NJ budget action intensifies this week as leaders scramble to spend all those billions
New Jersey lawmakers hope to introduce a state budget bill on Monday as they strike a deal with Gov. Phil Murphy.
The proposal will shed light on how they plan to spend or save two windfall gains – the first, an unexpected $ 5.2 billion increase in tax revenue, and the second, a massive $ 6 billion federal stimulus aid. , $ 2 billion.
There are less than two weeks until the July 1 deadline to adopt a spending plan for the upcoming fiscal year, and details to date are scarce.
This year’s negotiations follow several years of controversial and public fiscal struggles over taxation and spending, a pandemic and an unexpected multibillion-dollar windfall. They also come in the midst of election year politics. So far, disagreements between the Democratic governor and Democratic legislative leaders have not spilled over.
Murphy said early last week that the budget discussions were “extremely constructive, productive and in a very good spirit.”
If the budget bill is presented on Monday, budget committees and the state legislature are also expected to take action this week.
“I hope we have a budget bill that comes forward on Monday,” Senator Paul Sarlo, D-Bergen, chairman of the Senate Budget and Appropriations Committee, said on Thursday. “I guess at some point this week, Tuesday, Wednesday, we’ll be in committee here to do the budget bill.”
Murphy and the Democratic-controlled legislature have already agreed to fund rebates of up to $ 500 to help New Jersey’s lower and middle class residents cope with the economic fallout from the pandemic.
State Senate Speaker Stephen Sweeney D-Gloucester said he considered the tax cut, which was part of a deal in the last budget cycle to raise taxes on income earners high, was a “deal done”.
An announcement from the State Treasury Department earlier this month that New Jersey’s tax revenue is $ 4.1 billion above expectations this year and $ 1.1 billion more the year next, raised the prospect of even more fiscal policy changes.
Republican lawmakers have jumped on the news and called for some of the money to be returned to taxpayers through tax breaks, such as strengthening the Homestead Benefit Program or more direct aid.
Murphy signaled his support earlier this week for expanding popular Homestead Credits that lower property tax bills for hundreds of thousands of elderly, disabled and low-income homeowners.
“If we can find a way, for example, to increase the Homestead rebate, count me down for things like that,” the governor said Monday. “But again, figuring out exactly where we’re coming from.”
Homeowners ‘Homestead credits remain based on their 2006 property tax bills, allowing the state to maintain program costs despite rising homeowners’ bills.
The average property tax bill was $ 6,446 in 2006 and $ 9,112 in 2020.
It’s unclear how much of the estimated $ 10.1 billion surplus or $ 6.2 billion in federal aid Murphy and the legislative leaders plan to spend or spend on reserves.
Democrats and Republicans have recommended they deploy the money to tackle or avoid debt – ideas that caught on after the increase in tax collections made it clear the state had no need the roughly $ 4 billion in debt incurred last fall to fill an expected revenue gap.
The Senate Speaker has suggested in the past creating a trust fund to pay out of pocket for infrastructure or other projects for which the state would otherwise have to borrow money.
Lawmakers on both sides have also said they will support a contribution of hundreds of millions more to the public workers’ pension fund. The pension fund is among the least well funded in the United States
The state is expected to pay $ 4.8 billion this year, or 80% of what is recommended by actuaries to avoid taking on more debt. The governor’s February budget proposal would force the state to pay $ 6.4 billion next year, the largest single payment in New Jersey history and the first full contribution in a quarter of a century.
There also seems to be a consensus that leaders will not commit the state to new programs or spending until the budget is full that they cannot finance during the lean season.
“We have to spend all the money we spend on the game-changing things that are not programs that we start and that over the following years leave us with the bag,” Murphy said, adding that he and the presiding Senate agree. “I think we also share the view that the federal money that we are required to spend over the next three years is also not starting programs that leave us the bag with state money. “
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