those cuts were based on districts' excess surplus.

In addition to schools, Christie's first budget will make major cuts in aid to towns and colleges while skipping a $3 billion payment to the struggling state pension system, said four officials who spoke on the condition of anonymity ahead of Christie's speech.

The Republican governor on Tuesday also plans to propose slicing municipal aid by $445 million and aid to public colleges by $175 million, the officials said. That includes about $270 million in standard state aid to all towns, with the remainder coming from eliminating special municipal aid and extraordinary aid — two funds that help municipalities in distress, but have been criticized by Republicans as a crutch discouraging better fiscal management.

They would be replaced by a new "transitional" fund for municipalities, the officials said.

Christie's $29.3 billion budget also counts on $50 million in savings from privatizing certain government functions, and would increase the hospital provider tax by $45 million to generate another $45 million in federal funding, the officials said.

He will also propose to raise money through higher fees, such as business filing fees, though specifics were still sketchy, said two Democrats briefed on the plan.

The governor's proposal will also include converting property tax rebate checks to credits and a constitutional amendment limiting annual property tax hikes to 2.5 percent, The Star-Ledger reported Sunday.

That means eligible residents would not collect any direct property tax relief this calendar year, instead receiving credits around April, the officials said. State spending on direct services would also be constitutionally barred from increasing by more than 2.5 percent each year.

Christie has promised to give towns and school districts the "tools" to cope with state-aid cuts, including changes to collective bargaining for police, fire and teacher contracts, to public worker pensions and benefits, and to the civil service system.

By Claire Heininger and Josh Margolin/Statehouse Bureau. Lisa Fleisher contributed to this report.