New Jersey wrestling with budget problems
Stock market volatility clouds revenue outlook
By: Katie Sobko
NorthJersey.com
USA Today Network - New Jersey
..... Trenton lawmaker moved forward in the complex process of shaping a state budget for New Jersey;s 2026 fiscal year Tuesday [04/01/2025] as they digested assessments on the state's economy and heard forecasts for state revenue from nonpartisan budget experts.
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The picture those experts painted, while optimist about revenue collections, is a cautionary tale - New Jersey remains a state that spends more than it earns.
..... "At the risk of oversimplification, since fiscal year 2024, state spending has exceeded and is anticipated to continue to exceeded slowly growing revenue collection, a scenario that steadily erodes the state's relatively elevated reserves," said Thomas Koening, the state's legislative budget and finance officer - in practice, the chief financial officer for the Legislature.
..... Experts from the nonpartisan Office of Legislative Services told the sate Senate Budget Committee they expect to see t revenue forecasts of about $465.5 ,million - more than the amount in the revised fiscal year 2025 made in the governor's proposed budget for fiscal year 2026.
..... State Senator Paul Sarlo, the committee chair, said he fears the revenue outlook could be "very dire" moving forward because of the volatility of investment markers. Sarlo also reiterated concerns he;s shared publicly about the chaos surrounding the federal budget in Washington and its implications on the forthcoming state budget. He said Tuesday [04/01/2025] that he expect more chaos to follow the passage of an eventual New Jersey budget - after the continuing resolution that keeps the federal government operating expires. Sarlo highlighted concerns about federal funding that flows to various education programs and medicaid. He also said he's worried about programming administered by the state Department of Helaht that relies on federal aid.
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State Treasurer realizability Maher Muoio also appeared before the budget committee Tuesday [04/01/2025] and acknowledged the uncertainty as to how federal funding will be distributed and the negative impact.
..... "It remains to be seen how the new White House and Congress will continue providing fudning to the states for everything form education to health care," Muoio said.. "That means perhaps now more than ever, every dollar in our state budget must be spent wisely and efficiently, with an eye toward ensuring New Jersey remains resilient in the face of an uncertain federal picture."
..... Muoio took the time to talk about some of the successful programs and expenditures in Governed Phil Murphy's proposed budget, such as ANCHOR, plans for antihero full payment to the New Jersey pension system and school funding.
..... Then sue dug into the revenue raisers that Murphy included in his proposed budget, such as tax increases of the hugest tier of realty transfer fees, and hiked taxes on sports betting, alcohol, adult-use marijuana and cigarettes.
..... Muoio noted that in the governor's proposed budget the sales tax is being extended to things know as "participatory sports: as well as other products like alcohol and vaping.
..... State Senator Mike Tesla spelled out the list of these activities including batting cages, bowling alleys and basketball courts.
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Sarlo said he expect most - if not all - of these "revenue enhancers" to be eliminated from the final budget. He reiterated to reproters after the meeting hte Internet gaming tax is a separate discussion but that overall he expects most of the small fees and surcharges in the proposed budget to be removed.
..... The state of the surplus and the structural deficit was also at the forefront of the hearing.
..... Sarlo as well as state Senator Declan O'Scanlon, the minor budget officer, , asked Kornig and Muoio about the surplus and the need to have a robust cushion during times of economic uncertainly. Muoio noted a 10.9% surplus is good "by New Jersey standards" but that the national average is closer to 22%.
..... Katie Sobko covers the New Jersey Statehouse. Email sobko@northjersey.com