FISCAL YEAR 2021-2022 ANALYSIS OF THE NEW JERSEY BUDGET DEPARTMENT OF THE TREASURY Prepared by the NNewew JerseyJersey LLegislatureegislature OOfficeffice ooff LLEGISLATIVEEGISLATIVE SERVICESSERVICES May 2021 NNEWEW JJERSEYERSEY SSTATETATE LLEGISLATUREEGISLATURE SENATE BUDGET AND APPROPRIATIONS COMMITTEE Paul A. Sarlo (D), 36th District (Parts of Bergen and Passaic), Chair Sandra B. Cunningham (D), 31st District (Part of Hudson), Vice-Chair Dawn Marie Addiego (D), 8th District (Parts of Atlantic, Burlington and Camden) Nilsa Cruz-Perez (D), 5th District (Parts of Camden and Gloucester) Patrick J. Diegnan, Jr. (D), 18th District (Part of Middlesex) Linda R. Greenstein (D), 14th District (Parts of Mercer and Middlesex) Declan J. O’Scanlon, Jr. (R), 13th District (Part of Monmouth) Steven V. Oroho (R), 24th District (All of Sussex, and parts of Morris and Warren) M. Teresa Ruiz (D), 29th District (Part of Essex) Troy Singleton (D), 7th District (Part of Burlington) Michael L. Testa, Jr. (R), 1st District (All of Cape May, parts of Atlantic and Cumberland) Samuel D. Thompson (R), 12th District (Parts of Burlington, Middlesex, Monmouth and Ocean) GENERAL ASSEMBLY BUDGET COMMITTEE Eliana Pintor Marin (D), 29th District (Part of Essex), Chair John J. Burzichelli (D), 3rd District (All of Salem, parts of Cumberland and Gloucester), Vice-Chair Daniel R. Benson (D), 14th District (Parts of Mercer and Middlesex) Robert D. Clifton (R), 12th District (Parts of Burlington, Middlesex, Monmouth and Ocean) Serena DiMaso (R), 13th District (Part of Monmouth) Gordon M. Johnson (D), 37th District (Part of Bergen) John F. McKeon (D), 27th District (Parts of Essex and Morris) Nancy F. Muñoz (R), 21st District (Parts of Morris, Somerset and Union) Carol A. Murphy (D), 7th District (Part of Burlington) Verlina Reynolds-Jackson (D), 15th District (Parts of Hunterdon and Mercer) William W. Spearman (D), 5th District (Parts of Camden and Gloucester) Benjie E. Wimberly (D), 35th District (Parts of Bergen and Passaic) Harold J. “Hal” Wirths (R), 24th District (All of Sussex, and parts of Morris and Warren) OFFICE OF LEGISLATIVE SERVICES Thomas Koenig, Legislative Budget and Finance Offi cer Vacant, Assistant Legislative Budget and Finance Offi cer Marvin W. Jiggetts, Director, Central Staff David Drescher, Section Chief, Revenue, Finance and Appropriations Section This report was prepared by the Revenue, Finance and Appropriations Section of the Offi ce of Legislative Services under the direction of the Legislative Budget and Finance Offi cer. The primary authors were Scott A. Brodsky and Parag Shende with additional contributions from Joseph A. Pezzulo. Questions or comments may be directed to the OLS Revenue, Finance and Appropriations Section (Tel. 609-847-3835) or the Legislative Budget and Finance Offi ce (Tel. 609-847-3105). DEPARTMENT OF THE TREASURY C-6 to C-7; C-14 to C-15; C-23; C-25; Budget Pages....... D-373 to D-422; E-6; G-4 to G-8 The data presented in this Office of Legislative Services Budget Analysis reflect 12-month fiscal years beginning on July 1 and ending on June 30 of the subsequent year. Fiscal Summary ($000) Adjusted Percentage Expended Appropriation Recommended Change FY 2020 FY 2021 FY 2022 2021-22 State Budgeted $3,016,273 $3,191,588 $3,431,150 7.5% Federal Funds 62,520 10,083 10,083 0.0% Other 369,363 503,282 490,600 (2.5%) Grand Total $3,448,156 $3,704,953 $3,931,833 6.1% Personnel Summary - Positions By Funding Source Percentage Actual Revised Funded Change FY 2020 FY 2021 FY 2022 2021-22 State 3,619 3,496 3,632 3.9% Federal 47 51 57 11.8% Other 1,623 1,580 1,794 13.5% Total Positions 5,289 5,127 5,483 6.9% FY 2020 (as of December) and revised FY 2021 (as of January) personnel data reflect actual payroll counts. FY 2022 data reflect the number of positions funded. To be consistent with the data display in the Governor’s FY 2022 Budget, the above table includes the funding data in the Department of the Treasury for Higher Educational Services. Other explanatory data for these programs are included in a separate booklet entitled: “Higher Educational Services.” Link to Website: http://www.njleg.state.nj.us/legislativepub/finance.asp Department of the Treasury FY 2021-2022 Highlights The data presented in this Office of Legislative Services Budget Analysis reflect 12-month fiscal years beginning on July 1 and ending on June 30 of the subsequent year. PROPERTY TAX RELIEF: GRANTS-IN-AID AND STATE AID • The Governor’s FY 2022 Budget recommends $2.1 billion1 for Property Tax Relief in the Department of Treasury, which is a $49.8 million, or 2.4 percent, increase from FY 2021. Grants-in-Aid, which finance direct property tax relief to residents, account for $479.7 million of the total ($15 million, or 3 percent, less than FY 2021) and State Aid to local subdivisions of State government accounts for the remaining $1.7 billion ($64.8 million, or 4.1 percent, more than FY 2021). Table 1 on page 5 lists the aggregated components of the recommended State Aid total. • For FY 2022, the Administration recommends maintaining the FY 2021 parameters of the New Jersey Homestead Property Tax Credit Program, now named the Homestead Benefit Program. The program appropriation is to decline by $15 million based on the Administration’s expectation that the long-term trend of diminishing enrollment will continue. The Governor’s FY 2022 Budget provides $260 million for tax year 2018 homestead credits. • For FY 2022, the Administration recommends maintaining the FY 2021 funding of $219.7 million for the Senior Freeze program. The program reimburses qualified homeowners for the difference between the amount of property taxes paid on a principal residence in tax year 2020 and the amount paid in the base year. • The Administration recommends a FY 2022 appropriation of $51.5 million for the Veterans’ Property Tax Deduction, an increase of $11.6 million, or 29.1 percent, over FY 2021. The recommended increase is attributable to the approval by the voters of an amendment to the New Jersey State Constitution, which expands eligibility for the deduction to veterans who did not serve in a time of war and their surviving spouses. • Municipalities are to receive $1.254 billion in Energy Tax Receipts Property Tax Relief Aid (ETR Aid) in FY 2022, which represents an increase of $12.4 million, or 1.0 percent, over FY 2021. ETR Aid payments to municipalities would be supported by a direct $788.5 million State appropriation and $465.2 million transferred from the Consolidated Municipal Property Tax Relief Aid account in the Department of Community Affairs. • The Administration intends to pay 100 percent of the actuarially determined State pension contribution to the Police and Firemen’s Retirement System for full-time county and municipal police officers and firefighters. The full contribution represents a one-year acceleration of the payment plan intended to grow in 1/10th increments annually until the achievement of full funding in FY 2023. 1 This amount includes the $465.2 million transfer from Consolidated Municipal Property Tax Relief Aid. 2 Department of the Treasury FY 2021-2022 Highlights (Cont’d) DIRECT INCOME TAX RELIEF • The Governor’s FY 2022 Budget includes $319.0 million for the new Middle Class Tax Rebate Program pursuant to P.L.2020, c.94. The law provides up to a $500 rebate to taxpayers with incomes not exceeding $150,000 (married filing jointly) or $75,000 (single, head of household, or married filing separately) with qualifying children. The Administration estimates 764,761 taxpayers will receive this rebate for average rebate amounts of $425 for joint filers and $297 for single filers. TREASURY OPERATIONS • The Governor recommends $19.5 million as a first installment to the Division of Taxation for the tax system modernization project in FY 2022. This initiative will entail the installation of an integrated tax system to replace outdated technology and infrastructure. • The Administration recommends an additional $250,000 to support the Secure Choice Savings Program. The law requires employers with 25 or more employees to participate in a retirement savings program administered through automatic payroll deductions. • The Governor’s FY 2022 Budget includes an additional $3.4 million to hire staff for the Division of Pensions and Benefits call center. The division’s operations are charged to the State’s pension and health benefits funds through an off-budget account. OFFICE OF INFORMATION TECHNOLOGY • The Executive recommends an additional $13.0 million for the Statewide 9-1-1 Emergency Telecommunication System. This additional funding would be used to transition the State’s existing 9-1-1 network, which delivers call routing and location services to local Public Safety Answering Points, to a network that maintains existing services and implements certain Next Generation 9-1-1 features not supported by the current network. • The Governor’s FY 2022 Budget recommends $2.2 million as a first installment to modernize the New Jersey Comprehensive Financial System and $1.0 million for Office of Management and Budget Technology updates. • The Administration recommends the continuation of budget language requiring the Office of Information Technology to approve all Executive Branch purchase requests for information technology and telecommunications equipment, maintenance, and consultant services. The budget language requires the office to determine if purchase requests comply with Statewide policies and standards and the Information Technology Strategic Plan approved for each department. LEGAL SERVICES OF NEW JERSEY • The Administration recommends a FY 2022 appropriation of $35.5 million for Legal Services of New Jersey. This is a $6.0 million increase over FY 2021. 3 Department of the Treasury FY 2021-2022 Highlights (Cont’d) NATIONAL CENTER FOR CIVIC INNOVATION INC.