The Murphy administration plans to make its first deposit into the rainy day fund in nearly a decade after the fund ran dry following the Great Recession, the state treasury announced Monday morning.
Treasury officials are still crunching the numbers on the exact amount to be put into the fund, known formally as the state’s Surplus Revenue Fund.
The anticipated deposits come as a result of healthier revenue collections and ensuing larger budget surpluses – $1.1 billion according to Gov. Phil Murphy’s March budget address – for the end of the 2019 fiscal year, which concludes on June 30. That, in turn, triggers a law requiring the state to deposit excess money into the rainy day fund.
“Everyone is taught the importance of saving for a rainy day, but unfortunately it has been far too long since New Jersey’s rainy day fund has seen any deposits,” Treasurer Elizabeth Maher Muoio said Monday in a statement.
The state treasury describes the rainy day fund as a “lockbox,” which can only be used under very specific circumstances, such as the financial crisis a decade ago during which the state burned through $734.7 million to soften the blow of revenue decreases stemming from the nationwide financial crisis.
“For the first time in over a decade, we are going to be making a deposit into our rainy day fund, which has sat completely dry since the Great Recession,” Muoio said. “By asking the most fortunate among us to pitch in just a little more, we can truly create a stronger, fairer state, marking a significant ‘turning of the page’.”
Muoio is scheduled to unveil the state’s revenue performance on Tuesday, which will cover how much the state made in the gross income tax, sales tax and corporation business tax.
Murphy argued that the “pleasant surprise” of considerably high revenue collections – which would make up for revenue shortfalls from earlier in 2019 – was grounds for a deal he offered of $250 million in property tax relief in return for his controversial millionaire’s tax proposal.
The governor’s millionaire’s tax calls for increasing the income rate from 8.97 percent to 10.75 percent for every dollar earned above $1 million; which is expected to earn the state roughly $448 million annually.
Senate President Stephen Sweeney, D-3rd District – an opponent of the millionaire’s tax and oftentimes political rival of Murphy – shot back at Murphy’s optimism, saying the increased revenue came from a four-year increase to the corporate business tax, which Sweeney was successful in pushing through despite objections from Murphy.
“We need a real budget with long-term, sustainable property tax savings, not gimmicks,” Sweeney said. “It is the corporation business tax surcharge we imposed that has been coming in far over the administration’s revenue projections – just as the legislature said it would.”