NJ budget committees approve $60.7B budget in late-night votes

Budget committees in both chambers of the Legislature approved a $60.7 billion annual spending bill in late night party-line votes Sunday, but they also advanced hundreds of millions of dollars in additional spending for lawmakers’ priorities using a separate bill that boosts overall spending to above $61 billion.

The budget, the largest in state history, maintains the state’s full pension payment, increases school aid to record levels, and enacts cuts across a range of programs to narrow New Jersey’s structural deficit, the gap between its recurring revenue and spending.

“As I say all the time in budgets, there’s a lot of good. There’s things that each and every one of us don’t like. That’s part of the budget process. It’s a big document,” said Sen. Paul Sarlo (D-Bergen), the chamber’s budget chairman.

New sheriff in town, same old deputies in charge of NJ’s budget

Assemblywoman Eliana Pintor Marin (D-Essex), who chairs her chamber’s budget panel, struck a similar tone.

“I think that there’s good things in this budget for everyone. Whether it’s a budget or a regular bill, there’s never a perfect one,” she said, adding praise for its narrowed deficit.

The spending bill, the first to be advanced under Gov. Mikie Sherrill, calls for New Jersey to expend about $1.4 billion more than it takes in through taxes and would leave New Jersey with just over $6 billion in reserves.

It includes $12.4 billion in aid to New Jersey schools and maintains language that will cap aid cuts to 3% of the prior year’s award and limit increases to 6% of the same.

The budget will pare down Stay NJ, a property relief program targeted at New Jersey seniors and championed by Assembly Speaker Craig Coughlin (D-Middlesex), by lowering its income cap from $500,000 to $200,000 and means testing its awards.

Tax credits under the program would be capped at $6,500 for those making no more than $100,000, $5,000 for individuals with no more than $150,000 in earnings, and $4,000 for individuals making up to $200,000.

Under existing law, the program would have paid a maximum benefit of $6,500 to any senior homeowner who made no more than $500,000 annually. The changes are expected to cut the program’s annual cost from $1.2 billion to $742 million.

This year’s budget process faced renewed criticisms over transparency that have become an annual exercise in Trenton, with Republican lawmakers charging Sherrill had reversed course on a promise to end the opaque end-of-June rush to pass a budget.

Score sheets and language changes that had not undergone technical review but detail how appropriations and provisions changed from when Sherrill proposed a budget in March were made available to press in the evening, earlier than in some past years.

“Nobody’s who’s going to vote for this thing tonight has read it. You see it — 15 minutes ago, I got 56 pages of line items and budget wording,” said Sen. Declan O’Scanlon (R-Monmouth), the chamber’s GOP budget officer.

He added the process would benefit if the budget bill was required to sit without a vote for one or two weeks to allow press, the public, and lawmakers themselves to review it.

Democrats defended the process, saying the budget’s content was telegraphed by months of public and departmental hearings.

Anyone who doesn’t think the budget is developed in a transparent way is “not paying attention to the process,” said Sen. John Burzichelli (D-Gloucester)

The Senate Budget Committee did not take testimony on the budget.

Revenue raisers

Alongside the budget bill, committees in both chambers advanced legislation enacting tax changes that are expected to raise a combined total of $750 million.

Legislation capping businesses’ ability to write off losses to $1 million until Aug. 1, 2030, is forecast to bring in $485 million annually.

A separate bill reducing the amount business owners who use the alternative business calculation adjustment can deduct from their income tax liability is set to bring in $120 million. That bill bars the deduction for individuals making more than $500,000 a year and halves it for individuals making between $250,000 and $500,000.

A third bill would levy a per-employee fee for employers with at least 50 workers enrolled in the state Medicaid program. It is likely to face legal challenges, like those launched against similar programs in other states over what critics have called an attempt to regulate federally governed health plans.

The bill would charge a fee of $325, $525, or $725 for each employee — and each of their family members — on Medicaid, with the fee’s level dependent on the number of workers at a given firm on the public plan. The program is expected to bring $145 million each year.

The budget agreement includes a proposal to raise award levels for New Jersey’s Child Tax Credit by 25% at all eligible income levels for three years.

The change is expected to cost New Jersey $50 million in foregone revenue.

Legislative add-ons

Alongside the budget, legislators approved a bill allowing up to $358.8 million in additional spending during the fiscal year that ends Wednesday, mostly to fund their individual priorities and for a loan program to spare Jersey City steep tax increases to close what city officials have described as a $255 million budget deficit.

Such bills, called supplementals, are typically passed alongside the budget and are sometimes approved at other times of the year, like the $128 million supplemental approved earlier this year.

They can be used to approve spending or tweak budgetary language outside of regular budget cycles, but lawmakers have not used them to approve spending for legislative add-ons in recent years, preferring to place those items, sometimes derisively called “pork” or “Christmas tree items,” within the budget itself.

The more than $200 million the supplemental sends to such priorities will join dozens of line items for individual legislators’ districts approved as part of the budget itself.

Among many others, this year’s legislative add-ons, both within and without the budget, include $2.2 million in operating aid to Linden, Senate President Nicholas Scutari’s hometown; $1 million for park improvements in Sayreville; and $5 million to a recreation center in Wood-Ridge, where Sarlo is mayor.

Other add-ons send money to the Special Olympics, Boys and Girls Clubs, and health centers. The additions are paid for, in part, by lower projected expenses for a range of Medicaid-related programs within the Department of Human Services. Those were down $266.8 million.

The supplemental also sets aside $135 million in transitional aid to localities. Language requires the state treasurer to disburse at least $110.4 million as loans to one or more municipalities.

Jersey City will receive a $105 million loan from the program on top of a $15 million grant for the city in the budget proper, Sarlo said. The city, New Jersey’s second largest, faced local tax increases of more than 20% to close its budget gap.

“Our city is an economic engine of this state. We contribute more in income tax and sales tax revenue to the Treasury’s coffers than any other municipality in this state,” said Sen. Raj Mukherji (D-Hudson), who represents Jersey City. “This is an unprecedented fiscal crisis, and if the state doesn’t support Jersey City, everyone’s going to feel the repercussions of that.”