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Buono Tax Expenditure Reporting Bill Approved By Senate

TRENTON – The state Senate today voted 36-0 to approve a bill by Senator Barbara Buono (D-Middlesex) that would require the Governor to include in his annual budget message a report on state tax expenditures.

New Jersey provides a variety of tax credits, deductions and exemptions that reduce state revenue, but these expenditures are not included in the Governor’s budget message.

“There is no reason for significant expenditures like this to not be thoroughly evaluated,” Sen. Buono said. “The state budget process requires us to conduct an extensive review of all direct spending, but tax expenditures, which are off-budget items, are not regularly scrutinized.”

Sen. Buono, who is chairwoman of the Senate Budget and Appropriations Committee, said her bill (A2139/S3153) is designed to help legislators decide if these spending items are serving their originally intended purpose and should be continued.

“Most of them are written into the tax code and continue indefinitely unless the Legislature discontinues them,” Sen. Buono said. “Appropriated expenditures from the State’s General Fund, by contrast, typically last as long as the State’s budget cycle, which is one year.”

Under the bill, the tax expenditure report would be included in the Governor’s annual budget message, which is available online. The report will list the State’s tax credits, deductions, and exemptions along with their costs as well as other relevant information to help legislators evaluate their effectiveness.

“This bill will establish new reporting requirements and will integrate them into the budget process,” Sen. Buono said. “It will enhance transparency in government spending.”

The legislation is based upon the best practices identified in the report entitled Promoting State Budget Accountability Through Tax Expenditure Reporting issued by the Center on Budget and Policy Priorities in April of this year. These practices include incorporating the report into the budget process, issuing the report regularly, making it available on the Internet, and detailing the estimated amount of State revenue lost for the last completed fiscal year, the current fiscal year, and the fiscal year to which the budget message applies.

“Right now, New Jersey is one of only nine states that does not issue a tax expenditure report,” said Buono. “Having regular tax expenditure reports will provide the Legislature with the tools to carry out a comprehensive cost-benefit analysis.”

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