Even though state revenues for this fiscal year are falling short of expectations, Gov. Phil Murphy says he expects to close out the new budget with a surplus of about $1 billion. Business Correspondent Rhonda Schaffler and NJ Spotlight’s John Reitmeyer crunch the numbers.
Schaffler: A 1.7 percent increase in the budget overall but there are some savings this time.
Reitmeyer: Yeah, about a billion dollars in savings that it looks like they’re going to save from both public employee health care plans and also from departmental belt-tightening. It’ll reach about $1.1 billion which is something we haven’t seen in a while here. It’s especially surprising from a Democratic administration.
Schaffler: There are some areas of increased spending; education is one and NJ Transit will get a bump.
Reitmeyer: Yeah, NJ Transit will get a $25 million increase and school funding about $200 million for something that’s known as formula aid that goes right into the classroom. And the real big increase is for the public employee pension system. The state continues to have a grossly underfunded pension system and our payment will go up to almost $4 billion after being at $3.2 billion this fiscal year, which will be a record for New Jersey for one fiscal year.
Schaffler: So is this moving New Jersey in the right direction in terms of what the Wall Street credit agencies want to see? The governor kept talking about stable funding sources and the like in this budget.
Reitmeyer: A couple things on fiscal policy that I think will be important for the ratings agencies. One is he’s trying to wean us off of one-shot, or one-time, revenue sources and you see this reflected in a couple different places with NJ Transit specifically — the surplus growth from $765 million to a billion dollars. Now on a $39 billion budget, it’s still not a big number, but it’s the biggest number we’ve had here in New Jersey in a long time, and then seeing that pension contribution increase. We get knocked year after year for having substandard pension contributions. We’re not where we need to be in New Jersey, but it will get New Jersey to about 70 percent of where it should be which is more than we’ve been for a very long time.
Schaffler: Which is why, perhaps, taxes need to be raised. If you listen to the governor, he is proposing a millionaire’s tax. Whether or not if flies has yet to be seen, but it many ways it’s a drop in the bucket.
Reitmeyer: The millionaire’s proposal that he has would increase tax revenue by $450 million. So remember we talked about $38, $39 billion. $450 [million] is not going to make or break a budget. Some of the other taxes we talk about…
Schaffler: Adult-use marijuana, hardly anything
Reitmeyer: Exactly. But in the big picture we come back to the fact that we’re not fully funding our pension system, school funding, every little bit helps.