N.J. Enacts Budget With Record Pension Payment, Free College
(Bloomberg) -- New Jersey Governor Phil Murphy signed a record $46.4 billion budget with a biggest-ever pension payment, marking the first time in more than a quarter-century that the state will make the required minimum contribution to its underfunded retirement system.
The spending plan for the fiscal year that starts on July 1 is 24% higher the first one he signed in 2018. It uses an influx of tax revenue to cover free in-state public college tuition for low-income students, rebates for families with at least one child, $750 million in rental and utility assistance and other initiatives that will appeal to low- and middle-income voters in the November election for governor and all 120 legislative seats.
New Jersey’s record-high $6.9 billion pension payment, $500 million more than recommended in actuarial reports, is a noteworthy step for a state whose credit rating is second-worst among U.S. state governments, behind Illinois, because of its massive debt to the retirement system. New Jersey hasn’t made a full payment since 1996.
“This is a budget that moves our state forward,” Murphy said at an appearance in Woodbridge. “We collectively dreamed big and committed to an economy that works for every family.”
The spending plan is apart from $6.24 billion in federal pandemic aid. Murphy has said that his administration is working on how that funding will be committed and has promised that he won’t create programs and positions that are unsustainable after the cash has been exhausted.
New Jersey was among states including California, Connecticut and Texas that reported record revenue on retail sales and income tax collections. New Jersey’s unexpected $5.1 billion allowed Murphy to meet and exceed the $6.4 billion actuarially required payment.
The state also will pay off $2.5 billion of debt and put $1.2 billion toward infrastructure projects, rather than borrow for them. New Jersey’s debt load as of June 2020 was $33.4 billion, with $1.6 billion of that general-obligation bonds.
Republicans, the minority party in the legislature, faulted what they called a secretive budget process after the cancellations of final Assembly and Senate hearings where state Treasurer Elizabeth Muoio was to appear. They also said they weren’t given enough time to examine spending on some districts’ pet projects.
“I don’t like this historic lack of transparency,” Senator Declan O’Scanlon Jr., a Republican from Little Silver and a budget committee member, said in a statement on June 24, when lawmakers approved the spending plan. “I don’t like last-minute bills that spend billions of dollars that nobody has read. I don’t like massive amounts of pork and billion-dollar slush funds.”
Democrats said Murphy’s budget has been available since February. Changes since then amounted to “14 pages of score sheets, which change the line items of the funding priorities of this legislature, and another 14 pages or so of language changes,” Senator Paul Sarlo, a Democrat from Wood-Ridge and his house’s budget chairman, said in a statement.
“It’s not pork. It’s people,” said Senate President Steve Sweeney, a Democrat, referring to spending included for some lawmakers’ pet projects in home districts.
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