Sarlo
Budget season is in full swing, and hearings are underway in Trenton to parse Gov. Phil Murphy’s record $48.9 billion spending plan. “We have a long day here in the Senate,” said Senate Budget & Appropriations Chairman Paul Sarlo, D-36th District, as he opened a marathon day of testimony on May 2. “And for those who have appeared before us, I think you know we do things a little differently here. We try to have a very robust and collaborative discussion. This is not about gotcha questions. It’s about how do we get answers that we need to make the decisions that we need as part of this budget process, and how do we work together with the administration.”
The last few weeks featured presentations and testimony from some of the most consequential state departments and some of the New Jersey’s most prominent policymakers, including Lt. Gov. Sheila Oliver, Health Commissioner Judith Persichilli, acting Attorney General Matthew Platkin and more.
During that time, lawmakers on the Budget Committee have heard about needs and requests on issues ranging from COVID-19, education, higher education, law enforcement, judicial, environmental protection, affordable housing, and others.
The pandemic and its residual and ongoing effects have loomed large over the proceedings, as has the leftover federal aid, which when combined with record tax collection surpluses, has the state flush with cash.
Lawmakers on the Budget Committee have heard about needs and requests on issues ranging from COVID-19, education, higher education, law enforcement, judicial, environmental protection, affordable housing, and others. – DEPOSITPHOTOS
Last month, lawmakers received revised figures from the Office of Legislative Services estimating the state had collected $3.2 billion more in revenue than projected. But this trend is unlikely to last, so they must proceed with caution.
For example, one hearing dealt with the Garden State Guarantee, a program beginning this fall that allows a lower tuition rate for in-state, qualifying public university students in their third and fourth years. Sarlo expressed concerns about being able to keep that commitment over the next five to 10 years, especially in the event of a recession.
“If we’re going to make this commitment to students, I want to ensure that we’re going have the ability to continue to fund this,” Sarlo said. “Going forward, does it become an unfunded mandate?”
O’Scanlon
Senate Republican Budget Officer Declan O’Scanlon, R-13th District, shared those same concerns, as well as with the record spending levels overall. “This is a concern, not just with this funding, but with all the money we’re shoveling out so quickly from New Jersey this year, and presumably, next,” O’Scanlon said. “The music is going to stop at some point. We all need to be worried about that.”
Oliver, in her role as Department of Community Affairs commissioner, covered issues from Hurricane Ida cleanup, shared services, eviction prevention, the allocation of federal money, and, of course, COVID-19. She said it’s been a rough two years navigating the pandemic, along with implementing and administering both state and federal programs.
“As we emerge from the pandemic, we realize that we still have a lot of work left to do,” Oliver said. She highlighted how quickly DCA disbursed more than $632 million in federal emergency rental assistance funds. The U.S. Treasury ranked New Jersey as first-in-the-nation among state-administered emergency rental assistance programs.
Oliver
Oliver’s aides elaborated on some of the more specific and technical topics. But her appearance was spirited and a bit testy as she was questioned by Sen. Michael Testa, R-1st District, about DCA grants, as well as an affordable housing project.
Testa questioned why there were so few details about how the money in question would be allocated, arguing that the governor does not want to have to explain his proposal more fully or gain legislative approval. “If this proposal is so important that it is referenced in speeches and press releases, why hasn’t the administration made a more formal request for the funding of the Joint Budget Oversight Committee, otherwise known as JBOC, as is the current process for approving proposed uses of federal funds,” he asked.
Oliver argued that this is the time to hash out those very concerns, as legislators work through the budget process. “I don’t view the governor’s proposed budget as the alpha and the omega,” Oliver explained. “I view a governor’s proposed budget, from my experience in the Legislature, as giving me an opportunity as a legislator, to put my two cents in, to work with my colleagues in the Legislature to gain support for something that I want to see as a legislator representing a district benefit my district more.
“So, I don’t think the governor’s proposed budget is a closed door to anything or any discussion,” she said.
Pandemic recovery
Persichilli
During her appearance before the committee last week, Persichilli discussed the Health Department’s proposed budget of $2.4 billion, which includes $1.1 billion in state funds, $727 million in federal funds, and $571 million in anticipated revenues from departments, programs and services.
“In addition, throughout the pandemic, the department has received a total of $2.3 billion in federal COVID funds, required by CDC to be used for testing, vaccination, public awareness campaigns and grants to hospitals,” Persichilli said. “Of the CDC funds, more than $90 million has been distributed to counties, cities, and local health agencies. The Fiscal Year 2023 Budget prioritizes the health and safety of New Jersey residents and continues to assist those impacted by the COVID-19 pandemic.”
Persichilli said the department’s goals include preparing for future surges, strengthening local public health infrastructure, and prioritizing the protection of high-risk groups, saying she expects the virus to remain a part of New Jerseyans’ lives, in some form.
“We will also be prepared to work with our health care systems to study and address the impact of long-COVID,” she said. “We appreciate the proactive role the Legislature has played in addressing the many public health challenges we face. We expect this virus to continue to evolve. And we appreciate the Legislature’s support as the science guides us forward.”
Persichilli faced questions about all facets of the state’s COVID-19 response and conduct. At one point, O’Scanlon asked her about a study from the National Bureau of Economic Research that gave New Jersey an “F-“ for its performance.
Persichilli defended the state’s response, questioning parts of the study, while declaring the results were not all bad. Still, she admitted that officials should be prepared to look at all the data, with an open mind, to make decisions based on facts at the time. “I think all states have to learn from one another,” she explained. “What worked? What didn’t work? What is different about the disease now than it was last year or the year before?”
Persichilli noted that there are new variants emerging, so remaining cautious is warranted. “On that, we still need to be vigilant,” O’Scanlon said. “Nobody should be declaring it’s over. I agree. And we’re going to keep learning from the past together. And I look forward to that.”
Revenue figures
The next phase of the process to keep an eye on is when revenue updates are provided from the OLS and the State Treasurer. Those new figures will bring the state’s financial picture into greater focus.
O’Scanlon told NJBIZ that he remains concerned about the scope of the Murphy spending plan, along with its priorities, especially pertaining to the surplus and federal money. “The Murphy administration has a proven track record of underestimating revenues, which we witnessed yet again in February when the governor revealed an extra $4.5 billion in tax collections beyond what he had previously projected,” O’Scanlon said. “We expect that will grow even larger when the Treasurer gives her updated revenue forecast in a few weeks. Despite all of this extra money, the Murphy administration is proposing woefully inadequate tax relief.”
O’Scanlon said that Senate Republicans believe that the extra billions in the bank should go to taxpayers struggling with inflation and high gas prices through a pair of $1,000 and $500 tax credits to families, through the GOP’s “Give It Back” proposal.
“With a flush budget, we’re also disappointed that Gov. Murphy has proposed cutting school aid to nearly 200 districts, which will cause property taxes to rise in nearly one-third of our towns,” O’Scanlon said. “We are calling for those cuts to be reversed. With billions in American Rescue Plan Act funds sitting unspent after nearly a year, we believe Gov. Murphy should stop unnecessary payroll tax increases on employers, fix broken computer systems at [the] unemployment [office] and the MVC, and provide additional support to our struggling small business community.”
O’Scanlon also said that Senate Republicans are pushing for an indexing of New Jersey’s tax brackets for inflation, which is done in several other states, and overall, he is worried about many of the programs proposed in the budget plan.
“We believe the Murphy administration should be extremely cautious in launching expensive new programs that may not be sustainable in future years when the next economic downturn inevitably impacts our budget,” O’Scanlon said. “A windfall of federal dollars may not be there to bail us out next time.”
Sarlo told NJBIZ that he hoped the process would be cooperative. “If Republicans have good ideas and want to work together, I am more than willing to work together in the best interests of the state and people of New Jersey,” Sarlo said. “This productive working relationship works best, however, if they refrain from engaging in partisan politics. As the majority party, Democrats have the ultimate responsibility to get the job done.”
But Sarlo does share some of the same concerns about sustainability of the increased spending.
“That is why I am taking a multi-year perspective in budgeting and why we have to use one-time resources to make strategic investments that address long-term needs,” Sarlo said. “We have to be careful about creating long-term commitments with non-recurring resources.”
Overall, Sarlo believes the budget process is going well, adding that the hearings have been very useful to get an assessment of New Jersey’s needs.
“I am optimistic that we will produce a good budget that addresses New Jersey’s priorities and makes responsible use of the resources available to us – including the federal funds,” Sarlo said. “We will put together a budget that promotes economic growth, supports the ability of business to create jobs and makes the lives of the people of New Jersey more affordable. We have fiscal challenges to meet, but I am confident we can do it responsibly.”
