THE ESSENTIAL GUIDE TO THE NEW JERSEY STATE BUDGET

[Pages:11]THE ESSENTIAL GUIDE TO THE NEW JERSEY STATE BUDGET

APRIL 2018

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TABLE OF CONTENTS

I. Murphy's Budget: Five Things to Know II. Budget Players III. Budget Overview

I. MURPHY'S BUDGET: FIVE THINGS TO KNOW

It's budget season in Trenton, and lawmakers have begun their review of the $37.4 billion spending plan Gov. Phil Murphy unveiled in his first budget address.

Here are five things to know about the new governor's first proposed budget and what to expect as negotiations kick off in the Legislature:

1 Most of the revenue raisers were expected.

Murphy is asking lawmakers to raise taxes by nearly $1.7 billion to pay for his priority agenda items, which include free community college, boosting school funding and fixing the beleaguered NJ Transit. Consequently, as it relates to the pledges he outlined on the campaign trail, there were few surprises in the governor's budget proposal.

Most of the revenue raisers were anticipated, particularly: > Establishing a millionaire's tax > Legalizing the sale of recreational marijuana

The one budget curveball? Murphy is proposing that lawmakers undo a Gov. Christie-era cut in the state sales tax.

Budget Blowback

Senate President Steve Sweeney has said all the ideas give him heartburn and that he views higher income taxes as a "last resort." But he has yet to completely rule out anything, the New Jersey Pro team reports, so expect some behind-thescenes maneuvering as Sweeney, Murphy and Assembly Speaker Craig Coughlin try to come to terms on a final budget by the June 30 deadline.

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2 The debate over funding for K-12 classrooms will take center stage.

As budget talks unfold, the debate over funding for K-12 classrooms will take center stage again this year. The administration increased funding to schools by $283.6 million overall for fiscal year 2019, and touted the fact that 94 percent of districts, or 546 communities, would receive some boost in aid, and that no district or charter school would receive less than it got this year.

But some lawmakers and school administrators aren't happy that districts that have been overfunded by the state for years will continue down that path ? and in some cases, see their funding increased ? while underfunded districts are still playing catch-up. "My recommendation would be to put the money into the school districts that are underfunded ? that are the other 85 percent" of districts in the state, said Assembly Majority Leader Lou Greenwald.

A Modernized Formula?

In March, Murphy's chief of staff, Pete Cammarano, said the administration has had conversations with legislative leaders indicating "we are very much open to discussing how to modernize" the school-funding formula as part of this year's budget negotiations. Many in Trenton believe that the formula, now 10 years old, needs to be revised to reflect school districts' current needs.

More recently, Murphy himself called the current formula "completely unacceptable" and vowed to be "all in" on working with the Legislature to get it changed.

3 The governor's plan doesn't include any funding for the prisoner re-entry program run by former Gov. Jim McGreevey.

McGreevey, who served as governor from 2002-2004, said that he asked the Murphy administration to allocate $5 million in this year's budget for the New Jersey Reentry Corporation, the organization McGreevey runs to help former offenders get addiction treatment, sober housing, job training and placement, as well as legal services.

The governor's proposed budget includes no money for the program. However, McGreevey said he is in talks with legislative leaders regarding an add-on.

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Repeating History

While re-entry and addiction were top issues for Christie, the Republican governor would continually leave the funding out of his budget, only to see it included during the negotiations as a legislative add-on. Last year's budget included an add-on of $4 million for the organization. The year before, the Legislature included a $2.5 million add-on, and $3.5 million the year before that.

4 The budget includes $148 million in new state funding to improve NJ Transit.

Fulfilling his promise to make the troubled the commuter transportation agency a top priority, Murphy has pledged $148 million in new funding to plug a budget gap and wean NJ Transit off non-recurring revenue, while the remainder could go toward hiring and other improvements. "We must get the system back to fiscal health," Murphy said. "The bulk of this is straight in from the state financing to turn the lights on in the morning."

Murphy would give the agency $383 million in direct state subsidy ? a $242 million increase from the current fiscal year.

On the Waterfront

In January, one day before taking office, Murphy united with Hoboken Mayor Ravi Bhalla against a plan by NJ Transit to buy property on the Hoboken waterfront from New York Waterway to be used as a boat maintenance yard.

Less than three months later, the administration initiated the buying process by calling for an "emergency vote" to ensure that Hoboken, which wants to use the site as a public park, didn't try to take the land through eminent domain. After pushback from Bhalla, both sides agreed to pause in their pursuit of the property and the vote was cancelled. However, it's still possible the dispute will continue.

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5 Direct support professionals are again looking to the Legislature for wage increases.

Murphy's proposed budget removed a $20 million appropriation included last year that went toward pay raises for direct support professionals, the workers who provide services for residents with intellectual and developmental disabilities and are paid for by the state's Medicaid program. Thomas Baffuto, executive director of the Arc of New Jersey, an advocacy group for people with intellectual and developmental disabilities, said the understanding was that the $20 million was a one-time legislative add-on to cover bonuses, since the state didn't have the funds for an overall wage increase.

This year, the Arc's local chapters, along with other groups that contract with the state and make up the Coalition for a Direct Support Professional Living Wage, are asking the Legislature to include a $72 million add-on, which would increase the average hourly wage by $1.25.

Raising the Minimum Wage

Another priority and campaign pledge for the governor is raising the minimum wage to $15 ? which is one of few of Murphy's progressive programs the Senate president supports. But while unions and progressive groups closely aligned with Murphy want an across-the-board increase, Sweeney wants exceptions for farm workers and teens.

The article above is based on original reporting from POLITICO New Jersey Pro.

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II. THE BUDGET PLAYERS

In addition to Murphy, the following lawmakers play a key role in budget negotiations:

Assemb. Jon Bramnick

REPUBLICAN LEADER New Jersey Assembly

Peter Cammarano

CHIEF OF STAFF Office of the Governor

Assemb. Craig Coughlin

SPEAKER New Jersey Assembly

Assemb. John DiMaio

BUDGET OFFICER New Jersey Assembly

Frank Haines III

LEGISLATIVE BUDGET AND FINANCE OFFICER Office of Legislative Services

Sen. Thomas Kean

REPUBLICAN LEADER New Jersey Senate

Assemb. Eliana Pintor Marin

BUDGET COMMITTEE CHAIR New Jersey Assembly

Elizabeth Maher Muoio

ACTING TREASURER Department of the Treasury

Matt Platkin

CHIEF COUNSEL Office of the Governor

Sen. Paul Sarlo

BUDGET AND APPROPRIATIONS COMMITTEE CHAIR New Jersey Senate

Sen. Stephen Sweeney

PRESIDENT New Jersey Senat

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III. NEW JERSEY STATE BUDGET: AN OVERVIEW

One of the most significant political milestones for the new governor will be the passage of his first budget, which will determine how much funding is available to enact the various progressive policies Murphy pledged during his campaign.

The state budget process is a lengthy one, beginning in August and continuing through final budget negotiations in June. Here's a step-by-step overview of how New Jersey's budget is made:

1 THE OFFICE OF MANAGEMENT AND BUDGET DISTRIBUTES

BUDGET INFORMATION TO STATE AGENCIES.

In the weeks following the start of the new fiscal year on July 1, planning begins for the next fiscal year. The Office of Management and Budget (OMB) officially initiates the budget process in September by distributing a preliminary budget and technical instructions to state agencies. These materials provide guidance to departments as they determine funding

needs and assess priorities for the coming year.

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