It took a messy government shutdown last year before state lawmakers and former Gov. Chris Christie could reach agreement on his final budget. But this year, lawmakers are already cooperating with new Gov. Phil Murphy on budget issues.
Legislation seeking to relax the state’s legal deadline for the governor’s annual budget message has already been introduced to give Murphy’s administration a little more time to compile its first state spending plan.
Under a bill put forward by Senate Budget and Appropriations Committee Chair Paul Sarlo (D-Bergen), Murphy would be allowed to propose his first budget on March 13, instead of the current scheduled date of February 27.
The move by lawmakers to delay this year’s budget message is customary for a freshman governor thanks to a bipartisan tradition in the State House that goes back decades. Sarlo’s bill is expected to breeze through the Legislature.
“We did it for Christie, we did it for Corzine, and for McGreevey and Whitman,” Sarlo said during an interview yesterday.
Fiscal trouble ahead?
But this year, the extra cushion could also help ensure acting Treasurer Elizabeth Maher Muoio, a former lawmaker herself, clears the Senate confirmation process before the new budget is put forward. It would also give Murphy more time to assess the condition of the state budget he inherited from Christie, as there are already some indications there could be trouble before the current fiscal year closes at the end of June. With Democrats now in control of both the Legislature and the governor’s office after the Republican Christie’s departure earlier this month, there’s also some optimism that a new budget can be completed ahead of schedule this time around.
“It is our hope this year that, with a new governor, we’d love to see a budget done in early to mid-June,” Sarlo said.
Though staff in the Department of Treasury work virtually year-round on state spending issues, the delivery of the governor’s annual budget message officially kicks off the start of the budget season in Trenton.
By law, the budget message must be delivered to the Legislature on or before the fourth Tuesday in February. But lawmakers have traditionally passed legislation to relax that date for first-year governors, with Treasury’s online records indicating it has been done at least through the tenure of Democrat Jim Florio, who took office in 1990. Democrat Jon Corzine was also granted a special extension in 2009, which turned out to be his last year in office, to help account for federal stimulus funding that the state was receiving at the time in the midst of the Great Recession.
After the annual budget message is delivered, a series of public hearings are held both in the State House and around the state as lawmakers dig deeper into the executive branch’s spending proposals. The budget season culminates each year in late June as the New Jersey Constitution requires that a new — and balanced — spending plan be in place when each state fiscal year begins on July 1. (If lawmakers and the governor cannot reach agreement on a budget, state government is shut down, as it was last year.
Sarlo said holding the budget message this year on March 13 would give Murphy extra time to prepare his first spending plan while also allowing for the budget schedule to proceed along its typical schedule, including accounting for religious holiday observances in the spring. He said he’s already discussed the scheduling issue with Murphy’s staff to make sure everyone is on the same page.
Delaying the date of this year’s budget message would also give the Senate more time to fully review the nomination of Muoio, a former member of the Assembly Budget Committee, to serve as state treasurer in the Murphy administration. Her selection, announced by Murphy last month, was officially received by the Senate earlier this week. A confirmation hearing has yet to be scheduled.
Dealing with problems
The delay, meanwhile, will also give Murphy’s administration more time to gauge how well Christie’s last spending plan is holding up since the budget message will come from Murphy a full eight months into the current fiscal year. Typically, any problems in the current budget are addressed at the same time the governor proposes his budget message for the new fiscal year.
The latest official revenue report released earlier this month by the outgoing Christie administration indicated overall tax collections were ahead of projections as of the end of December. But a notice issued earlier this week by Wall Street credit-rating agency Moody’s Investors Service suggested there may actually be a slight shortfall at the halfway point of the 2018 fiscal year. The state’s latest tax collection figures were inflated, in part, by gas-tax receipts that are constitutionally dedicated to funding only transportation projects, Moody’s said. Income-tax collections also surged amid the federal tax-code changes that were enacted at the end of 2017, meaning there could be a coinciding decrease come April.
If Christie’s final budget does come up short of projections, it would continue a pattern of persistent shortfalls that occurred throughout his eight years in office. In fact, heading into this year, Christie’s budgets came up short of projections during five of the last seven years.
Sarlo said he wasn’t too concerned about the outlook for the current fiscal-year budget because the state has yet to see April collections from the income tax, which is the state’s largest tax-revenue source. He also said the key issues that lawmakers will be looking forward to seeing in Murphy’s first budget proposal are the perennial concerns of education aid and public-employee pension funding.
“Those are the two elephants in the room that don’t go away,” Sarlo said.