By Hilary Russ

NEWARK, N.J. (Reuters) - New Jersey Governor Chris Christie's office turned a regional transportation agency into a "goodie bag" from which to dole out favors and funds to Democrats who might endorse the Republican during his 2013 re-election campaign, according to prosecutors' star witness in the so-called Bridgegate trial on Friday.

David Wildstein, a former executive at the Port Authority of New York and New Jersey who pleaded guilty and is testifying for the prosecution, described how requests from state officials went first to a top Christie aide for approval - for everything from patronage jobs at the agency to tours of the World Trade Center site, which the Port Authority owns.

The aide, Christie's then-deputy chief of staff Bridget Anne Kelly, and William Baroni, the former deputy executive director of the Port Authority, are on trial for wire fraud and civil rights deprivation.

Kelly and Baroni are accused of arranging in September 2013 to close traffic lanes leading to the George Washington Bridge in order to cause gridlock in Fort Lee, New Jersey, as retribution after the municipality's Democratic mayor did not endorse Christie's successful re-election bid.

The scandal helped torpedo Christie's bid for the Republican presidential nomination.

At the start of the trial, federal prosecutors claimed for the first time that Christie knew his two close associates were involved in the shutdown.

Christie has denied any knowledge of the plot.

Wildstein said the "goodie bag" scheme allowed Christie's office to take credit for items given by the Port Authority, a bi-state agency run jointly with New York.

"That was the system that was established. All use of Port Authority resources had to be approved by the governor's office," Wildstein, 55, testified. "The governor's office was always to be the deliverer of good news."

In one case, Wildstein had the 100 flags flown over the World Trade Center site on the 10th anniversary of the Sept. 11 attacks shipped to the governor's office after the ceremony to be distributed to local officials as it saw fit.

The office considered whether officials were willing to endorse Christie when deciding how to hand out the flags, surplus equipment, and even local grant money, he said.

Baroni, whom Wildstein described as "one of the closest friends I've ever had," hired Wildstein to be the "bad cop" in pushing Christie's agenda at the authority, Wildstein said.

"If it was good for Christie then it was good for us," Wildstein said.

Wildstein's testimony continues on Monday.

(Editing by Matthew Lewis)