Gov. Phil Murphy is gearing up to realize his latest fiscal vision of New Jersey as the state increasingly feels the effects of global climate change and continues to fight the coronavirus pandemic.

Murphy and the legislature need to address these issues as New Jersey residents continue to pay consistently high property taxes and voters are putting increasing pressure on them to address common accessibility issues.

Meanwhile, Murphy, a second-term Democrat, is also facing the challenge of trying to improve past state budget practices that have left New Jersey deep in debt and with one of the nation’s worst-funded civil service pension systems.

And while the pandemic and economic downturn it caused two years ago could ease, fiscal experts say it’s never too early to start preparing for the next emergency – and the impact it could have on budget-funded and state-funded programs that provide the most services. vulnerable New Jersey residents.

Here are some of the key issues to look out for when Murphy delivers his budget message before Tuesday’s joint legislature session and when the debate takes place before the deadline, when lawmakers must submit a balanced budget by July 1:

Climate change

New alarms were killed in recent weeks about the effects of global climate change – including rising sea levels – that is of particular concern to New Jersey’s coastal communities. Not so long ago, Murphy himself toured communities across New Jersey affected by floods and other damage caused by powerful storms, which he personally linked to climate change.

Environmentalists have criticized the Murphy administration for taking funds from the state’s Clean Energy Fund … to help balance New Jersey Transit’s annual spending.

Earlier, Murphy announced ambitious long-term goals aimed at reducing New Jersey’s dependence on fossil fuels and reducing greenhouse gas emissions that change the climate. But environmentalists have also criticized the Murphy administration for often taking funds from the state’s Clean Energy Fund to supplement subsidies included in every state budget to help balance New Jersey Transit’s annual spending. It remains to be seen whether this will happen again.

It is also important to monitor what new climate change proposals could be included in the new state budget, such as increased funding for flood planning or the Blue Acres program used to buy homes in New Jersey. living in flooded areas.


Much of Murphy’s recent push postpone the unveiling of his budget plan for two weeks to make sure he can personally pass on to lawmakers in Trenton this week a message demonstrating improving conditions in the state early in the third year of the pandemic.

New Jersey’s ongoing response to the pandemic has had a major impact on the state’s last two budgets: from managing short-term revenue losses caused by the health crisis to taking advantage of tax spikes and significant dollar relief that came after a final aggressive federal intervention.

Although New Jersey’s health prospects are improving, the pandemic remains a serious card as persistent labor shortages and sustained inflation continue to impact the state’s economy. It remains to be seen whether a new coronavirus variant could cause an increase in COVID-19 cases, which occurred just a few months ago when the omicron variant swept the state. Help alleviate these problems somewhat, at least when it comes to the impact on public finances, billions in the remaining federal dollars that New Jersey has not yet spent.


Republicans were given seats in both houses of the Democrat-controlled legislature, and Murphy was nearly upset by his Republican candidate in the November election. This has again raised concerns about the relatively high cost of living in the state, including ever-increasing local property taxes.

Lawmakers have begun pushing for measures to ease property taxes, including for those often overlooked by state tenants, and Gov. Phil Murphy also participated in an “accessibility” campaign last week.

Lawmakers have not waited until the state budget is ready to start solving these problems. In recent weeks, lawmakers have begun promoting several measures to increase property tax benefits, including for those who often forget about tenants. Murphy also participated in the “accessibility” campaign. last week, announcing that its new budget would increase funding for direct property tax benefits so more homeowners in New Jersey could qualify for those benefits. Meanwhile, many tenants will also start receiving checks for assistance totaling at least $ 150 if lawmakers accept his plan.

But as state taxes have risen in recent months, Republicans have called for more immediate tax cuts for residents, including in order to help them fight rising inflation and high gas prices. It remains to be seen whether the check for the $ 500 income tax credit that Murphy and lawmakers sent to thousands of families ahead of their re-election last year will be extended without a major election in the 2022 political calendar.

Pension funding

After years of underfunding its employer’s pension contribution or – in some years making no contributions – this year New Jersey is doing what state actuaries would consider a full employer’s pension payment, for the first time in more than two decades. But achieving this hurdle takes nearly $ 6 billion from the budget – more than 10% of total government spending – and another about $ 1 billion from a dedicated state lottery.

It will take years for full state pension contributions before New Jersey can fully emerge from the deep pit created by pre-financing, and although Murphy has publicly pledged to maintain full funding, this could be a moving goal. First, the estimated rate of return of the pension fund should fall slightly starting in July this year, which is likely to shift most of the burden of funding, which has historically been covered by investment income, to taxpayers. Meanwhile, many workers and retirees have begun calling for the resumption of cost-of-living adjustments suspended more than a decade ago as a saving measure, and it will only increase the amount taxpayers have to pay to keep the overall pension fund in good health.

Preparing for the next recession

Taxes in New Jersey rose last year and continue to do so this year, putting the state in an unfamiliar position to fully pay pension benefits and pay off part of its significant bond debt. In fact, just last week New Jersey received its first credit rating boost in nearly two decades from Moody’s Investors Service in response to these and other recent actions.

But also last week leading fiscal analysts on Pew Charitable Trusts has published an analytical report suggesting that now is the time for state governments to begin preparations for the next major economic downturn, and how this could affect the budgets and programs that many residents are counting on to provide key services.

Last year, the state fund “Black Day” was exhausted, even as revenues grew.

Last year, Murphy and lawmakers spent part of what was then more than $ 10 billion in budget surplus to support spending growth over the same period last year, creating a structural gap in the budget that now needs to be filled under a new spending plan . Murphy collects. The state’s “Black Day” fund, which should only be used during major emergencies, was also depleted last year, even as revenue grew as it did again.

Murphy and lawmakers have made progress in recent years when it comes to creating an unlimited budget surplus, but as spending increases, maintaining adequate reserves becomes a moving goal. It remains to be seen whether Murphy and the legislature give priority to a more secure surplus, so when the next big economic blow comes, they are not forced to postpone or even cut funding to measures such as direct property tax cuts for the elderly and homeless. which often occurred in New Jersey, including in 2020 at the start of the pandemic.

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