Today’s strong bipartisan budget vote should not be seen as an indication that New Jersey’s fiscal situation is rosy. Not only does the budget include a high degree of risk, it fails to meet needs that have gone unmet since the start of the Great Recession.
Just like last year, the budget relies on overly optimistic revenues. The estimated shortfall of $700 million could easily grow close to $1 billion by mid-year if it is coupled with additional unbudgeted spending, both of the routine (snow removal, tort claims, etc.) and non-routine ($24 million for special U.S. Senate elections) variety. There will of course be under-spending to offset some of the shortfall, but there is less wiggle room next year, since the state can’t push $400 million in homestead credits to the next fiscal year as it did this year.
In addition, the budget fails to fully fund the court-approved school funding formula for all districts, to invest in expanding preschool funding to suburban districts and to increase operating aid for state colleges and universities. It also fails to reverse the 2010 tax increase on the half a million working families still scraping by on a lower Earned Income Tax Credit and fails to expand property tax relief under the homestead credit program.
This budget passed easily not because it’s the best budget for New Jersey, but because legislative leaders and the governor agreed it is in their best interest to get the budget done and get out of town rather than having a debate on whether it really meets the needs of the state.
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