Legislative Proposal Would Improve New Jersey’s Budget Process by Establishing Consensus Revenue Forecasts

consensus forecasting map-01In August, we proposed that New Jersey change the way it estimates revenues to ensure a more realistic and open budget debate. The recommendation was based on a report from our partners at the Center on Budget and Policy Priorities that would have New Jersey follow the proven practices of 28 other states.

Some background: For the past two years revenue projections have been overly optimistic and inaccurate, leading to last-minute budget maneuvers and accounting gimmicks to keep the budget in balance. The CBPP report gave New Jersey a score of 2 on a scale of 0-5 due to its failure to adopt practices that create reliable revenue estimates to guide state spending. The report offered a key recommendation that the governor and legislature jointly produce a single revenue estimate, instead of producing two separate estimates, as they do now.

Now a proposal by Sen. Robert Gordon would do just that: establish a three-person panel with representation from the state treasury, the legislative budget and finance officer and a mutually selected third member. The panel would provide a consensus forecast by mid-January with the option to adjust the estimate throughout the spring.

The proposal is a step in the right direction to reduce the political gridlock that has distracted lawmakers from examining the state’s true financial condition. The legislature should approve this common-sense reform to help bring some additional checks and balances to the budget-making process.