New Jersey will spend a record amount of cash over the next 12 months on everything from school aid to property-tax relief to public-worker pensions under a new state budget Gov. Phil Murphy formally enacted on Tuesday.
The governor officially endorsed a $46.4 billion legislative spending bill during a bill-signing event held at a school in Woodbridge, wrapping up a roller coaster budget season that included a dramatic shift in the state’s fiscal outlook brought on by an unexpected tax windfall that helped generate a massive, $10 billion surplus.
In all, the new budget for the fiscal year that begins Thursday calls for year-over-year spending to increase by roughly 15% as some of the state’s immense reserves will be spent down as a one-time source of revenue over the next 12 months.
Those resources will help fund, among other things, a record contribution to the public-worker pension system, a large increase in funding for K-12 schools, bigger Homestead property-tax relief benefits and an expanded state income-tax exclusion for retirees.
$4 billion for debt relief
The budget and separate pieces of legislation that Murphy also signed into law Tuesday will also establish a new tax break for college savings and set aside nearly $4 billion for debt relief, among other initiatives.
“This is a budget that pays our bills, it meets our obligations and invests in a brighter future,” Murphy, a first-term Democrat who faces reelection in the fall, said during the bill-signing event.
“We made sure we planned for the future,” said Senate Budget and Appropriations Committee Chair Paul Sarlo (D-Bergen) during the event.
Still, with all 120 legislative seats also on the ballot this November, the new budget will fund a brand new state tax-rebate program, as well as many other changes to state tax policy that will impact the budget’s bottom line. The new tax rebates, worth up to $500, will be offered to more than 750,000 families later this summer, officials said.
The new budget will also underwrite an increase in funding for Homestead property-tax relief benefits that will allow the average individual benefit to increase by at least $130. Low-wage workers will also benefit from an expanded Earned Income Tax Credit.
Murphy: ‘So much good’
“There is so much good that this budget invests in,” Murphy said during the bill signing as he discussed tax-relief initiatives.
But even as the annual budget will rise to a record-high total, some long-term fiscal practices that have been criticized in the past, such as raiding money from New Jersey’s Clean Energy Fund for other purposes, will be continued for another fiscal year. The new budget will also underfund the state’s K-12 school-aid law for another year even with a nearly $580 million year-over-year increase in direct aid. Limited funding for New Jersey Transit also means the agency will continue to use capital resources to subsidize annual operations.
Overall budget reserves — not counting the funding earmarked for debt relief and other funds set aside for open-space preservation — will equal roughly 5% of planned spending through June 30, 2022, according to updated Department of Treasury budget documents.
Meanwhile, the spending bill enacted by Murphy will fund dozens of last-minute spending add-ons known as “Christmas tree” items in Trenton because they help pay for lawmakers’ pet projects and other legislative priorities.
Republicans demand more information
Republicans who are in the minority in both houses have faulted their Democratic counterparts for providing little to no information to explain why those projects were given priority status in the new budget.
GOP members of the Senate Budget and Appropriations Committee shared on Tuesday a letter sent to the governor demanding more information about those spending items.
Many special-interest groups and activists have also called for a more open budget process in response to last week’s speedy approval by lawmakers of the 281-page budget legislation.
The full text of the spending bill for the 2022 fiscal year was posted online last Tuesday, just moments before members of budget committees in both the Assembly and Senate offered the public a final chance to comment before holding votes that sent the bill to both full houses for final consideration.
Calls for reform
The bill signing for the new budget ended up taking longer to complete than the time the public was given to read the final version of the spending bill before the budget committees voted to approve it.
Members of the United Black Agenda organization cited statistics demonstrating racial disparities in several key areas in New Jersey in a statement that also called for a reform of the budget process to make it more inclusive.
“There is no legitimate reason for New Jersey’s legislative process to operate in the manner it does. For lawmakers to combat structural racism in our state, New Jersey must operate a more inclusive and transparent legislative process that makes bills available to the public several days before they are voted on,” the statement said.