Andrew Musick, Vice President, Taxation & Economic Development
Over the past two days, the Office of Legislative Services (OLS) and Acting State Treasurer Elizabeth Maher Muoio appeared before both the Senate and Assembly budget committees to discuss the FY 2019 Budget as proposed by Governor Murphy.
During the hearings, the Legislature examines the proposed budget and has the opportunity to pose questions to both OLS, as well as the Acting Treasurer. Much of the discussion focused on the revenue estimates and impacts of the various tax increases included in the FY 2019 Budget proposal. Please find a brief summary of the hearings below.
The combined OLS revenue estimates are $180 million less than the estimates in the budget proposed by Governor Murphy back in February. Specifically, the OLS revenue estimates for FY 2018 are $3.4 million below Governor Murphy’s budget estimates and $176.6 million below his budget estimates for FY 2019. This is an extremely small difference in revenue estimates, representing roughly ¼ of one percent of total revenues.
Acting Treasurer Maher Muoio highlighted the structural challenges which exist in the budget, as the state is still rebounding from the recession and has outstanding pension and school funding obligations to fill. The budget calls for an increase in revenue from the top income tax rate, or a millionaires tax, an increase to the sales tax, and changes to the way in which the state taxes corporations. The Acting Treasurer highlighted the Governor’s commitment to providing education, jobs and economic development for the State.
The Administration also discussed their plan to move $788.5 million in Energy Tax Receipts from a traditionally off-budget account, to an on-budget account to help address the structural imbalance in the State’s General Fund. Acting Treasurer Maher Muoio added that this change would have no impact on municipal revenues, and that towns would see no change in the amount of money they receive from the State.
Budget Committee members noted the proposed budget calls for additional spending and new programs, along with existing liabilities that will need to be addressed, without detailing how these outstanding obligations will be met into the future. Additionally, there were discussions surrounding pension and health benefits, including potential savings around “Out-of-Network” reform legislation and the need for additional reforms to help control health care costs.
Lawmakers also discussed the impact of an increased minimum wage, the outmigration of millennials, and the desire to have New Jersey businesses expand in the state.
I have included links to the OLS Tax & Revenue Outlook, as well as the remarks made by OLS and Acting Treasurer Maher Muoio.
OLS Analysis of the New Jersey Budget FY 2018-2019
Legislative Budget and Finance Officer’s Testimony
OLS Revenue Forecast Testimony
Please stay tuned for additional budget-related updates, as I plan to keep everyone informed as the budget process continues. OLS and the Acting State Treasurer will appear before both the Assembly and Senate budget committees again on May 21st and 22nd, respectively to provide an additional revenue update. The FY 2019 budget must be passed by the Legislature and signed by the Governor by July 1, 2018.
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