The state Department of Treasury on Friday announced a freeze of “all hiring, promotions and discretionary spending until further notice” to ensure the state budget’s general fund can make it to the end of the 2018 fiscal year.
While the general fund covers roughly 55 percent of the state’s expenditures, a series of tax cuts and other fiscal-policy changes that have been enacted in recent years have been reducing the fund’s revenue stream, leading to a very tight operating margin. The state income tax, which is New Jersey’s biggest revenue source, is booming, but that revenue is not available for the general fund since it is constitutionally dedicated to only funding property-tax relief.
Treasury unveiled a plan to deal with general fund’s structural problem earlier this year, calling on lawmakers to allow for $788.5 million in energy-tax revenues to be shifted “on budget” to provide a robust cushion for the fund. But with just weeks left in fiscal year 2018, that plan has yet to be adopted as the Murphy administration and legislative leaders continue to clash on budget issues.