If tax collection reached historic highs, a budget proposed by Gov. Phil Murphy would reduce the total amount of spending provided by one-off sources of revenue.
However, recently published details of the budget indicate that it will continue to rely on significant appropriations from budgetary reserves to achieve balanced revenues.
Budget figures obtained by NJ Spotlight News through a request for public records show that Murphy requires that approximately 5% of annual expenses be backed up as known as one-off sources of income during the fiscal year beginning in July.
Major credit rating agencies and other fiscal security guards typically like to see that annual expenses coincide with annual revenues; they often see a high dependence on one-time sources of income, which they call “one-time,” a sign of trouble.
New Jersey has seen a surge in tax collection in recent months, and according to a nearly $ 49 billion spending plan announced by Murphy earlier this month, the percentage of total spending supported by one-off receipts will be about halved from the last two the financial years of the state. .
How much?
However, budget documents show that about $ 2.5 billion in revenue will continue to come from one-time sources – including the general surplus of the state fund – to support the overall increase in annual spending of $ 2.5 billion per year proposed by Murphy .
MP Hal Wirts: “We are still spending more than we are getting.”
New Jersey got its own the first credit rating boost in nearly two decades earlier this year after the completion of Fr. multibillion-dollar debt initiative. But Republicans took advantage of the administration’s continued reliance on one-off sources of revenue when they criticized the governor’s proposed budget and a broader solution to fiscal issues.
“We are still spending more than we accept,” said Assembly member Hal Wirts (R-Sussex), discussing Murphy’s spending plan in the House of Representatives earlier this month.
“The first thing we need to do is get a structural deficit (solve) and start spending within our means,” Wirts said.
Although a small amount of one-time spending is expected in any government spending plan, New Jersey has often received poor marks from groups such as the non-partisan Walker Alliance, which regularly rank states based on their fiscal practicesincluding whether they use one-time transfers of funds to maintain a balance of expenses.
One Shot Problem
One-off cases create a structural budget gap that is likely to need to be filled in the coming years. Using a budget surplus as a one-time source of revenue also means that less total funding is available as hedging against unforeseen expenditure needs or revenue losses, such as those that hit the state budget in 2020 at the start of the COVID-19 pandemic.
Murphy, a second-term Democrat, aimed to reduce the state’s dependence on one-time income before the pandemic caused a short-term budget deficit that led to mid-year spending cuts in 2020 of about $ 1 billion.
Murphy once said that one-time income “can help balance books in one year, but always – always – leads to a frantic struggle to close an even bigger hole in the next.”
In general, according to budget documents, Murphy’s budget for fiscal year 2023 provides for “expenditure” of $ 2 billion. At the same time, the total surplus projected at the end of this fiscal year is $ 4.2 billion.
“The proposed budget for fiscal year 2023 balances critical spending with a reliable surplus of $ 4.2 billion, more than 10 times the surplus for fiscal year 2018 and nearly 9% of the total budget,” said Finance Ministry spokeswoman Daniel. Curry.
Murphy hit Christy
The Treasury also credits as a one-time revenue of $ 300 million in business tax, which will be levied during the 2023 fiscal year. It is expected that these revenues will not be repeated in the next financial year, when the allowance for highly profitable enterprises is planned before sunset.
Before the pandemic, Murphy, a former Wall Street chief, said the key policy goal was less than 2% of annual spending tied to one-time income.
He told lawmakers in a speech on the 2020 budget that one-off revenues “can help balance books in one year, but always – always – lead to a frantic struggle to close an even bigger hole in the next.”
During the same speech, Murphy also targeted his Republican predecessor Chris Christie, saying the former governor often used single shots in a “desperate attempt to get New Jersey residents to believe the state is on solid ground.”
Asked whether a one-time allocation of less than 2% of planned annual spending is still a political goal of the Murphy administration, Curry said: “Reducing reliance on one-off resources remains a goal.
“The new proposed budget is more than halving these resources compared to last year,” she said.
