* Popular governor presents bare-boned fiscal plan ahead of election
* Largest payment ever to the state's public pension system
* Online gambling approved
By Hilary Russ
TRENTON, New Jersey, Feb 26 (Reuters) - New Jersey Governor Chris Christie presented a new state budget on Tuesday, but the popular Republican shied away from tax cuts after last year's bid at an income tax reduction fell victim to Democratic opposition as the economy stumbled.
Christie, who is up for re-election this year, stopped short of proposing in the $32.9 billion budget the kind of bold, new initiatives he was touting this time last year.
Instead, he tossed a previous tax cut compromise back to the Democrat-led legislature but did not include funding for it in his budget blueprint, the first since Superstorm Sandy ravaged the coast of New Jersey in October.
His fiscal 2014 budget had more prosaic priorities, including a $1.68 billion payment to the state's public pension system - a near $650 million increase over this year's payment and the biggest in the state's history, he said.
In this fiscal year, which ends on June 30, the state's more than $1 billion pension contribution was double what it had been the year before. But that was still only a third of New Jersey's actuarially required amount.
Christie also begrudgingly said he would expand the state's healthcare coverage for the poor under U.S. President Barack Obama's federal healthcare reform. The decision makes him the eighth Republican governor to opt for expansion - even as they decried the new law.
The increased federal funds from expanding Medicaid would save the state about $277 million in fiscal 2014 alone, Christie's budget officials said in a briefing with reporters.
Christie's budget blueprint also has to deal with a projected $407 million shortfall for the end of fiscal 2013, which would be closed largely by pushing off nearly $400 million of homestead tax rebates to fiscal 2014.
That program, a credit applied to homeowners' property tax bills if they make less than $75,000, primarily benefits the elderly and disabled.
SLOW GROWTH PROJECTED
Last year, Christie predicted a New Jersey comeback from the recession and more than 7 percent revenue growth. But the state's economy lagged, and then Superstorm Sandy dealt a major blow when it swept ashore in October.
On Tuesday, Christie projected that fiscal 2014 revenues would be 4.9 percent - or $1.5 billion - above revised estimates for this fiscal year, and just 3.5 percent above the enacted levels from last June.
Christie, who is more popular with state voters than any other New Jersey governor in nearly 20 years, said his budget was balanced and included no new taxes.
The $32.9 billion spending plan is still less than New Jersey spent in fiscal 2008, he said.
It includes a $40 million contingency fund for Sandy-related expenses that may not immediately be reimbursed by federal aid.
It also banks on a surge in casino revenues, to an estimated $436 million in fiscal 2014 from $235 million this year. The revenue leap is due largely to the legalization of internet gambling within state borders, a bill Christie also signed on Tuesday.
Christie didn't give Democrats much meat to chew on. After his address, they praised his decision to expand Medicaid, to make the pension payment and to fund basic and higher education.
But they called his plan to push back the homestead rebate a "gimmick," saying they would examine budget details in the coming day and seek more information.