New Jersey’s governor would no longer be able to wield an important budget-making power — one that governors here have held for decades — under a proposed constitutional amendment that Senate President Steve Sweeney hopes to put before voters as early as this fall.
Sweeney’s push to change a key element of the annual budget process comes just weeks after the Democratic Senate leader clashed with first-term Democratic Gov. Phil Murphy over a host of revenue issues in the run up to the adoption of a new state spending plan.
His proposal would take away the governor’s sole authority to certify revenues — which currently is firmly established in the state constitution — and instead would have that duty fall to a new “revenue certification board.” That panel would take input from representatives of the executive and legislative branches, as well a third party, according to the proposed amendment.
Sweeney (D-Gloucester) denied yesterday that his plan is in any way related to his recent budget quarrels with Murphy; he was speaking at a required public hearing on the proposal. A representative from the nonpartisan Volcker Alliance, an organization that promotes sustainable state budgeting, testified at the hearing that 29 other states already use the consensus-forecasting model that Sweeney wants for New Jersey.
Still, it remains to be seen whether the issue will go before voters this fall since Assembly Speaker Craig Coughlin (D-Middlesex) has yet to endorse Sweeney’s proposal.
Murphy administration opposes
The Murphy administration opposes the measure; state Treasurer Elizabeth Maher Muoio sent a letter to a key Senate committee yesterday, saying that taking away the governor’s sole authority to certify revenues would threaten “the balance of power spelled out in our Constitution.” But, in the end, the governor would have no say in the matter since Sweeney is seeking to make the change as a constitutional amendment, and not through legislation.
“If I’m the governor, I would want this,” Sweeney said. “You can’t argue with the numbers if you have a consensus between the legislative body, an independent individual, and the governor.”
For the last seven decades, New Jersey’s annual budget process has operated under a system established in the state constitution that gives lawmakers the power to write the annual appropriations bill, but the governor the sole authority to certify how much tax revenue will be available during the fiscal year to support spending. The constitution also requires a balanced annual budget, meaning projected revenues must match forecasted spending when a new fiscal year begins on July 1.
As part of the budget process, the Department of Treasury compiles a short fiscal outlook and revenue forecast each winter, and then the state treasurer comes before lawmakers twice each spring to review the forecast and make any changes, if necessary, based on tax-collection trends. A revenue forecast is also prepared each year by the budget analyst for the Office of Legislative Services, the state Legislature’s nonpartisan research arm.
The OLS projections are only advisory in nature, but they can still produce tension in the State House if there is a big or meaningful divergence from what the executive branch is forecasting. For example, former Republican Gov. Chris Christie had a far more aggressive revenue projection in 2013 than the OLS was forecasting as Christie sought to enact a major tax cut in the run up to his re-election. Christie also personally attacked David Rosen, who was serving as the nonpartisan agency’s budget officer at the time. But lawmakers never gave in to Christie. And, in the end, it was the OLS forecast that proved to be more accurate.
Sweeney says it’s about reaching a consensus
Meanwhile, Sweeney and Coughlin last month accused Murphy of intentionally taking a more pessimistic view on revenues when making the case for several tax hikes in his first state budget proposal, tax hikes the legislative leaders opposed. The three leaders eventually reached a compromise on taxes and spending, but it came just hours before the deadline for a government shutdown.
Sweeney argued yesterday that making the revenue-certification process more collaborative would lead to better results for all parties, suggesting it would take the political tension out of the forecasting duties by forcing cooperation. Under the proposed amendment, the members of a new revenue-certification board would be the state treasurer, the OLS budget officer, and a third member to be selected by the treasurer and the OLS budget officer.
“You have consensus built around real projections,” Sweeney said.
William Glasgall, senior vice president of the Volcker Alliance, told members of the Senate Budget and Appropriations Committee during yesterday’s public hearing that his organization recently gave New Jersey a “D” grade in the category of budget forecasting, in part due to the state’s current lack of a consensus-forecasting model.
“We’ve identified this as a best practice and we’d be very happy to see New Jersey go in this direction,” Glasgall said.
Gordon MacInnes, president of the progressive think tank New Jersey Policy Perspective, said his organization too favors the consensus model. But MacInnes also asked Sweeney to slow down the approval process since the proposal, which was first introduced at the end of June, is getting little public attention during the summer months.
Not so fast, please
“There should be (more) time for this to be reviewed, examined and debated before it is enacted in its final form,” MacInnes said.
Under the state constitution, a proposed constitutional amendment can be put on the ballot in the same year it is proposed if it receives approval from three-fifths’ majorities in both the Assembly and Senate. The legislative approval also must come 90 days before the election, which this year would be by August 6.
The Senate is expected to consider Sweeney’s proposal during a voting session that’s scheduled for Thursday. But the proposed amendment has yet to come up for consideration in the Assembly, and a statement released by Coughlin yesterday suggested the Assembly leader may not be as interested in adopting the proposal as Sweeney is.
“We support looking at ways that the state conducts revenue forecasting to ensure that it is as accurate and reliable as possible,” the Coughlin statement said.
Legislation seeking to establish a consensus-forecasting process in New Jersey was approved by both houses of the Legislature in 2015, but that bill — which Christie vetoed — did not strip the governor of the constitutional authority to certify revenues. Muoio raised that difference in the letter she sent to members of the Senate Budget and Appropriations Committee yesterday. She also cited existing, informal collaborations that already occur between the legislative and executive branches during the annual budget process.
“We are concerned that SCR-132 jeopardizes the system of checks and balances enshrined within our Constitution,” Muoio said.