Record budget goes to Murphy in record time
Gov. Phil Murphy now has an election year budget, filled with new spending for public service pensions, tax breaks, debt reduction and more, a budget lawmaker rushed to his desk in the middle a flurry of activity this week.
Final votes on the Legislative Assembly’s record $ 46.4 billion spending bill took place Thursday afternoon in the Assembly and Senate, with majority Democrats easily winning in both chambers.
Despite the haste with which the spending bill was sent to Murphy – it went from introduction to final adoption in just days – the governor now has plenty of time to take action before the start of July 1 of the next state fiscal year.
Murphy, a first-term Democrat facing re-election in the fall, is expected to sign the Legislative Expenditure Bill unchanged.
But even before final votes were cast at State House on Thursday, many had already started pushing for reform of the legislative budget process, suggesting this week’s events dated back to a decade and a half ago, when a budget opaque process helped fuel a public corruption scandal.
In total, the Legislative Assembly’s spending bill, backed by an unexpected windfall in tax revenue in recent weeks, added more than $ 1.5 billion to a spending proposal presented by Murphy in February.
During floor debates in both chambers, Democrats praised the budget legislation, which calls for spending to increase nearly 15% year-over-year.
They underscored the focus on solving long-standing state budget problems like debt, while at the same time funding tax breaks and other programs stemming from the coronavirus pandemic.
âThis budget represents an important statement for all New Jersey residents: we are prepared and ready to bounce back from the pandemic,â said Senate Speaker Steve Sweeney (D-Gloucester).
“In many ways, this is a COVID stimulus budget that makes the best use of public resources to meet New Jersey’s needs as we emerge from the most serious public health crisis of our lives,” said said Paul, chairman of the Senate Budget and Appropriations Committee. Sarlo (D-Bergen).
âIt’s really more than just a spending plan. It is also a plan for savings, debt reductionâ¦ tax relief and investment in our future, âsaid Sarlo.
Too rushed, too secretive, complain the Republicans
Republicans criticized Democrats for rushing this record-breaking spending plan through to final votes without allowing enough time to consider several hundred million last-minute additions, including funding for pet projects and d other legislative priorities. Interest groups and activists also called on lawmakers this week for a process that appeared to exclude public input.
âThis budget was decided privately by Governor Murphy and a handful of others. Republicans, and even many Democrats, had no say. The public had no say either, âsaid Senate Minority Leader Tom Kean (R-Union).
âThe biggest concern we haveâ¦ is the out-of-control spending. How can we maintain this in the future? We can’t, âsaid Senator Robert Singer (R-Ocean).
Last year, the Murphy administration predicted significant revenue losses would be triggered by the coronavirus pandemic, and lawmakers agreed to borrow around $ 4 billion to support the annual budget. A series of tax hikes were also enacted last year, especially for millionaires and top-paying companies.
But the shortfalls predicted by the administration never materialized. Instead, state coffers have filled with cash, helping to build a cushion that is now expected to exceed $ 10 billion before fiscal 2022, which begins July 1.
New Jersey was one of the most indebted states in the country before last year’s borrowing problem, and the spending bill approved Thursday sets aside $ 2.5 billion to pay off the state’s debt . Another $ 1.2 billion is allocated to fund planned capital projects on a pay-as-you-go basis rather than funding them with new borrowing.
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Something for a rainy day
Meanwhile, the spending bill provides for a balance of $ 1.3 billion in the state’s “rainy days” fund by the next fiscal year close on June 30, 2022. The fund is a tight budget reserve that protects against economic downturns. The fund has long been ignored or only partially replenished by governors and lawmakers, a practice that leaves the state vulnerable when incomes decline during a recession.
According to the spending bill, nearly an additional $ 600 million is left as unreserved fund balance, which is another budget reserve. Together, these two budgetary reserves represent approximately 4% of total planned spending.
One of the largest sums of money in the Legislative Budget, as it has for decades, is funding for public education. About $ 18 billion is spent on public education, about half of which goes to local school districts.
Lawmakers added to Murphy’s own budget an additional $ 100 million request for extraordinary special education when they drafted the spending bill earlier this week. Yet the state’s law on school aid will remain underfunded, as it has for about a decade.
But budget legislation provides nearly $ 7 billion for the civil servants’ pension fund, which will be a record contribution for a state that has not made all of the required actuarial contributions for more than two decades.
Tax relief for the election year
Lawmakers have also set aside many funds for election year tax relief initiatives. They include a new rebate program that is offered to more than 750,000 New Jersey families.
Households earning up to $ 150,000 with at least one dependent child and single-parent families with at least one dependent child will be able to benefit from tax reductions of up to $ 500 this summer, according to details already released. .
In addition to Murphy, the 120 legislative seats are on the November ballot.
The new budget will also increase the amount of Homestead rebates for thousands of seniors, disabled, and low- and middle-income New Jersey homeowners by ending a long-standing practice of using outdated property tax bills to calculate benefits under the program. This practice had eroded the effectiveness of the Homestead program as average New Jersey property tax bills have increased by more than 40% over the past 15 years.
Changes to the working income tax credit for low-wage workers and another tax credit available for childcare and dependents are also funded under the new spending bill. . It will also increase the exclusion of state tax relief for retirement income from $ 100,000 to $ 150,000.
Meanwhile, the legislative budget is giving lawmakers a say in how the state will appropriate the more than $ 6 billion in COVID-19 aid that New Jersey has received under US federal law. the bailout, including funding to help people who fell behind on rent and utility bills during the pandemic.
Lawmakers in recent days have praised some of the additions they made to Murphy’s original budget plan, including helping public colleges and hospitals, and for reversing a planned misappropriation of the Fund. New Jersey Affordable Housing Trust.
But the speed with which they drafted and approved this year’s finance bill, and some of the additional spending on pet projects and other hand-picked budget items have been heavily criticized, including by Republicans, but also by many activists and interest groups.
Some legislative leaders and Murphy have suggested in recent days a willingness to make improvements to the budget process, but none have made specific proposals in response to criticism.
âIf we want the state to live up to its stated values, we cannot continue as if nothing had happened. We are no longer interested in empty talk. We’re interested in action, âsaid Brandon McKoy, president of New Jersey Policy Perspective, a progressive think tank based in Trenton.
The so-called budget resolutions that are supposed to document every legislative addition to the budget bill have also not been made public until they are passed by both full houses. The budget resolution process was established among a series of ethical reforms adopted in the wake of the public corruption scandal that engulfed the budget process in the mid-2000s.
“All proposed changes to the budget, as well as the author of each change, will be released at least 14 days before the Senate’s appropriation bill is considered,” the Senate Democratic leadership pledged in a press release at the time.
LILY: In rush to spend, lawmakers find time and money for pet projects
LOOK: Record $ 46.4 billion budget could reach Governor Murphy’s office well ahead of July 1 deadline