New Jersey state budget
|New Jersey state budget|
|Date signed:||June 29, 2012|
|GF expenses:||$19.3 billion|
|GF revenue:||$19 billion|
|All funds expenses:||$32.1 billion|
|Other state budgets|
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- 1 Federal Aid to State Budget
- 2 FY 2014 Budget
- 3 FY 2013 Budget
- 4 FY 2012 Budget
- 5 Pensions
- 6 Budget transparency
- 7 Budget Basics
- 8 Accounting principles
- 9 Credit rating
- 10 Stimulus
- 11 Public Employees
- 12 State debt
- 13 External links
- 14 Additional reading
- 15 References
New Jersey budgets on an annual cycle and the fiscal year begins on July 1. The state is now in FY2013.
New Jersey has a total state debt for FY2013 of approximately $25,8034,922,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 state budget gap. The state debt total for FY2012 was $281,544,674,000.
New Jersey's total state debt per capita is $29,251.83.
According to a 2012 study by 24/7 Wall Street, New jersey is the 46 worst run state taking into account debt per capita, budget deficits, unemployment, median household income, and the percentage of the percentage of the population below the poverty line. The best run state is North Dakota and the worst run state is California.
Federal Aid to State Budget
The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to other states (if #1, the state receives the highest percentage of federal funding in the nation):
|New Jersey||21.82% (#45)||25.26% (#46)||30.23% (#44)||28.63% (#43)|
- Figures were calculated by dividing each state’s intergovernmental revenue into its general revenue.
FY 2014 Budget
Gov. Chris Christie unveiled his $32.9 billion FY2014 proposed budget on Feb. 26, 2013. The proposal increases spending by $1.27 billion over the FY2013 state budget. The proposed pension payment accounts for a portion of that increase. The governor based his calculations on the assumption the revenue will grow by 4.9 percent — far less optimistic than last year’s 8 percent prediction.
Highlights of the governor's proposed budget include:
- expanding Medicaid to include more than 300,000 more state citizens;
- a $1.67 billion pension payment;
- set aside $40 million in contingency funding in case the federal disaster relief aid for Hurricane Sandy is insufficient to cover the state’s rebuilding costs;
- phase-in of $2.3 billion in business tax cuts;
- $2 million for a grants program for failing districts.
FY 2013 Budget
Gov. Chris Christie signed the $31 billion FY2013 budget into law on June 29, 2012, after vetoing $361 million in spending proposed by the legislature. The governor's vetoes included tax credits for the working poor, and technology grants for private schools. The governor had sought a 10% income-tax cut across all brackets but the legislature did not pass it. The governor then called the legislature back to the Capitol for a special session.
Christie said that his administration anticipates a $407 million shortfall by the end of FY2013, ending in June, and he said in his budget address in February 2013 that he proposes to largely close that gap by delaying payments of property tax rebates to senior citizens and those earning less than $75,000 until August from May.
Senate President Stephen Sweeney proposed a tax credit equal to 10 percent of a resident’s property tax bill, capped at $1,000. The Assembly proposed the implementation of a "millionaires tax" to help boost the credit to 20 percent and cap it at $2,000.
Governor's proposed budget
Gov. Chris Christie proposed his $32.1 billion state budget on Feb. 21, 2012. The governor's proposed budget can be found here and the full text of his budget address can be found here. The proposed budget increases spending 8 percent more than FY2012.
Gov. Christie based his budget on his prediction that revenue will increase 7.3 percent in FY2013. That prediction was seen as optimistic after the first 10 months of FY2012 saw revenues drop. Standard & Poors, however, said it was an “optimistic” economic-growth projection and called the budget structurally unbalanced. Highlights of the budget include:
- the state making a $1.1 billion pension payment;
- increase school aid by $213 million;
- reducing aid to ailing cities;
The proposed budget also includes $183 million to fund the first half-year of the governor's 10 percent income tax cut and money to fund a 5 percent increase in the Earned Income Tax Credit for poor working families. The increase would boost the average benefit to $495 per family. During his State of the State address, Gov. Christie announced plans to reduce the state income tax by 10%, saying New Jersey could afford it because the state's finances improved over the last year. His administration has said the cuts would be phased in over the next three years, but has not explained how much taxes would go down year by year, or how it plans to deal with the revenue gap. New Jersey depends on the income tax for roughly one-third of its revenue.
Currently, top income tax rates in the region are:
New Jersey 8.9%
New York 8.82%
Since 2003 the top marginal rate in New Jersey has risen to 8.9% from 6.25%. Although Christie's proposal will not bring the top rate lower than Connecticut, Connecticut has higher property taxes.
The governor would need to introduce his income-tax cut as a bill separate from the budget. Democrats, who hold a majority in both legislative houses, have urged him to abandon the plan and instead focus on lowering local property levies, the nation’s highest at an average of $7,759 in 2011
Some of the budget challenges the state faces in FY2013 include:
- $1 billion pension payment;
- $300 million debt service on the 1997 bond sale floated by former governor Whitman
The governor's budget is based on an assumption of a 7.2% revenue growth. Prior to the passage of the budget, Treasurer Andrew Sidamon-Eristoff, a Christie appointee, said that revenue through June 2013 may be $700 million less than Christie’s target, while the Legislature’s chief budget analyst has said the gap may be almost twice that.
FY 2012 Budget
- See past state budgets
Revenue collections lag
Ten months into FY2012, the state faced a revenue shortage of $351 million.
Through the first quarter of FY2012, the state revenue collections were 3.6% below budget projections, with the state collected $4.15 billion for the first three months of the fiscal year, less than the $4.30 billion budgeted.
The $29.7 billion budget Christie signed into law eventually rose to $31 billion as the administration supplemented spending, in part because the Legislature underfunded some areas, said Treasurer Andrew Sidamon-Eristoff in Feb. 2012.
The legislature and Chris Christie were at odds over the FY2012 state budget, with the Democrats sending the governor a proposed budget on June 29, 2011, the next to last day of the legislative session. The governor vetoed $30.6 billion in spending and then signed by the budget on June 30, 2011. The governor's spokesperson had previously said, "The Democratic budget passed today by the Senate and the Assembly is unconstitutional in its present form based on hundreds of millions of dollars in spending that is unsupported by constitutionally certified revenue."
Governor Christie said that New Jersey would have available revenue of $30.3 billion for FY2012, and the Democrats' proposed budget relied on $300 million more in revenue.
The $10.5 billion deficit that New Jersey faces in FY2012 is equivalent to approximately 10 years of tolls collected on the Turnpike and Garden State Parkway combined. The Office of Legislative Services calculated the $10.5 billion shortfall by counting all mandatory increases in state funding and assuming all programs now in the budget would be included next year. The report noted that many of the sources of the FY2011 deficit would be an issue in the coming year as well, including that schools will be due $2.3 billion more, and the state will owe $2.1 billion in tax rebates.
Officials disputed that figure. Gov. Christie disputed the figuring, arguing that the projection was invalid because the OLS counted all mandatory increases in state funding and mistakenly assumed all programs now in the budget would be included next year. "The ($10.5 billion) number is completely fake, and doesn't understand the new reality, which is I'm not going to approve spending that goes over that," Christie said during a news conference in Atlantic City. State Treasurer Andrew Sidamon-Eristoff called the figure "wildly inflated." The gap "will not be anything near" $10 billion.
Under the budget, the state will save approximately $15 million by no longer holding a special primary for the Presidential election in early February and instead having just one primary for all elections in early June.
The FY2012 state budget can be found here.
Fitch Ratings lowered New Jersey’s credit rating general obligation bonds from AA to AA– on Aug. 17, 2011. Fitch explained that it did so because of the state's pension problem, the weak economy and a state Supreme Court order in May that forced New Jersey to increase spending on low-income school districts. Fitch's rating of New Jersey now aligns with Standard & Poor’s. Moody’s, which uses a different system, rates the state equivalently, at Aa3.
Legislative Proposed Budget
On June 23, 2011, Democratic leaders in the legislature unveiled their version of the 2011-12 state budget, a plan that totals $30.6 billion, $400 million more than the fiscal package Gov. Christie has proposed.
The proposed budget would reinstate more than $1 billion to underfunded school districts and also places millions of dollars back into property tax relief. It would also institute a "millionaires tax," raising the tax rate for people with incomes above $1 million from 8.97 percent to 10.75 percent, higher than any of the neighboring states. The tax would generate $550 million more for public schools. The Democrats’ proposed budget also would provide $50 million for police in high-crime cities, allot $1 million for women’s health care, which both took cuts in the governor's proposed budget, and also expand the earned-income tax credit for the working poor.
Gov. Christie said that he would not sign any tax increases and he does have line-item veto power.
Governor's Proposed Budget
Gov. Christie proposed his $29.4 billion FY2012 budget on Feb. 22, 2011.
His proposed budget includes having public employees pay a higher percentage of the cost of their co-payments and premiums in an effort to save the state an estimated $323 million. By 2014, the governor would require workers to pay for 30% of their medical benefits, up from 8% from when he proposed it.
Christie said that the state's pension system, which has a $54 billion deficit,should be overhauled.
The state will renegotiate 14 separate union contracts in FY2012.
Gov. Christie has said if the Democrats in the state legislature fail to cut public-employee benefits, he will cut popular property-tax refunds.
The state treasurer said that the state planned to contribute $512 million to its pension funds for teachers and state employees in FY2012, which would be the first such payment in four years. Gov. Christie, however, said a few days later that the state may not be able to make a required pension payment. The governor acknowledged that the payment “is required under current law,” but said, “Laws change all the time. That’s our current intention, but that could change.”
The fund benefits nearly 800,000 current and retired state employees and teacher and the gap between its assets and anticipated payouts is $46 billion as of June 30, 2009.
Budget reforms proposed by the governor include repealing an increase in benefits approved years ago; eliminating automatic cost-of-living adjustments; raising the retirement age to 65 from 60 in many cases; reducing pension payouts for many future retirees; and requiring some employees to contribute more to their pensions. Christie said."We must reverse the damage caused by fairy-tale promises that have fattened benefits and pensions to unsustainable levels."
New Jersey will lose $900 million in federal funding for Medicaid in FY2012, and Gov. Christie has said he may cut Medicaid but did not give an amount.
New Jersey launched the New Jersey Transparency Center on July 1, 2010. The website contains data on tax collections, expenditures by various state agencies and payroll data for agencies and individuals. In November 2010 the state added financial information for 19 independent agencies such as the New Jersey Turnpike Authority and New Jersey Sports and Exposition Authority. A bipartisan bill to make the website permanent and also extend similar online oversight of government spending to the local level is stalled in the legislature.
New Jersey currently has no statewide, official spending database online, despite recent attempts to pass legislation that would create a searchable spending database. The General Assembly, however, passed bill A-4103 introduced by Assemblymen Mike Panter and Gary Schaer. The bill would would require all governmental affairs agents to list their involvement with the annual appropriations act or supplemental appropriations legislation on the quarterly reports they file with the Election Law Enforcement Commission (ELEC).
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
|State Database||Searchability||Grants||Contracts||Line Item Expenditures||Dept/Agency Budgets||Public Employee Salary|
|New Jersey Transparency Center|
- See also: Evaluation of New Jersey state website
Multi-Measure Budget Transparency Profile
The Institute of Government and Public Affairs] at the University of Illinois has created a multi-measure transparency profile for New Jersey, which measures state transparency as of September 2011 using indicators from a range of organizations, including Sunshine Review. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.
U.S. PIRG "Following the Money" report
- See also: Following the Money 2014 Report
The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending. According to the report, New Jersey received a grade of C+ and a numerical score of 79, indicating that New Jersey was "middling" in terms of transparency regarding state spending.
New Jersey is required to pass a "balanced budget." Article VIII, Section II, paragraph 2 of the 1947 Constitution states "no general appropriation law or other law appropriating money for any State purpose shall be enacted if the appropriation contained therein, together with all prior appropriations made for the same fiscal period, shall exceed the total amount of revenue on hand and anticipated which will be available to meet such appropriations during such fiscal period, as certified by the Governor."
If the governor does not believe that the distribution of appropriations is in the State's best interest, the Governor may block the appropriation of funds to state agencies; moreover, New Jersey law also permits deficits to be carried over from one year to the next.
New Jersey's fiscal year begins July 1 and ends June 30 of the following year. The governor reviews individual agency requests along with past and present expenditure and revenue data from November through mid-January. In February the makes his/her final decision and presents a budget recommendation to Legislature on or before the fourth Tuesday in February. The Legislature reviews the recommended budget through a series of hearings and makes any necessary changes to the document. Once both the Assembly and the Senate have approved the bill, it is signed by the governor before July 1, as stated in the state Constitution. The governor does have the power to use line-item veto before signing the bill into law.
The Office of the New Jersey Comptroller is an independent office that audits government finances, reviews the performance of government programs and examines government contracts. The Office was created by legislation on March 15, 2007.. It is responsible for conducting audits of the executive branch of state government, public institutions of higher education, independent state authorities and local governments and boards of education. Appointed by the Governor, with the advice and consent of the Senate, the State Comptroller serves a six year term and can be reappointed for a second term. All employees of the Office of State Comptroller are barred from engaging in any political activity. Matthew Boxer was sworn in as New Jersey’s first independent state comptroller on Jan. 17, 2008. The audit reports are published online.
- Audits government finances
- Examines efficiency of government programs
- Scrutinizes government contracts
- Provides audit training to government entities
The Institute for Truth in Accounting (IFTA) rates New Jersey “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – the annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider New Jersey's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care. New Jersey's CAFRs are published online by the New Jersey Department of the Treasury, Office of Management and Budget.
In 2010, the State of New Jersey was given the following ratings:
New Jersey received $4.9 billion in federal stimulus funding between February 2009 and June 2013.
According to 2011 Census data, the state of New Jersey employed a total of 171,697 people, down from a total of 176,993 state employees in 2010. Of those 171,697 employees in 2011, 134,410 were full-time employees receiving a net pay of $797,041,595 per month and 37,287 were part-time employees paid $50,763,803 per month. More than 42% of those employees, or 72,647 employees, were in education or higher education.
- See also: New Jersey public pensions
In January 2014, it was reported that New Jersey’s state government faced nearly $214 billion debt, which does not include county or municipality debt. The debt divides into roughly $24,000 for every man, woman, and child in the state. The report was prepared by State Budget Solutions, a nonprofit public policy group in Virginia. "Fiscal changes are needed, and they are needed now," SBS president Bob Williams said in an interview. “Breaking down the state debt totals reflects the alarming toll that reducing that debt may take on citizens, the local economy and state budgets if lawmakers do not take drastic action." Specifically, New Jersey state debt is divided into several categories, including $64 billion in general debts like bonds and leases, $108 billion for unfunded public pensions, and $41 billion in unfunded employee benefits, like health coverage for retirees.
- State Budget Solutions, New Jersey
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Center for Policy Research of New Jersey
- New Jersey Department of the Treasury, Office of Budget and Management
- New Jersey Legislature
- New Jersey state site
- New Jersey Americans for Prosperity
- New Jersey Transparency in Government Act
- FY 2011 Budget in Brief Issued March 16, 2010
- "If you tax them they will leave" March 16, 2010 Dailyrecord.com
- "New Jersey Governor Proposes Deep Spending Cuts," March 16, 2010 The New York Times
- "NJ gov seeks to slash spending, amend constitution," March 17, 2010 The Washington Post
- "Budget in Detox for Addicted NJ" March 17, 2010 Courrierpostonline.com
- "Dems: NJ budget a heavy lift for middle class" March 15, 2010 Business Week
- "Bret Schundler: School Aid Cuts Unavoidable" NJ.com March 15, 2010
- Christie budget suspends N.J. tax rebates" Philly.com March 16, 2010
- State of New Jersey, Dept. of the Treasury, Office of Management and Budget, FY2013 Summaries of Revenues,Expenditures and Fund Balances
- The Wall Street Journal "Christie Trims Budget" June 29, 2012
- National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting" April 2011
- State Budget Solutions "State Budget Solutions' third annual State Debt Report shows total state debt over $4 trillion" Aug. 28, 2012
- State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
- State Budget Solutions "State debt more than $37,000 per private worker, $13,000 per capita" Oct. 2, 2012
- Yahoo, The Best- and Worst-Run States in America, Nov. 27, 2012
- US Census Federal Aid to State and Local Governments
- Tax Foundation' "Monday Map: Federal Aid to State Budgets. Accessed October 15, 2013
- NJ.com "Christie unveils $32.9B N.J. budget that expands Medicaid, covers pension payment" Feb. 26, 2013
- The Wall Street Journal "Christie Sets Modest Course" Feb. 26, 2013
- The Wall Street Journal "Christie Trims Budget" June 29, 2012
- Bloomberg "N.J. Lawmakers Ordered to Return for Special Tax Session" July 1, 2012
- The Wall Street Journal "Christie Sets Modest Course" Feb. 26, 2013
- NJ.com "Gov. Christie asks Cabinet to prepare for potential government shutdown if budget talks stall" June 12, 2012
- The Philadelphia Inquirer "Projecting big economic recovery, Christie offers budget with little pain" Feb. 21, 2012
- Businessweek "Christie’s $32.1 Billion Budget Counts on Rising Tax Revenue" Feb. 21, 2012
- CBSNews.com "NJ tax cut plan may survive despite revenue slump" May 18, 2012
- Businessweek "Christie Pitches New Jersey Budget, Tax Cuts in Radio Blitz" Feb. 27, 2012
- Fox News "Christie budget proposes modest increase in school aid, first phase of income tax cut" Feb. 21, 2012
- NJ.com "N.J. budget committee to discuss Gov. Chrisite's 10 percent tax cut proposal" Jan. 27, 2012
- The Wall Street Journal "Christie to the 1%: Please Occupy New Jersey" Jan. 28, 2012
- Businessweek "Christie N.J. Tax Cut Imperiled by Rise in Debt, Pension Costs" Feb. 17, 2012
- NorthJersey.com "Christie faces hurdles over state budget plan" Feb. 11, 2012
- CBSnews.com "NJ tax cut plan may survive despite revenue slump" May, 2012
- Businessweek "New Jersey September Revenue Comes in 6.9% Below Projections" Oct. 14, 2011
- Businessweek "" Feb. 21, 2012
- Reuters "Democrats, Christie poised for budget fight" June 29, 2011
- The Albany Times Union "NJ governor pares and signs state budget" June 30, 2011
- CNNMoney.com "It's D-day for state budget" June 30, 2011
- Bloomberg "New Jersey Democrats Offer Christie Budget Alternative as Deadline Nears" June 27, 2011
- The Christian Science Monitor "State budget woes: How much will they drag down US economy?" Jan. 20, 2011
- NJ.com "N.J. faces $10.5B budget deficit heading into next year" July 20, 2010
- The Trentonian "NJ Governor Chris Christie disputes $10.5B deficit projection" July 22, 2010
- Bloomberg "New Jersey Plans to Make First Pension Payment Since 2008, Treasurer Says" July 28, 2010
- The Hudson Reporter
- The New York Times "Citing Debt and Benefits, Fitch Lowers Bond Rating for New Jersey" Aug. 18, 2011
- New Jersey Newsroom "$30 billion state budget proposed by N.J. Democrats" June 24, 2011
- WIBW.com "Workers' Protests Swell In Midwest As Budget Battles Continue " Feb. 23, 2011
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- NJ.com "N.J. lawmakers bracing for battle following Christie's budget address" Feb. 20, 2011
- The Wall Street Journal "Budget Battles Roil Straitened States" Feb. 25, 2011
- Bloomberg "New Jersey May Not Make Pension Payment in Fiscal 2012, Christie Says" July 30, 2010
- The Cleveland Plain Dealer "States cutting benefits for public-sector retirees" Sept. 15, 2010
- Bloomberg "Christie may cut Medicaid as $10.5 Billion New Jersey Budget Deficit Looms" Jan. 9, 2011
- The Star Ledger "N.J. government transparency website launches" July 1, 2010
- The Star Ledger "N.J. website details finances of state independent authorities" Nov. 29, 2010
- New Jersey Transparency Center
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- Senatenj.com, Cross Section of NJ Municipalities Endorse “Transparency in Government Act”
- [New Jersey Legislature, A-4103
- Politicker NJ "Panter, Schaer Measure Improving Budget Transparency Receives Final Legislative Approval" June 11, 2010
- [Institute of Government and Public Affairs, New Jersey Profile
- [http://igpa.uillinois.edu/system/files/50_States_Transparency_Profiles.pdf Institute of Government and Public Affairs, 50 States Transparency Profiles}
- Institute of Government and Public Affairs, State Transparency Profiles
- U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
- New Jersey Budget Analysis
- State of New Jersey,"The State Budget Process," accessed June 5,2009
- [New Jersey State Comptroller Web site retrieved November 1, 2009
- New Jersey State Comptroller Web site, retrieved November 1, 2009
- Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
- New Jersey Department of the Treasury, Office of Management and Budget Web site, retrieved November 1, 2009
- New Jersey State Treasurer Web site, accessed August 1, 2013
- US Census, Bond Ratings for State Governments by State: 2010, published 2012
- Recovery, "Stimulus Spending by State"
- U.S. Census, 2011 Public Employment and Payroll Data State Governments, New Jersey
- U.S. Census, 2010 Public Employment and Payroll Data State Governments, New Jersey
- WatchDog.org "NJ government faces $214 billion debt; pensions are biggest cause," January 8, 2014