Gov. Mikie Sherrill’s administration has not ruled out cuts to nascent property tax relief program Stay NJ as Sherrill seeks to narrow a gap between state revenue and spending, acting State Treasurer Aaron Binder told the New Jersey Monitor.
Though Sherrill, a Democrat who took office last month, has yet to reveal the breadth of her ambitions for the budget, she’s made clear her first appropriations plan will focus on controlling state spending rather than boosting revenue in order to close a roughly $1.5 billion structural deficit.
It’s not clear what degree of cuts the administration will seek for the coming July-to-June fiscal year, nor is it apparent what costs Sherrill’s first budget proposal will aim to shed. She is set to present her plan to the Legislature in early March.
“It’s really turning over every stone at this point and just looking every possible ‘where,’ every place in this budget we can find a potential cut,” Binder said in an interview. “And we have new cabinet members coming in, so in some cases, it’s a fresh set of eyes.”
The Sherrill administration’s quest for spending cuts comes as Stay NJ, championed by Assembly Speaker Craig Coughlin (D-Middlesex), begins to rise off the ground. That program promises to cut seniors’ property tax bills in half, to an inflation-tracking cap of $6,500.
The state last week announced it issued its first Stay NJ payments, which will be paid in quarterly installments. When the new fiscal year begins July 1, the program’s annual cost is expected to be about $1.2 billion and, like some expiring one-shot revenue sources, is among the items set to expand New Jersey’s structural deficit.
Binder said the administration will not treat Stay NJ differently than any other state spending.
“We are looking at finding cuts everywhere in the budget,” he said, adding, “Wherever we can find efficiency, find cuts that make sense, we’re looking at that.”
Coughlin reiterated his commitment to funding the property tax relief program in the coming budget cycle.
“We were thrilled to see Governor Sherrill’s message of affordability resonate, and it’s exactly why we’ve championed programs like Stay NJ for years,” Coughlin said in a statement. “We look forward to working with the Governor to ensure affordability and property tax relief remain a priority.”
Binder reiterated comments he made during a confirmation hearing earlier this month that the administration would not seek to close the state’s structural deficit by enacting broad-based tax hikes.
Tax hikes are incompatible with the affordability mission Sherrill campaigned on, he said, but the state could still seek to boost revenue by tightening enforcement of some tax collections and what Binder called creative ways to use state assets.
The scope of those creative solutions is unclear, but they could include renovations to state-owned properties that would eliminate the need to lease office space from the private sector or the sale of some state assets, among other things.
“There’s a lot of other directions she’s sending her cabinet in to find resources, to find ways to balance this budget without focusing on tax increases,” he said.
Though the administration has not set a goal yet for the size of the reduction to the state’s structural deficit, which may expand as a result of spending approved midway through the current fiscal year, Binder said the aim is to reduce it every year, in part to satisfy ratings agencies that have rewarded New Jersey’s improving fiscal stewardship in recent years with ratings upgrades.
New Jersey can run deficits for a limited period of time. The state’s constitution requires its budget be balanced, and for now, the budget is balanced by spending down some of its surplus. The surplus is expected to fall to about $6.8 billion by July 1, though that number may shift as a result of mid-year spending or changes in revenue collections.
There’s been some hint of what spending Sherrill wants cut. Last month, she told NJ Advance Media she would aim to curtail budget resolution spending that added roughly $700 million in appropriations to the current year’s nearly $59 billion budget.
Budget resolution spending is sometimes criticized because it often approves funding for projects in individual municipalities outside of the competitive processes used to dole out grants and aid elsewhere in state government, but it accounts for a relatively small share of overall spending, and the mechanism is used to make other, less directed changes to the governor’s initial budget proposal.
In recent years, legislators have fiercely defended budget resolution spending, which can be sought by any branch of state government and is sometimes derisively called “pork.” They said the funding secured through such resolutions serves their constituents and can further statewide policy priorities, and any bid to end budget resolution spending will likely spawn conflict.
Binder is no stranger to budget negotiations. He spent four years as deputy treasurer under Gov. Phil Murphy and served as Assembly Democrats’ deputy executive director, including as a lead aide for the chamber’s budget panel.
“The better communication that we have with the Legislature, the better off we all are,” he said, adding, “I think to the extent that I have relationships with legislators, it can only be a good thing.”
Property tax relief programs, including Stay NJ and the broader Anchor tax rebate program, have morphed Treasury’s mission somewhat in recent years, turning an agency known mostly for its oversight of state finances into one that faces consumers.
Though Treasury has often interacted with residents and businesses over tax filing matters, among other things, the expansion of tax relief programs has significantly broadened its consumer-facing mission and brought growing pains at times.
“Now, we’re dealing with over 2 million people receiving Anchor benefits, and our job is to get the right benefit in people’s hands, to get it out as quickly as we can, and answer questions and deal with issues,” Binder said. “That’s been a challenge. It’s an agency that really, historically, has not had to have that kind of focus as much.”
Some residents had trouble getting through when calling to check on the status of their Anchor rebates, Binder said, a matter he found concerning.
Binder said the solution to Treasury’s customer service problems could lay within the state’s Innovation Authority, which partners with state agencies to modernize services and their delivery. He said he hopes technology could cut wait times and leave residents with more detailed information about the status of their own awards.
“The answer is not going to be to add a thousand more agents answering the phones,” Binder said.
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