New Jersey is one of the few states that failed to rebuild its rainy day fund following the Great Recession a decade ago, according to the second report in recent weeks criticizing what it called the overall poor quality of the reserve.
This comes as lawmakers and the Murphy administration butt heads over a budget proposal to put roughly $317 million into New Jersey’s rainy day fund for the coming fiscal year, starting in July – a move considered inappropriate by legislative leaders who argue the state still has too many bills to pay.
Only two other states, Kansas and Montana, did not grow their rainy day fund at all since the economic downturn, according to Tuesday’s report from The Pew Charitable Trusts.
Meanwhile, a mid-May report from Wall Street rating agency Moody’s Investors Services found New Jersey and Illinois were the two least-prepared states for an economic downturn, given the condition of their rainy day funds.
State Treasurer Elizabeth Maher Muoio said the Moody’s report bolsters the state’s need to boost the fund.
“While our projected surplus is certainly better than the far too risky position New Jersey had become accustomed to in recent years, we are still far behind most states when it comes to being adequately positioned to weather a future economic downturn,” she said in a May statement.
The injection into the rainy day fund comes thanks to the $1.1 billion surplus that the state will have following the end of the 2019 budget, which closes on June 30, Muoio said.
“Our need for sustainable revenues is real and pressing because our obligations will only continue to grow in the coming years,” she added. “Savings, surplus, and sustainable revenues are the key to putting us on the path to fiscal stability.”
Still, lawmakers have questioned the Murphy administration’s arguments behind the rainy day fund, given the state’s existing bills to pay.
“I don’t know how you talk about putting money into a rainy day fund when it’s pouring in New Jersey,” Senate President Stephen Sweeney, D-3rd District, said in mid-May.
“A rainy day fund is when you have everything funded and everything’s fine, but it’s not in New Jersey,” Sweeney added.