Gov. Phil Murphy on June 29 approved a record-high $46.4 billion spending plan to cover state expenses for the next year, after the Senate and Assembly sent it to his desk last week following hours of debate on June 24.
The bill was approved strictly by a party vote in both chambers, where Democrats hold considerable majorities: 25-15 in the Senate and 49-26 in the Assembly.
Supporting this year’s budget is $52 billion of revenue, a $10 billion surplus and roughly $6.5 billion from the Biden administration under the American Rescue Plan. It’s also bolstered by $4 billion of money the state borrowed last year, at a time when the full financial and economic impact of the COVID-19 pandemic on the state was uncertain.
Instead, the state has found itself flush with billions of dollars in extra cash in a never-before-seen financial situation.
“This is a budget that pays our bills, it meets our obligations and invests in a brighter future,” Murphy said during the June 29 political-rally-style bill-signing event at the gymnasium of the Ross Street School in Woodbridge. “This is a budget that moves our state forward.”
Republicans and open government activists objected to the speed at which the plan made its way through the state Legislature–it was introduced and made public at the Senate Budget Appropriations Committee last week and approved 11 minutes later.
‘A darn good budget’
And they objected to what they say are hundreds of millions of dollars in “pork spending” or “Christmas tree items;” that is, spending that goes to benefit projects in a lawmaker’s specific legislative district.
The Senate Democrats Office released two lists on June 25, just before the start of the weekend, outlining which lawmakers had requested those spending items. But a similar list was not released for the state Assembly, nor had either chamber disclosed whether any elected officials had personal or financial connections to projects that received special funding.
Four state Senate Republicans put out a letter the morning of June 29 addressed to Murphy asking him to “immediately” make that information public.
“The public has a right to know how their money is being spent,” the letter reads. “Alternatively, if their governor approves hundreds of millions of dollars of what appears to be pork without knowing what it is and without a basis for why it is worthy of their tax dollars, they have a right to know that too.”
The spending includes $24 million for an art museum in Jersey City, $15 million for demolitions in Camden, $300,000 for the Paramus library, $350,000 for re-turfing a Metuchen public park, $500,000 for walking trails in North Brunswick, and $300,000 for a Little League field in Franklin Township.
The governor pushed back against any notion of pork-spending, saying that the budget was instead “filled with game-changing investments,” ranging from infrastructure to higher education, public health and K-12 education.
“What I see are life-changing impacts … investments in communities and in their future,” Assembly Speaker Craig Coughlin, D-19th District, and the top elected official in the Legislature’s lower house, said on Tuesday.
Murphy and all 120 members of the state Legislature are up for reelection this November.
The budget deal was largely negotiated behind closed doors between Murphy, Senate President Stephen Sweeney, D-3rd District, and Coughlin. Information was sparse ahead of the June 22 committee votes, save for piecemeal press releases jointly issued by the three men’s offices in the preceding two days.
“This is not a perfect budget,” Murphy conceded. “But this is a darn good budget.”
Top Democrats, including Sweeney and Coughlin, contend that the budget process has been highly transparent.
Last week, Murphy said he was open to a waiting period between when lawmakers send him a budget and when he would ultimately approve it. State lawmakers have not formally committed to the proposal.
What’s in it (and not)
The budget will tap into more than $1 billion of federal ARP money over the next year: $700 million in the upcoming spending plan, $450 million for the state’s three Level 1 trauma centers, and $200 million that Murphy could spend at his discretion at increments of up to $10 million. Any use of the rest of the money would require legislative approval by a Democratic-controlled four-person committee.
Under the plan, the state would add another $505 million to this year’s already-proposed $6.4 billion pension payment. That would make the 2022 fiscal year the first time since the 1990s that the state has met the full actuarial obligations for how much money to put into the sorely underfunded public worker pension fund.
There’s $3.7 billion to pay down some of the state’s oldest and most expensive debt – and $2 billion for the state’s rainy day fund, to ride out any future economic woes.
“We are living up to our obligations today and not pushing them off at a higher cost and greater weight onto the shoulders of the next generation,” Murphy said.
The budget includes hundreds of millions of dollars in direct tuition assistance grants for community colleges and four-year universities, as well as tax breaks for students to subsidize their education costs.
As part of last year’s agreement for enacting Murphy’s sought-after millionaire’s tax, upwards of 760,000 households with incomes below $150,000 would get $500 rebate checks this summer.
Lacking from the budget are any considerable upgrades to the state unemployment system and any major replenishment of the state unemployment fund after it was used to pay out billions of dollars in jobless benefits over the past 15 months.
The plan calls for putting roughly $206 million in the unemployment insurance fund, but lawmakers like Sweeney said that more funds coming out of the ARP pool could be forthcoming to replenish the unemployment fund.
Republicans and business groups had suggested $2.5 billion to refill the state unemployment fund and half a billion dollars to upgrade the computer systems for the unemployment fund, the Motor Vehicle Commission and the 9-1-1 system. Democrats last year proposed putting in $50 million to upgrade the unemployment system – this budget proposes roughly $17 million.
Without the $2.5 billion, businesses could expect to see their taxes increase beginning this coming July 1 – the same day the budget goes into effect – and then in 2022 and 2023 in order to refill that fund. In January, Murphy approved a bill phasing in the tax increases over three years
“The payroll tax increase that we could prevent is going to hit employers just one week from today,” Senate Republican Leader Thomas Kean Jr., R-21st District, said last week. “That is absolutely unconscionable. For the record, it did not have to be this way.”
Michele Siekerka, who heads the New Jersey Business & Industry Association, said in a June 29 statement that the budget was “unsettling” for doing nothing to “delay or soften a payroll tax increase on businesses.”
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.
Retiring Senate Majority Leader Loretta Weinberg, D-37th District, blasted the plan for not including a recurring and dedicated source of funding for NJ Transit.
“I am extremely disappointed,” she told reporters on June 21. “It is short-sighted, and it certainly doesn’t live up to the governor’s promise to fix NJ Transit.”