Facing Major Deficit and Pressures, Governor Murphy Must Absorb the Needs of New Jersey’s Most Vulnerable Residents in the Budget
On Tuesday, March 13, 2018, New Jersey’s new Governor Murphy will deliver his first state budget to the state legislature.
New Jersey’s Department of Treasury works on state spending issues year-round but the delivery of the governor’s annual budget message kicks off the start of the budget season in Trenton.
The Governor’s Budget Transition Committee made proposals which he will likely touch on during his proposal. But he is concerned over the major deficit in the current budget and future strains on the state’s budget. This may limit the money and investments that he can commit at this point.
By law, the budget message must be delivered to the Legislature on or before the fourth Tuesday in February. But traditionally, lawmakers have relaxed that date for first-year governors.
“For decades, NJ was a shining example of fiscal prudence. During the 1990s, as the economic growth lagged, NJ policymakers departed from this stable financial course. This resulted in eleven credit downgrades in the past eight years. Today, NJ’s appropriation credit stands two downgrades away from junk bond status. The state’s massive pension obligation is a major reason for these downgrades but insufficient revenues, other debts, and increasing costs are fueling further economic instability.”
“Budgeting pressures will continue to make it a challenging to fund all of the known budget commitments and emerging funding needs from existing resources. A budget must be crafted that absorbs the increasing pension and debt service costs, investments in mass transit and transportation infrastructure, additional funding to support K-12 and higher education, and the devastating impact from the actions taken by the Trump Administration on the most vulnerable residents – the poor, the sick, the disabled, and the homeless.”
After the annual budget message is delivered, a series of public hearings are held both in the State House. The budget season ends on June 30, 2018. The state’s constitution requires that a new and balanced spending plan be in place when each state fiscal year begins on July 1. If lawmakers and the governor cannot reach agreement on a budget, state government is shut down. A government shutdown occurred last year in 2018.
Governor Murphy can now tweak the remaining four months of the current budget and propose new plans for next year’s budget.
On January 25, 2018, NJ Spotlight reported that, “Typically, any problems in the current budget are addressed at the same time the governor proposes his budget message for the new fiscal year. The latest official revenue report released earlier this month by the outgoing Christie administration indicated overall tax collections were ahead of projections as of the end of December. But a notice issued earlier this week by Wall Street credit-rating agency Moody’s Investors Service suggested there may actually be a slight shortfall at the halfway point of the 2018 fiscal year. The state’s latest tax collection figures were inflated, in part, by gas-tax receipts that are constitutionally dedicated to funding only transportation projects, Moody’s said. Income-tax collections also surged amid the federal tax-code changes that were enacted at the end of 2017, meaning there could be a coinciding decrease come April.”