Trenton – Senator Paul Sarlo, the chairman of the Senate Budget and Appropriations Committee, issued the following statement as the committee starts departmental hearings on Governor Phil Murphy’s budget proposal for Fiscal Year 2022:
“This is the start of the annual legislative process of reviewing and revising the Governor’s budget proposal for the upcoming fiscal year. Our responsibility takes on greater significance as we continue to contend with the consequences of the Covid crisis and its impact on the public’s health, government services, state finances and the economic wellbeing of individuals, families and businesses in New Jersey. We are still living with a public health crisis with unique fiscal challenges that are difficult to predict.
“The good news is that we have the advantage of state revenues that are significantly higher than anticipated, we have substantial amounts of federal aid to help us work through crisis conditions, we have the availability of emergency borrowing, and we have an increasing vaccination rate.
“But these advantages come with potential financial dangers if they create a ‘fiscal cliff.’ The sudden fall-off of funding for the next two to three years could cause severe budget problems that put vital services at risk and undermine the state’s fiscal integrity. We can’t afford to be near-sighted about fiscal conditions.
“We need to approach this budget with a two to three-year perspective that takes into account the uncertainty of state revenues, the use of federal aid with a limited lifespan, and one-time, emergency borrowing. These conditions create the need for what is essentially a two to three-year budget process. It is the prudent and responsible thing to do.
“I believe it is also important that we make use of financial resources to pay down debt. New Jersey’s long-term debt has a history of being a fiscal albatross. If we have an opportunity to do something about it – we should do it.
“The Governor’s spending plan does a very good job of addressing the emergent needs of the pandemic, as well as investing in ongoing priorities. It includes a full pension payment that saves money in the long run, increases school aid to support education and ease the burden of local taxpayers, and delivers aid for social services for those in need – and there are many who are in need.
“We also must continue to make strategic investments that promote economic growth. This is vital for small businesses that face obstacles in recovering from the pandemic. The renewed Economic Development program will be enormously helpful. We should also make use of budget resources to compliment tax incentives.
“It is important that we get a full accounting of how the federal stimulus money is being allocated. This should include the CARES Act dollars already spent, CARES Act money that has not yet been allocated, and the $6.4 billion from the American Rescue Plan.
“Until now, the executive branch has exercised control of federal funds, but I believe the Governor and the Legislature should work in partnership on how this aid is best used. The dollars may originate in Washington, but the spending overlaps and interacts with state money, state services and the state’s economy. The Legislature should have a shared responsibility for the use of federal funds.
“I also look forward to an informative update on the state’s emergency borrowing: How the money is being used? How much has been spent and how much remains? How it will be repaid? And why it was issued as ‘non-callable’ bonds? It’s important to get a handle on this portion of state finances.
“The administration has given us a very good budget plan with no new taxes or fees that we can work with. I welcome the willingness of the Governor and the Treasurer to work cooperatively with the Legislature to put in place a fiscally responsible financial plan for the upcoming year – and the years to follow. It is now our responsibility in the Legislature to follow through on this work.”