New Jersey lawmakers in both the state Assembly and Senate will decide June 24 whether to send Gov. Phil Murphy a record-high $46.4 billion spending plan, packed with various programs he’s sought.
The budget will cover state expenses for the 2022 Fiscal Year, which runs July 1, 2021, to June 30, 2022.
Murphy, a Democrat, and all 120 lawmakers in the Democrat-controlled state Legislature are up for reelection this November, with budget talks having gone forward largely behind closed doors and away from public headlines.
The main spending bills, Senate Bill 2022 and Assembly Bill 5870, were passed by their respective Senate and Assembly budget committees with little time for public review, drawing the scorn of Republican lawmakers and good government advocates. In the case of the Assembly version, it was approved just 11 minutes after the full text was released to the public.
“There has been such a rush and no transparency on this,” Assemblyman Hal Wirths, R-24th District, said during the Assembly hearing. “The rush here to get this thing crammed through today – we have until July 1. There’s no reason to be pushing.”
Senate Budget Chair Paul Sarlo, D-36th District, defended this year’s process, telling reporters after the Senate budget hearing that “Every year, you guys say it wasn’t transparent enough. But I believe it was no different than any other year.”
The spending plan is awash in billions of dollars in extra cash, thanks to $4 billion of new debt taken on last year, as well as billions from federal aid, budget cuts last year, and pandemic-driven surges in consumer spending. A year ago, state officials feared an economic meltdown as tax revenue cratered amid mass business closures to stop the spread of COVID-19. The total opposite has panned out, and the state is looking to end this year, on June 30, with a $10 billion surplus, and next year with a $6 billion surplus.
All told, the state is looking at $52 billion of tax revenue and other sources of income over the next year.
What’s in (and out)
The state is getting roughly $6.5 billion from the Biden administration under the federal American Rescue Plan, with strings attached that the funds have to go toward COVID-19 response and recovery, and to make up for tax revenue lost over the past year.
Over the next year, the state will spend $700 million of ARP money, under the budget plan.
That includes half a billion dollars for rental assistance, $250 million in utility relief, $100 million in expanded child care–so that more New Jerseyans can physically return to the workplace, $600 million over the next three years for adult special education services, and $180 million for HVAC improvements at schools.
The state’s three Level One Trauma Centers – University Hospital in Newark, RWJ University Hospital in New Brunswick and Cooper University Health Care in Camden – would each get roughly $150 million to build up their public health capacities.
Murphy would have $200 million that he could spend as he wishes, with a limit of $10 million for any one item.
State officials do not plan to include money for replenishing the unemployment fund, which the state has used to pay out billions of dollars in jobless aid during the COVID-19 pandemic. Republicans suggested $2.5 billion of the ARP funding over three years to repay the fund, so that it would not fall on employers to cover those costs through tax increases.
“To be determined,” Murphy said when asked earlier in the day at an unrelated event in Long Branch whether he wanted to use the extra cash to replenish the unemployment fund. “The budget is sort of unfolding as we speak, so bear with me on that one.”
The state would allocate $10 million toward New Jersey’s aging unemployment computer systems, which buckled last year under the weight of hundreds of thousands of sudden claims.
Republicans proposed half a billion dollars for computer and IT upgrades for both the unemployment system and Motor Vehicle Commission.
The bill requires the Murphy administration to put together a report on the state’s “most critical information technology needs,” and how those fixes could be paid for with ARP funding.
Lawmakers want to add another $505 million in pension payments for this year, on top of the $6.4 billion Murphy already proposed. That would make this year’s budget the first time since the 1990s that the state has met its full yearly pension obligation.
And the budget includes hundreds of millions of dollars in tax cuts for homeowners and direct checks to roughly 720,000 New Jersey families. The state would sock away $2 billion into its rainy day fund for future economic woes.
The bills call for $3.7 billion debt-defeasance, or the process of paying down much older, more expensive debt. That includes $2.5 billion to immediately pay off some of the state’s oldest tabs and $1.2 billion to forgo potential debt on new projects.
Lawmakers estimated the practice could save the state hundreds of millions of dollars in the coming years.
There’s $50 million to cover the costs of tuition at four-year universities for the state’s lowest-income students, and added money for tax breaks and loans for student’s tuition bills.
The budget would not include a recurring source of revenue for New Jersey Transit, something that transportation proponents argue is vital to overhaul the struggling transit agency without raising fares and cutting services.
Lawmakers packed almost half a billion dollars in state funding for projects up and down the state, most of which benefit only a single municipality or the surrounding towns and cities. That includes money for an art museum in Jersey City, demolitions in Camden, a Little League field in Franklin Township, a YMCA building in Union County and a park in Paramus.
An exact breakdown of which lawmakers requested funding for specific projects in the towns they represent is yet to be available. Such budget resolutions outlining the individual spending have been available for years.
“Who wants this stuff, and why doesn’t the public know who asked for these bills,” said Assemblywoman Serena DiMaso, R-13th District.
Sarlo and Assembly Budget Chair Eliana Pintor-Marin, D-29th District, agreed that the resolutions should come out eventually, but they were not available when both committees approved the plan and $115 million of supplemental appropriations.
“It’s no different than any other budget,” Sarlo said. “Every budget that I’ve ever been here , there’s some budgets that are a little bit more than others, and some budgets, a little bit less.”
Editor’s note: This story was updated at 8:57 a.m. EST on June 23, 2021, to include remarks from Senate Budget Chair Paul Sarlo and Assemblywoman Serena DiMaso, and information regarding nearly half a billion dollars in state funding for individual projects.