How N.J.’s record $54.3B budget can save you money on property taxes and more
Originally posted on NJ.com: https://www.nj.com/politics/2023/07/how-njs-record-543b-budget-may-save-you-money-this-year.html
Expanded property tax rebates. Free state parks and fee waivers. Affordable housing and an expansion of a state-level child tax credit. A third consecutive full payment to New Jersey’s public worker pension fund.
The $54.3 billion state budget Gov. Phil Murphy signed Friday is the largest spending plan in state history, and its long list of spending initiatives affect the lives of more than nine million Garden State residents.
The Democrats who control the state Legislature voted to approve the final budget on Friday, joined by nine Republicans who also voted in favor of the spending plan, hours before Murphy signed the bill into law. It lifts spending by more than 7% over the previous year and increases total state expenditures by more than 55% since the Democratic governor took office in 2018.
“The bottom line is that this is a budget focused on the pocketbooks of our families,” Murphy said at a Statehouse bill-signing ceremony Friday night [Friday, June 30, 2023].
The process of getting the budget to the finish line was laden with delays, errors and a lack of accountability in the waning hours of back-room negotiations between Murphy and his fellow Democrats. That and the final budget drew jeers from opposite ends of the political spectrum.
Nicole Rodriguez, president of left-leaning think tank New Jersey Policy Perspective, said “an overall lack of transparency rewarded big corporations and special interests at the expense of everyday New Jerseyans.”
Regina Egea, president of right-leaning think tank Garden State Initiative, described the budget as “a fiscal calamity,” saying: “No household or business in New Jersey has been able to increase their spending 50% in the last six years. Gov. Murphy and our Legislature, however, have done just that. They are as disconnected from New Jerseyans’ day-to-day reality as going to Mars, but they simply do not care.”
Despite the criticism, the budget now in place for the fiscal year that began Saturday, includes substantial investments aimed at addressing some of New Jersey’s most pressing issues: the highest property taxes in the nation, affordable housing, rising health care costs and funding for public schools, to name a few.
Here are some of the measures in the budget that could affect you and your wallet:
New Jersey homeowners and renters pay the highest property taxes in the nation, and the average bill statewide hit a record $9,490 in 2022.
The state has a complex collection of programs to provide relief, including a new initiative called ANCHOR that was created last year by Murphy and Democratic lawmakers. Under the initial program, homeowners making up to $150,000 received $1,500 rebates, and renters earning the same income got $450 checks.
State leaders are fully funding the $2 billion program for a second year, and the new budget boosts the rebates by $250 for residents age 65 and older. That brings the total tax credit for senior homeowners to $1,750, and the credit for senior renters would increase to $700.
That initiative is designed to cut property taxes in half for most New Jersey senior homeowners, though it has been widely criticized as an effort to buy votes in an election year with all 120 seats in the Legislature on the ballot in November. When fully funded in five years, the program will cost the state about $1.3 billion each year, officials said.
In the waning hours of backroom budget negotiations last week, state leaders also included a measure to return $150 million from energy tax receipts back to municipalities, an effort that is meant to ease rising property taxes.
The energy tax was initially paid directly to municipalities, but the state started raiding those funds roughly half a century ago.
Social safety nets, affordability and more free state parks
New Jersey’s latest budget includes several initiatives aimed at making the Garden State more affordable, including hundreds of millions in new spending for affordable housing and an expansion of a state-level child tax credit.
Murphy’s previous budget created the child tax credit for working- and middle-class parents in New Jersey with young children. It provided households with $30,000 or less in yearly income with a credit of $500 for each child under the age of 6. It also gives minimum credits of $100, based on income, to households making up to $80,000.
The $54 billion budget signed on Friday increases the top credit to $1,000 and the bottom to $200.
The new budget includes at least $275 million to fund affordable housing and urban preservation across the state, with much of that added in the final weeks of negotiations. The spending plan also includes at least $40 million to provide down payment assistance for first-generation homebuyers.
Residents will also get another “fee holiday” under the latest budget, including a second year of free state parks, as well as new additions like fee waivers for teacher certification and public defenders.
Many parks are already free to enter, but the state charges daily entry fees during the busy summer season for nearly half of the parks and natural areas. Those fees will be waived, giving all visitors free entry.
The budget waives teacher certification fees for one year, allowing anyone looking to be certified as a teacher in the Garden State to save hundreds of dollars in the certification process.
And in an effort to address persistent issues of race-based wealth disparity, the state is waiving public defender fees, which can range anywhere from $250 to $750 or more.
New Jersey’s new state budget focuses heavily on trying to make life more affordable for senior citizens living in the state, and that includes assistance for health care and prescription drug costs.
State leaders have expanded eligibility for the Medicare Savings Programs by increasing income thresholds to 200% of the federal poverty level. That would provide Medicare Savings to an additional 163,000 seniors at a cost to the state of more $200 million.
The latest budget also expands the Senior Gold and Pharmaceutical Assistance to the Aged & Disabled (PAAD), both popular prescription drug programs for those 65 and older.
The PAAD program is being increased to cover seniors up to 400% of the federal poverty level, allowing as many as 10,000 New Jersey seniors to receive average benefits of more than $700 per year. All other seniors would be eligible for Senior Gold, which provides an average $400 benefit per year.
The state’s final spending plan features other investments to help ease the pain of rising health care costs, including a $10 million pilot program to eliminate personal medical debt and continued state and federal funding through the Get Covered New Jersey exchange, among other initiatives.
Public pensions and fiscal sustainability
For a third consecutive year, state leaders are making a full payment of $7 billion to New Jersey’s beleaguered public worker pension fund, which supports the retirement of more than 800,000 state and local government workers.
Budget experts say that investment significantly improves New Jersey’s battered balance sheet, and it’s the first time full payments have been made to the fund in about 25 years. The system remains underfunded, and has been for decades.
This year’s payment is nearly $200 million higher than in the previous budget thanks to volatile financial markets in 2022, which delivered a loss of nearly $10 billion in market value.
New Jersey’s public worker pension fund faces several hurdles in the coming years, as rising health care costs continue to weigh on local government budgets. New Jersey’s latest spending plan includes $200 million as a subsidy for municipalities, but administration officials say that won’t provide relief in the current year.
Budget discussions in recent years have largely ignored what is arguably an even bigger problem for the pension fund and its retirees: Retirees haven’t received a cost of living adjustment in over a decade, even as inflation has risen to 40-year highs over the past year.
The budget includes an $8 billion surplus to guard against emergencies and a tougher fiscal climate, something many economists predict is ahead for New Jersey and other states.
You can subscribe today to NJ.com.