New Jersey

State Budget Practice Report Cards and Budget Resource Guide

Reflecting decades of underfunding public worker pension and other postemployment benefits (OPEB), principally health care, New Jersey was one of only seven states to receive a D-minus average, the lowest possible grade, in legacy costs for fiscal 2015 through 2019. In budget maneuvers, the state was one of just four receiving a D average, with neighboring Pennsylvania the sole state ranking lower.

Although New Jersey has increased its pension contributions in recent years, its 2019 appropriation was still only 61 percent of the actuarial recommendation. That year, New Jersey had the second-worst-funded state pension system in the US, with assets equal to 40 percent of promised benefits, up from 31 percent in 2016. It also failed to provide annual contributions for OPEB in line with actuarial recommendations and instead funded its $13.8 billion net liability on a pay-as-you-go basis.

New Jersey’s budget maneuvers grade reflected numerous one-time actions to cover recurring expenditures and achieve balance. From 2015 to 2018, the state used the sale of assets and up-front revenues on financing transactions to shore up the budget, covered recurring expenditures with debt, deferred expenditures, and shifted revenues from special funds into the general fund to pay for recurring costs.

The state made fewer one-time moves in 2019. It continued to rely on transfers from special accounts to bolster the general fund, however, including shifting $82 million from the state’s Clean Energy Fund to cover New Jersey Transit utility costs that are usually paid from general fund dollars. Another $47.5 million from the energy fund was used for utility costs in state facilities. The state also shifted $179.5 million to the general fund from the New Jersey Turnpike Authority—although that was $13.5 million less than in fiscal 2018. 

New Jersey’s shortcomings in the budget forecasting category, which resulted in a D average, have remained constant through the study period. It does not use the consensus method of revenue forecasting, and budget documents fail to provide multiyear projections for revenues or expenditures.

Download Printable State Report Card

To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2021 Volcker Alliance report, Truth and Integrity in State Budgeting: Preparing for the Storm, which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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