Trenton – Senate President Steve Sweeney and Senate Budget Chair Paul Sarlo praised the FY2022 State Budget introduced today as a responsible spending plan that will provide relief, spur economic growth, pay down debt and set aside sufficient reserves to avert a future fiscal cliff.
“This budget achieves the legislative priorities we set out from the start,” said Senator Sweeney (D-Gloucester/Salem/Cumberland). “It provides relief to those who need it, makes strategic investments to boost our economic recovery, and sets aside billions of dollars to pay down higher-cost debt and avert future borrowing.
“Most important, it restores the Rainy Day Fund, puts extra funding into the pension system up-front to save on future costs, and provides a multi-year surplus to avert a future fiscal cliff when this unprecedented flow of federal aid ends. Furthermore, it requires legislative approval for the future expenditure of billions of dollars from the American Rescue Plan,” Senator Sweeney said.
Senator Sarlo (D-Bergen) said the FY2022 spending plan achieves the goals he set out at the beginning of the budget process by taking a multi-year approach designed to ensure New Jersey’s long-term fiscal stability.
“This is a smart and responsible budget that makes the best use of public resources to address the needs of the people of New Jersey as we work to emerge from the most severe public health crisis of a lifetime,” Senator Sarlo said. “It is a spending plan that continues to prioritize the health and safety of the state’s residents and alleviate the economic consequences the pandemic imposed on individuals, families, small businesses and communities throughout the state.
“We have the advantage of state revenues significantly higher than anticipated, and a substantial amount of federal aid. But we must be cautious and thoughtful in how these funds are used. We cannot afford to be near-sighted about fiscal conditions that could quickly change and with the use of federal funds with a limited lifespan. We do not want to repeat mistakes of the past by creating a ‘fiscal cliff’ with spending that can’t be sustained,” he said.
Senators Sweeney and Sarlo noted that the budget makes strategic investments out of American Rescue Plan funds to address emergent needs. These include providing $500 million for rental assistance, $250 million for utility relief, $600 million over three years to provide an additional year of special education for 22-year-olds with disabilities, $180 million for HVAC improvements to schools, and $100 million to expand childcare so people can get back to work.
The budget not only completes the ramp-up to full funding of the Actuarially Required Contribution to the state’s underfunded pension system for the first time in two decades, but also adds $505 million to cover the cost of lowering the expected return-on-investment for pension assets from 7.3% to 7.0% a year early.
The bill creates a Debt Defeasance Fund that includes $2.5 billion to pay down higher-cost debt and $1.2 billion to be allocated to avert unneeded future debt increases by covering the cost of capital projects.
“This budget emphasizes debt reduction, increased pension payments that will produce savings, and strategic investments that address emergent or long-term needs, including childcare, upgrades to school heating and ventilation systems, and tax savings for retirement income,” said Senator Sweeney. “We are ensuring that the Legislature has a shared responsibility in the use of the $6.5 billion in federal funds New Jersey received from the American Rescue Plan. The Legislature has a financial and governmental obligation to the people of New Jersey to make sure the federal resources are used wisely to guide the state’s recovery.”
“We are pleased that this budget includes a large surplus and a Rainy Day Fund so we have financial reserves in place. We must be prepared for unexpected economic changes and for unanticipated needs,” Senator Sarlo said.