New Jersey residents pay some of the highest taxes in the country. But they might get little chance to say how a stunningly large infusion of state and federal cash that tops $11 billion will be spent in their name.
Public meetings scheduled to pore through new revenue forecasts of a whopping $5.2 billion state tax windfall were abruptly canceled by lawmakers last week.
There also have been no hearings to solicit public input on the budget since New Jersey received $6.2 billion in COVID-19 relief funding from the federal government’s American Rescue Plan Act, leaving questions unanswered about how those resources will be spent.
Taken together, the recent infusion of state and federal cash adds up to a full quarter of what New Jersey has typically spent during its July 1 to June 30 fiscal year. That means it has the potential to be a game changer for a state that consistently struggles to address major fiscal problems, as well as many other challenges, including issues related to affordable housing, income inequality, racial-wealth disparities and school segregation.
Yet the last time lawmakers took testimony from the public on the budget was back in March, well before the federal relief arrived and the tax windfall materialized to dramatically change the state’s fiscal outlook.
If the Democratic-controlled Legislature’s recent history is repeated later this month, it will draft and then introduce a spending bill of more than $40 billion. Legislators will speed it through budget committees and then onto votes in both full houses, perhaps all within a matter of days.
Leaving little time for much debate
From there, the spending bill will go to Gov. Phil Murphy, also a Democrat, for his signature before a July 1 deadline. That deadline, which is written into the state Constitution, is a little over two weeks away, already leaving little time for a robust public debate.
In theory, the public will have at least one more opportunity to comment on the new spending bill after it is drafted. But by then, all the big decisions on the budget, and potentially the federal coronavirus aid, may already have been made behind closed doors by legislative leaders and the governor’s office, leading to largely pro forma committee votes that historically are rarely swayed by any new public testimony.
To be sure, Murphy made his major spending priorities known months ago, and last-minute budget deals are a time-honored tradition in Trenton that predates the current cadre of Democratic leaders. This year, as negotiations heat up in the run-up to the July 1 deadline, those leaders are all saying their goal is to be “fair” and “responsible.”
“The process will be open and transparent,” promised longtime Senate Budget and Appropriations Committee Chair Paul Sarlo (D-Bergen) in a lengthy statement emailed to NJ Spotlight News.
Still, Republicans who are in the minority in both houses of the Legislature have voiced concerns in recent days about what they see as diminishing transparency in the State House.
Some of those concerns were aired publicly by the GOP members of the Senate Budget and Appropriations Committee after their own scheduled committee meetings were canceled by the Democrats last week.
“The only way that government can be truly trusted is through transparency,” said Sen. Michael Testa (R-Cumberland).
What didn’t happen this year
Typically, the state treasurer appears before lawmakers over two separate days to go over and explain the latest official revenue forecasts, and to answer questions about how they may have changed the administration’s budget plans for both the remaining weeks of the current fiscal year and the one that begins July 1. But that didn’t happen this year. The administration’s final forecasts and budget plans were made public only in written format last week.
The GOP lawmakers have also tried to make the case that the majority Democrats’ current practices have real-world consequences for taxpayers.
Last year, a select commission of Democratic lawmakers took less than 20 minutes to approve the Murphy administration’s plans to borrow more than $4 billion to support the annual budget. At the time, the borrowing was sought by Murphy to offset tax-revenue losses his administration had projected would be triggered by the pandemic; those losses ultimately never materialized.
Now, as the recent tax windfall is helping the state amass a $10 billion surplus, taxpayers are still on the hook for funding millions of dollars in annual interest payments into the 2030s because of that borrowing.
“Simply stated, the citizens and taxpayers of the state of New Jersey deserve better,” said Testa, one of the GOP lawmakers who unsuccessfully opposed the borrowing in court last year after Republicans were left off the select commission that authorized the $4 billion in borrowing.
Others have also been making the case for an overhaul of the state’s budget-approval process, including to make state fiscal policies more inclusive and to use them as a tool to address long simmering racial-equity concerns.
Three men in a room?
While there is diversity on the budget committees themselves, final calls on the budget are made by Murphy, Senate President Steve Sweeney (D-Gloucester) and Assembly Speaker Craig Coughlin (D-Middlesex), all white men.
“The reason why we need to have public engagement in this, is that the way that New Jersey has made decisions around budgeting, and the systems that we have sort of administered to do that, have created the disparities that we see today,” said Brandon McKoy, president and chief executive of New Jersey Policy Perspective, a Trenton-based progressive think tank.
“Those disparities did not come about on their own, and the idea that we’re going to now lean on those systems and processes to spend this $10 billion in surplus does not sound like a good plan to me for someone that cares about equity,” McKoy said.
Earlier this year, McKoy teamed up with New Jersey Business & Industry Association leader Michele Siekerka to make a joint pitch for Trenton to adopt better governance and transparency policies coming out of the coronavirus pandemic, which has upset the state economy and forced many businesses to close.
Asked about the looming decisions on the budget and federal aid, Siekerka called for “real hearings, where the public can be heard, and it isn’t just ideas that are being thrown around in a back room somewhere.”
Looking for transparency
“The job of an elected official, one of the most important things, is being a good steward of the state’s resources, and when we have an opportunity like this, you would think that there should be a heightened state of attention to transparency (and) open dialogue,” she said.
This year, Murphy is up for reelection and all 120 seats in the Legislature will also be on the November ballot.
Asked by NJ Spotlight News for a preview of the budget process, and a response to those who already have raised transparency concerns, Sarlo pointed to 19 different budget hearings held in recent months with members of the public and cabinet members, despite constraints posed by the ongoing pandemic.
He also promised a “final budget plan will be available to the public before it is discussed in a committee hearing and before it is debated by the full Senate.”
“The fact that the Legislature will be working in partnership with the Governor in deciding how the federal aid will be used will ensure greater transparency and accountability,” Sarlo said. “We are not rushing those decisions. They will be part of the open legislative process that puts the economic interests of the public first.”
In the Assembly, Coughlin spokeswoman Cecilia Williams said the goal this year is to “present a fair and responsible budget.”
A different perspective
“Three months of open and accessible public budget hearings in both Budget Committees provided great insight into this year’s proposed budget,” Williams said. “While budget negotiations are ongoing, the speaker expects the typical budget introduction procedures and committee hearing to follow when appropriate,” she said.
For his part, Murphy in 2020 called for “making government more transparent and accountable than ever” as he proposed a comprehensive ethics-reform initiative. Among his many proposals was model legislation that called for the consideration of all bills and resolutions only after 72 hours had elapsed since the final language was posted on the Legislature’s website.
It remains to be seen whether Murphy will hold lawmakers to that standard later this month.
Murphy press secretary Alyana Alfaro Post pointed to recent appearances before lawmakers by the state treasurer and testimony provided by the leaders of other departments as she addressed the transparency issue in a written statement.
“Discussions are still ongoing between the governor and legislative leadership to determine the best uses of state funds before the constitutionally mandated deadline, and we believe the Legislature will move forward with an appropriations bill soon,” she said.