From the Halls of Trenton is a new, regular feature of the President’s Report. Thank you to Hoboken Strategy Group for partnering with us to keep you up to date on the action while focusing on legislation of interest to our members. Their first column is an overview of the most important policy document the Governor’s Office produces, the State Budget.
by Hoboken Strategy Group
Did you know that the term “lobbyist” was coined during the administration of President Ulysses S. Grant? The President would frequent the lobby of The Willard Hotel near the White House to smoke a cigar. Word got out amongst interest groups of where to catch the President and hence the term “lobbyist” was born. In Trenton, the ideal place to catch administration officials, lawmakers and other government relations professionals is in the hallways. As a result, we bring you our observations of the action “From the Halls.”
For our first segment, we provide an update on the proposed New Jersey State Budget. On February 26, Governor Chris Christie presented his administration’s proposed State Budget for the next fiscal year. The Governor’s $34.4 billion budget holds the line on discretionary spending without tax increases. The budget proposal forecasts fiscal 2015 revenue to increase by 5.8 percent from current levels.
The Legislature has now begun its budgetary review process to allow public input on the effects of the proposed budget. Throughout April and May, each state agency including the departments of education, transportation, health and senior services, human services, law and public safety will testify before the Senate and Assembly Budget committees to present their agency’s planned budget for the next fiscal year.
In May, legislative leadership will advance budget negotiations with the Governor’s Office and State Treasurer to develop a budget proposal which will be introduced in the Legislature and advanced by the Senate and General Assembly. The New Jersey State Constitution mandates that the State Budget must be approved by the State Legislature and signed into law by the Governor by midnight on June 30. With a Republican Governor and Democratic controlled Legislature, the budget process is always an exciting one with a tremendous level of negotiation between the administration and legislative leadership.
Since taking office in 2010, the Christie administration has been committed to enhancing the business climate in the State including efforts to reduce business taxes. The Governor’s budget proposal continues the phase-in of the single sales factor formula for determining Corporate Business Tax liability and providing a net operating loss carry forward for small businesses. The proposed budget also reduces the minimum tax on S-corporations in the State. In addition, this year’s budget proposal phases out the Transitional Energy Facility Assessment while funding the Research & Development Tax Credit.
The Governor touted this proposal as a part of the bi-partisan effort “to provide more than $2 billion in tax relief to business in New Jersey.”
Governor Christie’s proposed budget clarifies existing tax laws to include a requirement that out-of-state online retailers collect sales tax from New Jersey customers. This proposal is meant to support small businesses in maintaining their competitiveness with larger online retailers.
The Governor’s $34.4 billion budget includes a $1.676 billion pension payment, the largest in state history. This record payment is an increase of more than $650 million from the current budget level. In 2011, Governor Christie and the Legislature approved an overhaul of the pension and benefit system requiring workers to pay more into the benefit system while requiring the State to increase pension payments for seven budget cycles. These reforms reduced unfunded state and local pension liabilities by 32 percent. While these reforms have helped defray future costs for the State and pension payments have been a part of the budget, the State pension system is still $52 billion short of being fully funded, according to the Department of Treasury.
In his address to a joint legislative session, the Governor called upon the Legislature to enact further reforms to help control the increasing costs of public employee pensions, health insurance and debt service. The Governor stated, “Due to our pension, health benefit and debt obligations only 6 percent of new spending can be focused on the areas where we really want to dedicate our resources- education, tax relief, public safety, higher education, drug rehabilitation, health care and critical services for the most in need.”
As the State Budget advances in the Legislature along with other legislative priorities, it will not just be the Spring/Summer weather which will heat things up in Trenton. Budget season is always an exciting one and this year should not disappoint.
Check back in for our June edition of “From the Halls of Trenton” and an update on the advancement of the State Budget and other legislation of note to the business community. If you have any questions or suggestions for this column, please let us know!
Hoboken Strategy Group is a boutique New Jersey government relations and business development firm made up of public affairs professionals with years of experience handling legislative and regulatory issues on the local, state and federal levels. Kay Elizabeth LiCausi, President of Hoboken Strategy Group, serves on the Government Affairs Committee for the Hudson County Chamber of Commerce as well as the Regional Plan Association’s New Jersey Committee. Michael J. Comba serves as Vice President of Hoboken Strategy Group and is currently a Fellow with the New Leaders Council-New Jersey.