April 29, 2014
RE: State Revenue Shortfall Grows
In a major development on State finances, Treasurer Andrew Sidamon-Eristoff announced last evening that State revenue collections for the current Fiscal Year will be even lower than the Administration anticipated when it revised its projections downward, back in February. In a Press Release published on the Treasury website, the Department noted, “Total anticipated revenues are about $31.8 billion for Fiscal Year 2014, which is approximately $807 million (2.5 percent) less than for Fiscal Year 2014 than anticipated in the Governor’s Fiscal Year 2015 Budget Message.”
The Appropriations Act for State Fiscal Year 2014, which was passed last June, assumed the availability of $32.8 billion. The Administration revised that figure downward, to $32.6 billion, in February. At that time, the Treasurer was able to cover the shortfall by identifying “lapses” – funding appropriated for a certain purpose, but not needed or used as anticipated. Those lapses included $120 million in savings on medical and prescription drug benefits for retired State employees and teachers, and $80 million realized by a change in pension system actuarial assumptions, which reduced State contributions in the current Fiscal Year. (Those changes are expected to reduce State contributions by an additional $116 million in State Fiscal Year 2015. The actuarial changes have also reduced 2014 local employer pension payments by $135 million, and similar local savings are anticipated for 2015. See our March 20 letter, which is posted on our website at http://www.njslom.org/letters/2014-0320-PensionBills.html, for details.)
In yesterday’s Press Release, the Treasurer states, “The State will take any and all actions necessary to offset the reductions in anticipated revenues, including the identification of additional lapses and savings opportunities, as well as the exercise of the full range and scope of executive authority, including, but not limited to, reserving and/or impounding budgeted appropriations. … As a consequence of these actions, the ending fund balance for Fiscal Year 2014 will remain at the level anticipated in the Governor’s Fiscal Year 2015 Budget Message.”
We will keep you posted on further developments concerning actions taken to close the gap and on the State Budget. If you have any questions, contact Jon Moran at 609-695-3481, ext. 121 or email@example.com.
Very truly yours,
William G. Dressel, Jr.