OLS Says Initial Estimates Show N.J. Facing $10.5B Budget Deficit Going Into Next Year
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July 21, 2010
OLS Says Initial Estimates Show N.J. Facing $10.5B Budget Deficit Going Into Next Year
According to an internal report by the Office of Legislative Services (OLS), New Jersey faces a $10.5 billion budget deficit heading into next year — nearly the same size as the gap that the State experienced before this year’s spending plan passed.
The internal report, obtained by The Star-Ledger, means next year’s budget challenges could be just as difficult as this year, when Gov. Chris Christie slashed funding for schools, municipalities and property tax rebates.
But David Rosen, OLS’ chief budget official, wrote the numbers "will no doubt shift" between now and when the next budget is crafted. The analysis was requested by Assembly Democrats.
The Office of Legislative Services calculated a $10.5 billion shortfall by counting all mandatory increases in state funding and assuming all programs now in the budget would be included next year.
The List
- Fully fund pension contribution: $3.53 billion
- Fully fund school aid formula: $2.3 billion
- Fully fund homestead rebates: $2.13 billion
- Replace expiring enhanced federal Medicaid reimbursement: $1.033 billion
- Maintain funding for transportation construction: $800 million
- Growth in employee salary, health care costs: $400 million
- Fully fund municipal aid: $330 million
- Growth in Medicaid: $300 million
- Fully fund higher education: $275 million
- Replace one-shot revenues in current FY11 budget: $272 million
- Fully fund Senior Freeze, which this year isn’t allowing new filers to receive checks and is freezing other benefits at last year’s rate: $112 million
That’s a total of $11.482 billion projected spending pressures, offset by a projected increase in the state’s revenues (due to growth, without any tax increases) of $1.01 billion.
Grand total: $10.472 billion.
This Year
Christie closed the gap in the $29.4 billion budget that took effect July 1 largely by avoiding costs such as funding for schools and rebates, rather than making major policy changes. He put off a $3.1 billion pension payment; next year, that bill is expected to increase to $3.5 billion, the OLS report says.
The analysis said many of the big items that made up this year’s deficit would return for the next budget, noting that schools will be due $2.3 billion more, and the state will owe $2.1 billion in tax rebates.
State Treasury spokesman Andrew Pratt said it was too early to release predictions for next year’s deficit.
When asked what Christie did this year to ease the ongoing budget problem, Pratt noted changes to pensions and benefits that will save money on future hires. Christie is pushing for more, including bills to curtail payouts already accumulated by current workers and reducing local government costs.