April 4, 2014
Re: Office of Legislative Services Budget and Finance Officer Rosen and State Treasurer
Eristoff Testify on Governor’s Budget Proposal
On Tuesday (before the Senate Budget and Appropriations Committee) and on Wednesday (before the Assembly Budget Committee), expert budget testimony was presented by the nonpartisan Office of Legislative Services’ (OLS) Legislative Budget and Finance Officer David J. Rosen and by State Treasurer Andrew P. Sidamon-Eristoff.
Dr. Rosen’s testimony focused on the revenue forecasts for the current (2014) and upcoming (2015) State fiscal years and on broader revenue trends. The text of his remarks is available online at http://www.njleg.state.nj.us/legislativepub/budget_2015/Rosen_testimony_04012014_SBA.pdf.
The parameters of New Jersey’s next balanced budget will be limited by the level of revenues available. The OLS estimates, which are contained in the annual OLS Tax and Revenue Outlook, are online at http://www.njleg.state.nj.us/legislativepub/budget_2015/tax_revenue_analysis_2015.pdf.
Those estimates project that SFY 2014 revenues and SFY 2015 revenues will be $525.9 million less than the estimates that served as the basis for the Governor’s budget proposal. (See our February 25 letter on the proposal at http://www.njslom.org/2015-FY/2014-0225-SY2015-tolegislature.html.) OLS estimates for the current fiscal year are $216.6 million than the Governor’s projection, which, if accurate, would reduce the balance to be carried forward. OLS projects that revenues for SFY 2015 will fall $309.4 million short of the Executive branch target.
Both OLS and the Administration’s revenue estimates will be updated in May, when better and more data will be available. The final appropriations act will be limited by the Governor’s certification of State revenues, as of June 30.
The Treasurer’s testimony took a broader look at the Administration’s record of fiscal discipline and highlighted aspects of the SFY 2015 proposal. (See Treasurer Eristoff’s full statement at
The Treasurer repeated a point made by the Governor on February 25, noting that 94 percent of the revenue growth expected in the State’s next Fiscal Year will need to be budgeted for State and school district employee pensions, for State and school district employee health benefits and for debt service.
He commented on the tax policy changes that the Governor has recommended, including the proposed change in Urban Enterprise Zone (UEZ) business-to-business sales tax. Instead of a tax-free transaction, the Governor proposes that the UEZ retail sales tax rate of 3.5% will be applied on business-to-business sales.
League President, Mayor Suzanne Walters had commented on this proposal in her recent State Budget testimony, when she noted, “The Urban Enterprise Zone Program has been the catalyst for billions of dollars in business investments throughout New Jersey. The Program has been used to create and retain jobs, to promote smart growth and investments; while providing tax relief through the financing of infrastructure, sanitation and public safety initiatives; which in many cases would not be fundable solely through municipal budgets. … This is a time when municipalities need to continue fostering economic redevelopment and encouraging job creation through the growth and expansion of private sector opportunities.”
In addressing challenges that the State faces, the Treasurer reminded legislators of the Governor’s call for another round of public employee pensions and benefits reforms, stating, “As the Governor has made clear, we can and must do more.” In response to questions from Committee Members, the Treasurer further indicated that he has been preparing, for the Governor’s consideration, a menu of options designed to reduce the State’s pension and benefits obligations.
Over the next few weeks, the various Executive Branch Departments will appear before the Committees to discuss their programs and priorities. We will keep you posted on any news bearing on your municipalities and your budgets, beginning with a review of the Department of Community Affairs appearance before the Assembly Budget Committee, which is scheduled for Monday, April 7.
If you have any questions on this, please contact Jon Moran at 609-695-3481, ext. 121 or firstname.lastname@example.org
Very truly yours,
William G. Dressel, Jr.