May 1 - Proposed Fiscal 2010 State Budget Update

The heads of state agencies and departments continued their testimonies before legislative committees last week regarding the proposed 2010 state budget. Members of the Legislature are reviewing the proposals outlined in Governor Corzine’s $29.8 billion proposed budget, which contains spending reductions, tax increases, and relies on federal assistance to make up for the projected $7 billion shortfall for the new fiscal year that begins July 1.

New Jersey Department of Labor and Workforce Development

Department of Labor and Workforce Development (DOLWD) Commissioner David Socolow provided testimony to the Assembly Budget Committee on April 30. He detailed key programs and services within the department, emphasizing services that are of particular importance during this economic downturn, such as job training, basic-skills training and unemployment insurance benefits. He said that in 2008, his department provided $2.8 billion in benefits to 570,000 workers who lost their jobs, and the demand for benefits is even higher this year. Dislocated workers also are receiving an additional $25 per week funded by the federal stimulus program.

Commissioner Socolow noted that Governor Corzine and the Legislature transferred $380 million from the state’s general fund into the Unemployment Insurance Trust Fund in 2008 and 2009 to try to avoid a payroll tax increase that is automatically triggered when the Fund’s balance falls below a minimum amount. Additionally, legislation was enacted earlier this year that qualified New Jersey for $207 million in federal stimulus money that helped increase the fund’s balance. Unfortunately, those infusions were not enough to keep the fund solvent in time for the March 31 deadline, and the deficit will trigger a payroll tax increase of approximately $87 per employee on July 1. In addition to the tax hike due to the fund deficit, employers that have laid off workers will see their taxes increase even more because their experience rating will increase. Commissioner Socolow projects a deficit of between $1.5 billion and $2.2 billion for fiscal 2010.

View Commissioner Socolow’s testimony and the OLS analysis.

New Jersey Department of Transportation

On April 28, the Assembly Budget Committee also took testimony from Steven Dilts, the Commissioner of the Department of Transportation (DOT); Sharon Harrington, Chief Administrator of the NJ Motor Vehicle Commission (MVC); and Richard Sarles, Executive Director of NJ Transit. The budget proposal recommends $1.3 billion for DOT, 7.5 percent less than this year. The MVC is slated to receive $291.7 million, a 1.5 percent increase, and NJ Transit is recommended to receive $1.8 billion, a 3.9 percent increase.

Commissioner Dilts discussed steps taken by DOT to reduce costs, such as decreasing management and administrative positions, procuring federal reimbursements, closing inactive federal projects and utilizing technology to increase efficiency. DOT will receive over $1 billion in federal stimulus funds, including $652 million for highways, roads and bridges, and $424 million for transit projects. Counties, municipalities and nonprofits can apply through DOT for an additional $19.5 million dedicated to transportation enhancement projects.

Chief Harrington discussed the MVC’s service expansions and physical and technological infrastructure investments. She said that the MVC currently collects $1.1 billion in revenues with $200 million allocated for their primary operating budget and $850 million allocated to the state general fund. She projects a surplus of $29 million heading into fiscal 2010, but cautions that MVC could end fiscal 2010 with a $21 million deficit. The MVC Board is considering adjusting some of the fees and surcharges that it collects, some of which have not been increased in decades.

Director Sarles detailed NJ Transit’s cost-cutting measures, including reducing staff, reducing administrative expenses and utilizing technology to streamline operations. He reported that NJ Transit would be able to operate rail, bus and light rail services without major service cuts and without fare increases.

View Commissioner Dilts’ testimony, Chief Harrington’s testimony, Director Sarles’ testimony and the OLS analysis.

New Jersey Commission on Higher Education

Jane Oates, executive director of the New Jersey Commission on Higher Education, provided testimony to the Assembly Budget Committee on April 28. She described the Commission’s collaboration with New Jersey colleges and universities, and the goals of the Commission’s long-range plan, including enhancing the quality of programs and services, tying institutional accountability to state goals and striving to make higher education affordable.

The proposed budget appropriates $2.2 billion for higher education services, a 2 percent increase from the current fiscal year. The budget contains significant increases for student financial assistance, including a 13 percent increase for Tuition Aid Grants and a 21 percent increase for the NJ STARS scholarship program. Direct operating aid to senior public colleges and universities is recommended at $844.9 million, a slight decrease from the current funding level. That’s due to a 5 percent across the board decrease in operating aid for the majority of senior public institutions. Aid to county colleges and independent colleges and universities is also decreased by 5 percent.

The Governor is proposing to cut Tuition Aid Grant (TAG) awards to students attending New Jersey proprietary institutions by funding them at the state college level rather than at the current proprietary and independent college levels. This starts with a 40 percent decrease for the neediest students and increases to a 100% reduction for students in other categories.

View Director Oates’ testimony and the OLS analysis.

New Jersey Department of State

On April 27, Secretary of State Nina Wells testified before the Senate Budget and Appropriations Committee on the proposed budget, which appropriates $76.4 million to the Department of State (DOS), a decrease of $22.7 million or 22.9 percent from the fiscal 2009 budget. Secretary Wells described key DOS programs, and noted that in 2008, New Jersey’s tourism industry generated $38.8 billion, and 450,000 jobs were created by travel and tourism, accounting for 11 percent of the state’s total employment.

Secretary Wells said that the DOS Division of Travel and Tourism cannot succeed without partnerships in the business community, and that the division has strengthened its relationships with destination marketing organizations, including convention and visitor bureaus and chambers of commerce. She told committee members that such partnerships will help to bridge the gap in the budget so that DOS can maintain the same level of services.

She also highlighted New Jersey’s cultural, arts and historic assets, which place New Jersey in the top tier of tourism expenditures nationally. The New Jersey Council on the Arts, the New Jersey Historical Commission, and the New Jersey Cultural Trust will provide organizations with $23 million in funding from hotel and motel occupancy tax revenues in fiscal 2009. A minimum amount of the revenues generated from this tax is statutorily required to fund culture, arts, history and shore protection, or a "poison pill" provision is triggered and the tax is no longer paid or collected. Some legislators expressed concern that the amount of funding recommended in this budget falls below the minimum amount. Secretary Wells referred these questions to Chief Counsel Bill Castner, who said that the Legislature could override "poison pills" unless they are constitutionally dedicated. In response to a request made by the Senate Republican Office, OLS issued a legal opinion stating that the Legislature may choose to suspend poison pills through budget language as was done this year, but that this suspension may be best enacted through separate legislation. View the OLS legal opinion.

View Secretary Wells’ testimony and the OLS analysis.

New Jersey Department of Health and Senior Services

State Department of Health and Senior Services (DHSS) Commissioner Heather Howard discussed her department’s proposed budget with the Assembly Budget Committee on April 21. DHSS is slated to receive $1.2 billion in fiscal 2010, 22 percent less than the fiscal 2009 budget. Cuts were made in the department’s five largest programs: hospital funding, Pharmaceutical Assistance to the Aged and Disabled (PAAD) and Senior Gold programs, nursing homes, home and community based senior programs and the Early Intervention Program.

The Commissioner said that the budget protects the health care safety net by providing $605 million in charity care reimbursements to hospitals, $40 million for the Health Care Stabilization Fund, which provides grants to hospitals to maintain critical healthcare services, and $40 million in reimbursements to community health centers for providing care for the uninsured.

Commissioner Howard said that DHSS is pursuing opportunities for federal stimulus funding to avoid more drastic cuts to vital health programs and services. New Jersey’s 20 community health centers will receive $9.4 million over the next two years to expand health services. DHSS is also expecting to receive $10.8 million for the Early Intervention Program and $2.8 million for senior nutrition programs.

Commissioner Howard said details regarding the federal stimulus package can be found at: http://www.nj.gov/recovery/faq/dhss.html

View Commissioner Howard’s testimony and the OLS analysis.

New Jersey Department of Environmental Protection

Mark Mauriello, acting commissioner of the state Department of Environmental Protection (DEP), provided testimony to the Senate Budget and Appropriations Committee April 20 on his department’s proposed 2010 budget and key DEP programs. The budget appropriates $370.1 million to DEP, $64.1 million less than the current 2009 fiscal year. Acting Commissioner Mauriello said that the DEP, with the Legislature’s approval, has been steadily reducing its reliance on state funds by increasing its reliance on fees and user charges. Operations that are significantly supported in the proposed fiscal 2010 budget include parks operations, forestry management, dam safety, shellfish regulation and science and research. He noted that due to a $9 million reallocation last year from the Shore Protection Fund to parks operations, along with parks operations streamlining efforts, DEP would not need to close any state parks this year.

The Acting Commissioner highlighted DEP’s Permit Efficiency Review Task Force, which was established last year to evaluate the permitting process and to formulate recommendations for improvement. Last summer the task force issued its final report, and DEP developed an implementation plan. This plan includes improving electronic data management, amending the rulemaking process, and managing resources more efficiently. He reported that DEP has made progress in implementing many of these objectives.

He also discussed legislation that creates a Licensed Site Professional program, which allows certified professionals to handle the investigation and remediation of selected sites with a minimum of DEP oversight. This would speed up the remediation of numerous contaminated properties in New Jersey, sites that could then be put to use and stimulate economic development. The Licensed Site Professional program is a recommendation of the Chamber’s 2006 Site Remediation Benchmarking Study.

View Acting Commissioner Mauriello’s testimony and the OLS analysis.

New Jersey Department of Public Advocate

The Senate Budget and Appropriations Committee also took testimony from Public Advocate Ronald Chen. The fiscal 2010 budget proposal contains $16.8 million for the department, a 2 percent reduction from the current fiscal year. Advocate Chen noted that his department’s staffing level has declined 24 percent in the past two years, which necessitated consolidation of some divisions. Last summer, Chen also took on the role of acting Child Advocate.

Advocate Chen highlighted his department’s role in implementing the governor’s statewide foreclosure mediation program. The Office of Dispute Resolution trained hundreds of lawyers to serve as mediators and as advocates for homeowners. He said the department has continued its work on preventing eminent domain and redevelopment abuses, and has recommended changes to the state’s redevelopment laws to better protect and compensate residents displaced by eminent domain.

Chen’s department worked with the Department of Human Services to create an express enrollment form to identify and expand enrollment of uninsured children in NJFamilyCare.

View Public Advocate Chen’s testimony and the OLS analysis.

Additional information:

New Jersey Site for American Recovery and Reinvestment Act: http://www.nj.gov/recovery/

Click here for more information on the fiscal 2010 budget.

Click here for the previous update.