Category: Report

Red Flags Amid a Sea of Green: Breaking Down New Jersey’s FY 2024 Budget

Posted on by Peter Chen

Negotiated behind closed doors and voted on without public input, the latest state budget wasted a historic opportunity to fix New Jersey’s finances and boost investments in historically underfunded areas. Instead, lawmakers used record-setting revenue collections to fund costly tax cuts and credits for wealthy households and profitable corporations, threatening the state’s long-term fiscal health.

On the positive side, the $54.3 billion budget for Fiscal Year (FY) 2024 includes another full pension payment and a record level of school funding.[i] The budget also continues investments in the many building blocks of a strong and healthy state: expanded pre-K, increased college tuition assistance, increased access to affordable health care, and much more.

However, three major red flags in the budget undermine the sustainability of these essential public services and programs.

Red Flags: A Shaky Fiscal Footing

New Jersey, like every state, is required to pass a balanced budget, meaning it must raise enough revenue to account for all of its expenses. The major changes in this year’s budget, to both the tax code and expenditures, have the state spending more than it takes in, raising three red flags about the state’s ability to pass a balanced budget in subsequent years. First, the growing investments in the budget rely on a temporary boost in tax collections that is already declining. Second, new corporate tax cuts and tax credits for wealthy homeowners will further weaken future revenue collections. Third, the budget relies on federal pandemic aid that will soon expire, creating looming funding shortfalls that must be addressed as early as next year.

Despite the budget’s continuation of important investments, it will largely be remembered for its short-term giveaways to profitable corporations, wealthy individuals, and politically-connected insiders who loaded up line items and side deals, while kicking long-term structural budget problems down the road.

Red Flag 1: Declining Revenues, Shrinking Surplus

The FY 2024 budget includes new and growing investments that will require consistent funding in future years. Yet, the revenue streams supporting these investments are already starting to wane. Recent revenue snapshots show that last year’s unprecedented boost in tax collections was temporary, with the state’s major revenue sources on the decline.[ii] Bringing in less revenue threatens the sustainability of the investments made in the latest state budget and could hamper future improvements to public services and programs that New Jersey families, communities, and businesses rely on.

Increased spending and declining revenues leave the state at a structural deficit, with expenditures now surpassing revenue collections by roughly $1.5 billion. This deficit is already eroding the state’s historic surplus, as the Governor’s original $10 billion projected surplus for FY 2024 has already come down to $8.1 billion.[iii] That means the state has less of a safety net if revenue collections continue to decline in the near future.

The shift in revenues and expenditures between the budget initially proposed by Governor Murphy and the one ultimately signed into law should serve as a clear warning signal for the state.

Table: Appropriations Surpass Revenue Collections in FY 2024 Budget

Original Proposed Budget Final Approved Budget
Revenues $53,828,554 $52,801,265
Appropriations $53,084,949 $54,357,547
Net difference +$743,605 -$1,556,282

Source: FY 2024 Appropriations Bill Scoresheet: https://pub.njleg.state.nj.us/publications/budget/Scoresheet,%20As%20Introduced.pdf

The surplus funds won’t last long if New Jersey continues to spend more than it generates in revenue, a trend likely to continue given the elimination of the corporate business tax surcharge and other tax giveaways buried in the budget deal. The state’s Rainy Day Fund also remains woefully drained, leaving New Jersey unprepared to weather bumpier economic conditions in the years to come.[iv]

During the Great Recession, the state saw the devastating consequences of costly tax cuts and an empty reserve.[v] New Jersey cannot afford to repeat the mistakes of the past, especially now, as far too many families are struggling to keep up with rising costs and afford basic expenses. Lawmakers must prioritize tax policies that generate enough revenue to both cover the state’s expenditures and build up reserves so vital state services are there for families and communities when they need them the most.

Red Flag 2: Costly Corporate Tax Cuts and Credits

Even with increased investments that will require consistent funding in future years, the new state budget contains a $1 billion tax cut for the world’s biggest and most profitable corporations.[vi] Add in other corporate tax changes that reward offshoring of profits to foreign countries, hundreds of millions in tax credits for specific industries, and a costly property tax credit program that will disproportionately benefit wealthy households, and New Jersey could experience significant revenue losses in the face of rising costs and potential economic turmoil.

For context, the Corporation Business Tax currently includes an additional 2.5 percent surcharge on businesses with more than $1 million in profit. The surcharge, which will expire unless it is renewed before the end of the calendar year, only applies to the top 2 percent of businesses earning the most in profit.[vii] This includes all corporations that generate profit in New Jersey — including multinational corporations, e-commerce sites, and chain retailers like Amazon, Walmart, and Starbucks — not merely companies headquartered in the state. Eliminating the surcharge would enrich a select few corporations and their shareholders at the expense of workers and families who benefit from the various investments in infrastructure, transit, schools, and safety net programs that the surcharge helps fund.

The budget also includes new legislation that will open up more loopholes in the corporate tax code, which may accelerate the erosion of the corporate tax base even further.[viii] These changes would allow multinational corporations to evade taxation by shifting their income to subsidiaries based in foreign tax havens. Though billed as “revenue-neutral,” these changes would reward corporations who shift profits abroad, reducing their tax liability in future years and continuing a trend of eroding corporate tax bases at the state level.[ix]

On top of these risky corporate tax changes, the budget also incorporates the costly Stay NJ proposal, which provides a significant property tax credit to senior homeowners. If implemented fully, the program will cost approximately $1.7 billion, all of which is unfunded.[x] And due to its proposed structure benefiting wealthy homeowners, Stay NJ would overwhelmingly go to the highest-income households and would widen the state’s racial wealth gap.[xi]

As revenues already appear to be declining and spending continues to increase, wealthy corporations experiencing record profits have managed to pay less towards the state’s core investments and keep more for their shareholders and high-paid executives.

Red Flag 3: Unaddressed Fiscal Cliffs

While the new budget includes enough revenue and surplus funds to cover investments for FY 2024, looming funding gaps across various areas have been kicked down the road with no plans to address them. This includes fiscal cliffs from expiring federal pandemic assistance that has propped up local and county budgets, school districts, and state agencies that now anticipate major deficits in future years.[xii] Federal pandemic aid will have to be expended in the next few years, leaving a funding cliff when they expire.

Key programs facing cliffs include:

  • NJ Transit: In FY 2025, NJ Transit, which does not have a sustainable funding source, has budgeted $749 million in federal relief. In FY 2026, that drops to $0.[xiii] Expiring federal aid, combined with lower fare collections, leave NJ Transit with a projected shortfall of roughly $1 billion in FY 2026.
  • Child care: By September 2024, nearly $890 million in federal funds will expire, leaving the child care sector vulnerable to more closures.[xiv]
  • K-12 schools: In September 2023, $1.2 billion in federal education funds will expire, followed by another $2.7 billion in September 2024.[xv] As it stands, the state currently does not fully fund its school funding formula.

 

Although these funds were designed to be temporary, a failure to replace them with sustainable state funding could lead to harmful cuts that would hamstring New Jersey’s economy and damage the very assets that make the state a great place to live, raise a family, and start a business: infrastructure, education, and robust government services. Lawmakers will face difficult decisions sooner than they might like, as they must find new ways to continue funding these services or determine which ones to cut. Past experience has shown that when spending cuts come, they disproportionately harm Black and Hispanic/Latinx communities and low-income households.[xvi]

Sea of Green: Notable Investments and Budget Lines

Looking past the red flags, New Jersey’s FY 2024 budget includes many important investments in public services and programs that support New Jersey families, communities, and the broader economy. From tax credits for working families, to increased funding for education, to health insurance subsidies that increase access to comprehensive health care, the initiatives highlighted below are designed to uplift individuals and families across the state, raise the standard of living, and contribute to the future prosperity of the state.

Economic Security

Working Family Tax Credits

The New Jersey Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) pay workers and their families money back in their tax returns, supporting strong families, reducing poverty, and helping to make New Jersey affordable for working- and middle-class households.

The FY 2024 budget doubles the Child Tax Credit (CTC), providing up to $1,000 for every child under age 6 to families earning up to $80,000, benefitting up to 372,000 children.[xvii] While the CTC expansion passed with overwhelming bipartisan support, and the increased credit is welcome news, the budget did not include a proposal to expand eligibility and access to the benefit for children up to 12 years old.[xviii]

It’s worth noting that the cost of the CTC expansion, roughly $120 million, pales in comparison to new tax credits for businesses included in the budget. Film and television studios alone will receive more than $230 million in new tax credits in FY 2024.[xix]

The FY 2024 budget also leaves the EITC unchanged, despite pending legislation to reduce barriers in the program and increase benefit levels to further boost workers’ wages.[xx] To better support working families struggling with rising living costs, lawmakers should increase the EITC to 50 percent of the federal credit and expand eligibility to immigrants with Individual Tax Identification Numbers. These changes would get more money back into the pockets of families who need it, reducing poverty and strengthening local economies across the state.

WorkFirst NJ

New Jersey’s Temporary Assistance for Needy Families (TANF) program, WorkFirst NJ, is supposed to provide basic financial support to very low-income households. While it is well-known that this program is underfunded and falls short for low-income families, the FY 2024 budget failed to increase WorkFirst NJ benefits.[xxi] The current grant amount — the maximum benefit is $559 a month for a family of three — remains far too low to meet the program’s goal of helping families afford their most basic needs.[xxii] For this program to succeed at helping families get by and break the cycle of poverty, lawmakers must commit to raising WorkFirst NJ benefits, reworking the program to meet the realities of today’s families, and moving TANF away from its racist “welfare reform” roots.[xxiii]

Education

The FY 2024 budget continues to bring New Jersey closer to fully funding the state’s school funding formula, investing $11 billion in K-12 education, which includes $103 million in stabilization aid for school districts facing cuts.[xxiv] This is an increase of more than $800 million compared to the prior year. This increase, as well as those made throughout Governor Murphy’s tenure, are critical to ensuring that New Jersey meets its constitutional obligation to fully fund education. Pre-kindergarten funding also received a boost of $116 million over the prior year, bringing New Jersey closer to its statutory goal of universal preschool.[xxv]

The number of children attending schools that receive less than adequate aid under the formula has reduced substantially since 2015.[xxvi] However, there is evidence that the School Funding Reform Act (SFRA) targets are too low to meet New Jersey’s current and more rigorous educational standards.[xxvii] While fully funding the school funding formula remains an important short-term goal, resetting its adequacy targets to meet the new, higher outcome standards must become a priority for lawmakers.

Health

Cover All Kids

Cover All Kids is a hallmark achievement of the Murphy administration, with all income-eligible children now able to receive public health insurance, regardless of immigration status.[xxviii] This initiative reduces barriers to health care and is responsible for recent progress in lowering the number of uninsured children across the state.[xxix] The FY 2024 budget includes $14.1 million for this initiative.[xxx] It is unclear how much of last year’s funding will carry forward, and the program’s continued success will require ongoing investments to maintain outreach and enrollment efforts. The budget also includes language allowing the state to explore affordable health insurance options for all children, regardless of immigration status, who are not income-eligible for NJ Family Care, closing the final implementation gaps and providing universal coverage for all kids in New Jersey.[xxxi] 

Health Insurance 

Over the last few years, increased health insurance subsidies have helped get a record number of people insured, and the FY 2024 budget continues to invest $25 million to support health insurance marketplace subsidies.[xxxii] However, with the end of the COVID-19 public health emergency, many people will likely lose their public health insurance coverage, forcing them to find coverage elsewhere.[xxxiii] It’s unclear whether flat funding will be sufficient to maximize coverage.

Medical Debt Relief

The burden of medical debt has widespread consequences on the economic stability of individuals and families. The FY 2024 budget includes a novel pilot program with a $10 million investment of pandemic relief funds to assist families reduce their medical debt.[xxxiv] This program will focus on helping low- and middle-income residents, with eligibility limited to residents who have a household income below 400 percent of the federal poverty level ($99,440 for a family of three in 2023) or have medical debt equal to 5 percent or more of the household’s income.[xxxv] Although details on the program are still forthcoming, similar programs in other states have helped eliminate residents’ medical debt for pennies on the dollar.[xxxvi]

Reproductive Health 

Last year, Governor Murphy signed legislation to codify abortion rights in New Jersey, solidifying the state’s commitment to protecting the right to reproductive freedom.[xxxvii] The FY 2024 budget reaffirms this commitment with a $10 million investment to increase reimbursement rates for reproductive health care providers.[xxxviii] This will help support clinics and health care professionals currently overwhelmed and under-resourced, serving New Jersey and out-of-state residents seeking a safe haven in the Garden State.[xxxix] The budget also continues to invest in family planning services through the state’s Department of Health with a $30 million allocation.[xl] Similarly, the new initiatives from last year’s budget to address the post-Dobbs threats to reproductive health — for training OBGYNs, facilities upgrades, and security needs — are maintained at $20 million. [xli]

To build on the state’s recent successes in reproductive health, lawmakers must consider expanding access to abortion care for uninsured and underinsured residents just as the state does for other prenatal care.[xlii]

Maternal Health

Funding in the FY 2024 budget also reflects the Murphy administration’s commitment to addressing New Jersey’s wide racial disparities in maternal and infant health. The budget includes a $200,000 investment in the Restorative Maternal Health Birthing Center in Trenton.[xliii] Additionally, the budget includes a $4.5 million increase in funding for the Universal Home Visiting program, which entitles all parents with newborn infants to at least one free postpartum home visit.[xliv] The program will receive a total of $15.6 million for FY 2024.[xlv]

Prescription Drugs

The high cost of prescription drugs has reached crisis levels: Nearly a quarter of New Jersey residents have not taken medicine as prescribed due to concerns about cost.[xlvi] The FY 2024 budget takes initial steps toward addressing this urgent issue. Thanks to new laws and investments in the budget, residents will see EpiPen, insulin, and asthma inhaler costs capped on certain state-regulated insurance plans, in addition to lower prices at the pharmacy for some medications, depending on their insurance plan, in the coming months.[xlvii] The budget also includes expanded affordability measures for seniors on Medicare.[xlviii]

The budget also created the Drug Affordability Council (DAC) to bring transparency to the pharmaceutical industry. The DAC will research the underlying factors behind high drug costs and make recommendations to lawmakers on ways to further rein in costs and make prescription drugs affordable for more residents.[xlix] State leaders will need to provide sufficient support for the DAC and act quickly on its recommendations to lower prescription drug prices further.

Harm Reduction Services

Harm reduction services are essential to support people who use drugs, keep people out of the criminal legal system, and promote long-term health and public safety. The FY 2024 budget maintains funding levels for existing harm reduction centers at $4.5 million.[l] In supporting the expansion of local harm reduction centers, the new harm reduction center operated by Black Lives Matter Paterson will receive a grant for $250,000.[li] There is also funding for expanded access to naloxone, so pharmacies across the state can provide the life-saving drug anonymously and for free.[lii] Separate from the state budget, New Jersey will receive $600 million over the next two decades from settlements with opioid manufacturers, which should be allocated to harm reduction service expansion and healing the harms of the War on Drugs.[liii]

Public Safety

 Public Defender Fees

The constitutional right to counsel guarantees legal representation for those accused of a crime, regardless of their ability to pay. Until now, one’s right to legal representation from a state-issued public defender in New Jersey came with a price tag, sometimes in excess of $1,000.[liv] These high fees not only contributed to the cycle of poverty but also created perverse incentives for defendants, as accepting a plea bargain came with lower fees than fighting a case. The latest state budget eliminates state-level public defender fees — a huge win for the residents of New Jersey and a major step toward a more equitable justice system for all.

The FY 2024 budget appropriates $4.4 million to both cover the costs of public defender fees and provide modest pay increases for attorneys that assist the Office of the Public Defender (OPD).[lv] The Legislature also repealed the statute requiring fees and wiped out existing liens owed to the OPD.[lvi]

Unfortunately, municipal and county-level public defenders may still require fees for service. Eliminating public defender fees across the board is the logical next step for state lawmakers, as access to a constitutional right should not exist behind a paywall and result in debt.

Crisis Response and Violence Intervention Programs

The current approach to public safety, premised on punishment and rooted in racism, often falls short of keeping residents safe, while doing active harm to Black and brown communities through over-policing and unnecessary use of force. This was exemplified by the tragic death of Najee Seabrooks, who was shot and killed by Paterson Police earlier this year while experiencing a mental health crisis. Mental health crises are one of many situations where armed police are not the best equipped to respond. Even so, legislation that would have provided $10 million to fund new community-led crisis response teams did not make it into the final state budget, as the bill passed through the Assembly but has yet to be heard in the Senate.[lvii]

However, the state budget continues to invest in community-led violence intervention programs, which help resolve high-risk conflicts and disputes, connecting residents to needed supports and keeping them out of the criminal legal system. The FY 2024 budget includes $15 million — $10 million from the state and $5 million in federal funds — to support and expand the state’s existing community-based violence intervention programs.[lviii] Community-led responses are an evidence-based approach to improve public safety, centering restorative justice and harm reduction without resorting to armed police response.[lix]

In stark comparison, the FY 2024 budget includes far-greater investments in conventional policing across the state. Some examples include: Camden County Metro Police received $8 million for technology upgrades,[lx] the police headquarters in the Borough of Haddonfield received $5 million,[lxi] and the Paterson Police Department received $10 million.[lxii] Additionally, ARRIVE Together, the Attorney General’s crisis response initiative operated by State Police, receives roughly $10.6 million.[lxiii]

As the need for a non-police response to crises becomes increasingly evident, future budgets should prioritize funding for more community-based solutions.

Environment and Transit

Clean Energy Fund

 New Jersey’s Clean Energy Fund aims to help the state transition to 21st-century technologies that reduce our dependence on fossil fuels, cut air pollution, and save families money. However, more than $2 billion has been raided from the fund over the last decade, including $70 million in the new state budget.[lxiv] This is a minor improvement compared to the raid in last year’s budget, but every dollar raided makes it less likely New Jersey will meet its ambitious clean energy goals. If used as intended, the Clean Energy Fund will drive investments in areas like offshore wind and bus electrification, reducing air pollution and creating good-paying jobs across the state.

NJ Transit

NJ Transit is a cornerstone of mobility in New Jersey, providing residents with transportation to their jobs, doctors, schools, and more. But years of underfunding have left NJ Transit in a state of disrepair and passengers without a reliable source of transportation. The FY 2024 budget contains $2.87 billion for NJ Transit with no new fare hikes, but that does not tell the whole story.[lxv] The transit agency’s budget relies on expiring federal funds, diversions from the Clean Energy Fund, and it once again diverts NJ Transit’s capital funds to cover operating costs, transferring $334 million to cover routine maintenance.[lxvi] Without additional state funding, NJ Transit faces a $1 billion deficit by FY 2026 due lower than expected fare collections and federal pandemic assistance about to expire.[lxvii]

NJ Transit remains the only transit agency of its size in the United States without a reliable, dedicated funding source. If lawmakers do not act quickly to fully fund NJ Transit, the state may experience a transit death spiral, with drastic service cuts, fare hikes, and breakdowns that leave passengers stranded.[lxviii]

Conclusion: Sustainable Investments Need Sustainable Revenues

The investments made in New Jersey’s FY 2024 will pay great dividends in years to come. But sustainable tax revenue is required to maintain and build on these investments in future years. With tax collections already declining, even a small economic downturn could lead to reduced revenues that throw the state budget out of balance. Coupled with costly tax cuts and expiring federal pandemic relief funds, lawmakers may soon face difficult choices and potentially devastating cuts to programs and services.

A period of economic uncertainty is not the time to cut taxes for billion-dollar corporations or to direct tax giveaways to wealthy individuals and special interests. A strong tax code where those with the most pay what they owe is the only way to guarantee the promise of the budget’s investments for years to come.

End Notes

[i] The final approved appropriations in the FY 2024 Appropriations Act was $54,319,047,000 after the Governor’s line-item veto. See Governor Philip Murphy, Veto Message and Summary, A5669/S2024 (June 30, 2023), p. 2, https://d31hzlhk6di2h5.cloudfront.net/20230630/07/c4/38/35/b3a57fbddd9e9af6a3e5a3bd/FY2024_Veto_Message_and_Summary.pdf.

[ii] New Jersey Department of the Treasury, State of New Jersey, Month and Year-to-Date Cash Collections, Fiscal Year 2023 – May 2-23 versus 2022 (June 19, 2023), https://www.nj.gov/treasury/news/2023/pdf/MonthlyReport%20with%20Snapshot-FY23May.pdf.

[iii] See Office of Legislative Services, FY 2024 Appropriations Bill Scoresheet, June 30, 2023, p.1 https://pub.njleg.state.nj.us/publications/budget/Scoresheet,%20As%20Introduced.pdf.

[iv] Justin Theal & Alexandre Fall, Record State Budget Reserves Buffer Against Mounting Fiscal Threats, Pew Charitable Trusts, March 22, 2023, https://www.pewtrusts.org/en/research-and-analysis/articles/2023/03/16/record-state-budget-reserves-buffer-against-mounting-fiscal-threats.

[v] Sheila Reynertson, New Jersey Policy Perspective, Don’t Forget to Fix New Jersey’s Shrinking Rainy Day Fund, July 19, 2017,

https://www.njpp.org/publications/blog-category/lets-not-forget-to-fix-new-jerseys-shrinking-rainy-day-fund/.

[vi] The Governor’s FY 2024 Budget in Brief, hereinafter “FY 2024 Budget in Brief”, February 2023, p. 65, https://www.state.nj.us/treasury/omb/publications/24bib/BIB.pdf. The FY 2024 Budget in Brief is cited when budget allocations do not appear as specific line items in the Appropriations Act, Assembly Bill 5669, hereinafter “FY 2024 Appropriations Act.”

[vii] Sheila Reynertson, Stop the Sunset: Corporate Tax Cut Would Benefit the Biggest and Most Profitable Businesses, New Jersey Policy Perspective, Feb. 22, 2023, https://www.njpp.org/publications/report/stop-the-sunset-corporate-tax-cut-would-benefit-the-biggest-and-most-profitable-businesses/.

[viii] Peter Chen, New Jersey Policy Perspective, GILTI as Charged: New Corporate Tax Proposal Would Accelerate Tax Avoidance, April 6, 2023, https://www.njpp.org/publications/blog-category/gilti-as-charged-new-corporate-tax-proposal-would-accelerate-tax-avoidance/.

[ix] For more on this trend nationally, see Josh Bivens, Economic Policy Institute, Reclaiming Corporate Tax Revenues, April 14, 2022, https://epi.org/247534.

[x] Assembly Budget Committee Statement to Assembly Bill No. 1, June 28, 2023, https://www.njleg.state.nj.us/bill-search/2022/A1/bill-text?f=A0500&n=1_S2.

[xi] Peter Chen, New Jersey Policy Perspective, StayNJ 2.0: Senior Tax Cut Still 2 Regressive and 2 Expensive, Jun. 27, 2023, https://www.njpp.org/publications/report/staynj-2-0-senior-tax-cut-still-2-regressive-and-2-expensive/.

[xii] The Treasurer’s May Supplemental Budget Update showed total revenues of $52.8 billion in FY 2023, compared to $54.6 billion in expenditures. See New Jersey Department of the Treasury, FY 2024 Budget, May 17, 2023, p. 3, https://www.nj.gov/treasury/news/2023/pdf/TreasurersMayPacket.pdf. However, additional associated bills not included in the FY 2024 Appropriations Act, notably the Stay NJ property tax credit program, increased the total cost of the budget to $54.5 billion. See Press Release, Governor Phil Murphy, Governor Murphy Signs Fiscal Year 2024 Budget Into Law, June 30, 2023, https://nj.gov/governor/news/news/562023/approved/20230630f.shtml.

[xiii] New Jersey Transit Budget Proposal Transmittal, April 19, 2023, at Exhibit B, appendix D, p. 41, https://content.njtransit.com/sites/default/files/board/meeting_minutes/2023_04_19_OpenSessEXP.pdf.

[xiv] Linda Smith & Victoria Owens, Bipartisan Policy Center, States Face a $48 Billion Child Care Funding Cliff, June 3, 2022, https://bipartisanpolicy.org/blog/states-face-a-48-billion-child-care-funding-cliff/.

[xv] New Jersey Department of Education, Text Version: New Jersey One-Time Grants and Timelines Charts, (June 22, 2022), https://www.nj.gov/education/federalfunding/understanding/TextVersion_OneTimeGrants.shtml.

[xvi] For a summary of how economic austerity during the Great Recession harmed racial and economic equity, see Asha Banerjee & Emma Williamson, Center for Law and Social Policy, Fighting Austerity for Racial and Economic Justice, October 2020, https://www.clasp.org/wp-content/uploads/2022/01/2020_Fighting-Austerity-for-Racial-and-Economic-Justice.pdf.

[xvii] FY 2024 Budget in Brief, p.13; Office of Legislative Services, Fiscal Note, Senate, No. 3940, June 23, 2023, https://pub.njleg.state.nj.us/Bills/2022/S4000/3940_F1.PDF.

[xviii] Assembly Bill 3857, https://www.njleg.state.nj.us/bill-search/2022/A3857.

[xix] Peter Chen & Pat Garofalo, New Jersey Policy Perspective, Reel Regret: The High Cost of Expanding Film Tax Credits in New Jersey, June 26, 2023, https://www.njpp.org/publications/blog-category/reel-regret-the-high-cost-of-expanding-film-tax-credits-in-new-jersey/.

[xx] Senate Bill 2458, https://www.njleg.state.nj.us/bill-search/2022/S2458.

[xxi] FY 2024 Appropriations Act, p. 141, lines 31-33.

[xxii] New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FY 2021-2023, at attachment B,  https://www.nj.gov/humanservices/dfd/programs/workfirstnj/tanf_2021_23_st_plan.pdf; Raymond Castro, New Jersey Policy Perspective, Promoting Equal Opportunities for Children Living in Poverty, April 13, 2020, https://www.njpp.org/publications/report/promoting-equal-opportunities-for-children-living-in-poverty/.

[xxiii] Center on Budget and Policy Priorities, TANF Policies Reflect Racist Legacy of Cash Assistance, 2021. https://www.cbpp.org/research/income-security/tanf-policies-reflect-racist-legacy-of-cash-assistance.

[xxiv] Press Release, Governor Murphy Signs Fiscal Year 2024 Budget Into Law, June 30, 2023, https://www.nj.gov/governor/news/news/562023/20230630f.shtml.

[xxv] Press Release, Governor Murphy Signs Fiscal Year 2024 Budget Into Law, June 30, 2023, https://www.nj.gov/governor/news/news/562023/20230630f.shtml.

[xxvi] Mark Weber & Bruce Baker, New Jersey Policy Perspective, School Funding in New Jersey: A Fair Future for All, November 17, 2020, https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/.

[xxvii] Bruce Baker & Mark Weber, New Jersey Policy Perspective, New Jersey School Funding: The Higher the Goals, the Higher the Costs, February 2, 2022, https://www.njpp.org/publications/report/new-jersey-school-funding-the-higher-the-goals-the-higher-the-costs/.

[xxviii] Pub. L. 2021, c. 132.

[xxix] New Jersey Department of Human Services, Response to OLS Questions, FY 2024 Budget, p. 9, https://pub.njleg.state.nj.us/publications/budget/governors-budget/2024/DHS_response_2024.pdf.

[xxx] FY 2024 Budget in Brief, p. 33.

[xxxi] FY 2024 Appropriations Act, p. 30.

[xxxii] FY 2024 Appropriations Act, p. 29.

[xxxiii] New Jersey Department of Human Services, Stay Covered NJ, Eligibility Unwinding, 2023, https://nj.gov/humanservices/dmahs/staycoverednj/unwinding/. Last accessed July 2023. Page on file with author.

[xxxiv] FY 2024 Appropriations Act, p. 275, line 36.

[xxxv] United States Department of Health and Human Services, 2023 Poverty Guidelines, https://aspe.hhs.gov/sites/default/files/documents/1c92a9207f3ed5915ca020d58fe77696/detailed-guidelines-2023.pdf; FY 2024 Appropriations Act, p. 275, lines 55-74.

[xxxvi] Amanda Holpuch, Medical Debt Is Being Erased in Ohio and Illinois. Is Your Town Next?, New York Times, Dec. 29, 2022, https://www.nytimes.com/2022/12/29/us/toledo-medical-debt-relief.html.

[xxxvii] Pub. L. 2021, c.375.

[xxxviii] FY 2024 Appropriations Act, p. 126, lines 36-41.

[xxxix] Heather Howard, New Jersey should increase Medicaid reimbursement rates for reproductive health care, New Jersey Globe, May 15, 2023, https://newjerseyglobe.com/health/opinon-new-jersey-should-increase-medicaid-reimbursement-rates-for-reproductive-health-care/.

[xl] FY 2024 Appropriations Act, p. 95, line 47. The Family Planning Services line-item was funded at $19,529,000 in FY 2022 and $30,029,000 in FY 2023. See FY 2024 Governor’s Detailed Budget, p. D-159, https://www.nj.gov/treasury/omb/publications/24budget/FY2024BudgetDetail-Full.pdf.

[xli] FY 2024 Appropriations Act, p. 163, p. 96, line 4, p. 160, line 35.

[xlii] FY 2024 Appropriations Act, p. 121, lines 31-39.

[xliii] Lilo Stainton, Not one, but two birthing centers in the works for Trenton, NJ Spotlight, October 26, 2022, https://www.njspotlightnews.org/2022/10/two-trenton-birthing-centers-maternal-infant-health-mortality-tammy-murphy/; FY 2024 Appropriations Act, p. 44, p. 202, lines 14-16.

[xliv] FY 2024 Budget in Brief, p. 29.

[xlv] FY 2024 Appropriations Act, p. 31.

[xlvi] Altarum Healthcare Value Hub, New Jersey Residents Worried about High Drug Costs; Support a Range of Government Solutions, 2023, https://healthcarevaluehub.org/advocate-resources/publications/new-jersey-residents-worried-about-high-drug-costs-support-range-government-solutions-1.

[xlvii] P.L.2023, c. 105. Bill text is available at https://www.njleg.state.nj.us/bill-search/2022/S1614.

[xlviii] P.L.2023, c. 79. Bill text available at https://www.njleg.state.nj.us/bill-search/2022/S3.

[xlix] P.L.2023, c. 106.

[l] FY 2024 Appropriations Act, p. 96, line 33; FY 2024 Governor’s Detailed Budget, p. D-161.

[li] FY 2024 Appropriations Act, p. 96, line 32.

[lii] FY 2024 Budget in Brief, p. 38.

[liii] FY 2024 Budget in Brief, p. 38.

[liv] Marleina Ubel, New Jersey Policy Perspective, The High Cost of “Free” Representation: Why New Jersey Should Eliminate Public Defender Fees, October 24, 2022, https://www.njpp.org/publications/blog-category/the-high-cost-of-representation-public-defender-fees/; Marea Beeman et al., National Legal Aid and Defender Association, At What Cost? Findings from an Examination into the Imposition of Public Defense System Fees, July 2022, pp. 98-99, https://www.nlada.org/sites/default/files/NLADA_At_What_Cost.pdf?v=2.0.

[lv] FY 2024 Budget in Brief, p. 41.

[lvi] P.L.2023, c. 69.

[lvii] Assembly Bill 5326, https://www.njleg.state.nj.us/bill-search/2022/A5326.

[lviii] FY 2024 Budget in Brief, p. 39.

[lix] New Jersey Policy Perspective, To Protect and Serve: Investing in Public Safety Beyond Policing, October 13, 2021, https://www.njpp.org/publications/report/to-protect-and-serve-investing-in-public-safety-beyond-policing/

[lx] FY 2024 Appropriations Act, p. 52.

[lxi] FY 2024 Appropriations Act, p. 49.

[lxii] FY 2024 Appropriations Act, p. 159, line 35.

[lxiii] FY 2024 Appropriations Act, p. 156, line 50, p. 153, line 34.

[lxiv] FY 2024 Budget in Brief, p. 99; Alex Ambrose, New Jersey Policy Perspective, Stop the Raids: The Clean Energy Fund Should Fund Clean Energy, Jan. 12, 2023, https://www.njpp.org/publications/report/stop-the-raids-the-clean-energy-fund-should-fund-clean-energy/.

[lxv] FY 2024 Budget in Brief, p 43.

[lxvi] FY 2024 Appropriations Act, p. 271, lines 19-20.

[lxvii] NJ Transit Board Minutes, April 20, 2023, appendix D, p. 41. https://content.njtransit.com/sites/default/files/board/meeting_minutes/2023_04_19_OpenSessEXP.pdf.

[lxviii] Elise Young, NJ Transit’s Creaky, Empty Trains Stir Worry of Fare Increases, Bloomberg, Feb. 24, 2023, https://www.bloomberg.com/news/articles/2023-02-24/nj-transit-delays-hit-record-high-despite-gov-murphy-pledge-to-fix-trains.

StayNJ 2.0: Senior Tax Cut Still 2 Regressive and 2 Expensive

Posted on by Peter Chen

The latest draft of StayNJ, a proposal to credit home-owning seniors for up to half of their property tax bills, would still direct the largest benefits to wealthy households while providing much less to lower-income homeowners and renters. Despite amendments that lower the maximum tax credit and add a much-needed income cap on eligibility, the new proposal still ties the total benefit to property taxes paid, resulting in the biggest tax cuts going to people with high incomes who own the most valuable homes.

As written, the proposal would make New Jersey’s tax code more regressive and worsen the racial wealth gap. It would also come at an enormous cost to the state, with a total price tag of $2.2 billion at a time when the state can ill afford it.

1. Still Regressive

The new StayNJ proposal, a compromise between Governor Murphy and legislative leaders, has been modified to include an income cap of $500,000 and a lower maximum benefit of $6,500. These changes fail to address the fundamental flaw at the heart of StayNJ: By tying benefit amounts to total property tax bills, the program directs larger payments to owners of larger, higher-valued homes. Further, an income cap of $500,000 still includes many high-income seniors with substantial wealth and economic advantages. To put this new income cap in perspective, it is double that of the state’s ANCHOR property tax rebate, which phases out at $250,000 in annual income.

The majority of StayNJ benefits would still go to the top 40 percent of households, leaving lower-income seniors with much less. In total, 28 percent of benefits would go to the top 20 percent of households, while those in the bottom 20 percent would receive only 7 percent of the benefits. As long as the program continues to disproportionately benefit homeowners at the expense of renters, and direct bigger benefits to those with more valuable homes, it will continue to reward the rich at the expense of the rest of the population.

Even with an additional $250 payment for seniors who rent included in the proposal, renters would still receive thousands less than their wealthier home-owning peers. The average benefit for seniors in the top 5 percent (with incomes of at least $360,000) would be $4,508, while seniors in the bottom 20 percent (with incomes less than $26,000) would receive an average benefit of $369. Because renters are disproportionately nonwhite and have lower incomes on average, the new StayNJ program would still widen the racial wealth gap.

2. Still Expensive

Based on modeling of income and homeowner data, NJPP estimates the program’s cost at $1.9 billion for the homeowner component alone, with another $300 million in ANCHOR payments for a total cost of $2.2 billion per year. With declining tax collections, federal pandemic aid set to expire, and no revenue source to pay for StayNJ, this proposal will make it extremely difficult for lawmakers to balance the state budget in future years.

Good Intentions, Poor Execution

The new StayNJ proposal remains too regressive and too expensive, directing the biggest benefits to already-wealthy households. Whatever its good intentions, StayNJ will put more in the pockets of those who need it least, while doing little to support the low-income seniors most at risk of losing their homes.

Stay Away from StayNJ: Proposal Cuts Taxes for the Rich, Leaves Low-Income Seniors Behind

Posted on by Peter Chen

Housing affordability is one of the most pressing challenges facing New Jersey, but not all policies aimed at making the state affordable are equally effective, efficient, or equitable. When evaluating new proposals and changes to the tax code, it’s critical to consider who stands to benefit, by how much, and who is left behind. In other words, “Affordable for who?”

The newly proposed property tax cut for seniors, StayNJ, has a laudable goal of helping seniors who are struggling with high costs stay in their homes. However, by the program’s very design, StayNJ would accomplish the exact opposite by providing huge tax cuts to the wealthiest homeowners in the largest homes, while providing little-to-no benefit to the lowest income homeowners and renters.

With no income cap on eligibility, higher tax cuts for more expensive homes, and no credit for renters, the StayNJ proposal represents a massive transfer of wealth and state resources to those who already have the most. As currently written, the proposal diverts billions of dollars away from much-needed investments in schools, transit, health care, and infrastructure we all rely on just as federal pandemic aid expires and state revenue collections decline.

Despite its name, A1 is decidedly second-rate when it comes to helping make New Jersey affordable for all.

1. StayNJ is Robin Hood in Reverse: Wealthy Residents Would Benefit the Most

The proposed tax cuts from StayNJ would benefit the wealthiest New Jersey residents the most and the lowest-income residents the least. According to an NJPP analysis of modeling from the Institute on Taxation and Economic Policy (ITEP), the top 1 percent of New Jersey residents would receive the an average tax cut of $2,688, while the lowest-income 20 percent would receive a mere $103, largely due to the high percentage of low-income residents who rent.[1] Among those who would receive a tax cut from StayNJ, the average cut for those in the top 1 percent is roughly three times the average tax cut for those in the bottom 40 percent.

When looking at the total cost of the proposal — $2.2 billion, according to ITEP’s modeling — roughly 40 percent would go to the wealthiest 20 percent of residents, while only 5 percent would go to the lowest-income 20 percent of residents. The top 1 percent of residents alone would get a bigger share of the benefits than the entire lowest-income 20 percent.

Considering the structure of StayNJ, it’s not surprising that the proposal disproportionately benefits those with the highest incomes.

In order to get the maximum tax cut of $10,000, a homeowner must pay $20,000 in property taxes, a rare occurrence reserved for the highest-valued homes. For reference, the average property tax bill in New Jersey is less than half that amount.[2]

As a result, the average homeowner in Alpine (average home value of $2.8 million) would receive $10,000. Meanwhile, the average homeowner in Trenton (average home value of $62,863) would receive $1,700.[3]

It’s worth noting that this analysis does not account for the residents who already receive property tax credits through ANCHOR and the Senior Freeze — which each have income limits on eligibility — meaning fewer low- and middle-income seniors would receive benefits under StayNJ. As written, the StayNJ benefit is half off a senior’s property tax bill, or their Senior Freeze and ANCHOR benefits combined, whichever is more.[4]

Add it all up and the lion’s share of the StayNJ benefit would go to the wealthy, with bigger benefits the wealthier the taxpayer. This undermines the state’s progressive tax code and the principle that government benefits should flow towards those with the least, not those with the most.

2. StayNJ Fails to Accomplish Its Stated Goal by Leaving Renters and Low-Income Seniors Behind

Seniors on fixed incomes often have a difficult time keeping up with rising costs, and there is evidence that New Jersey’s low-income seniors need additional financial help. The poverty rate for seniors in New Jersey (9.2 percent) is actually higher than the poverty rate for other adults (9.1 percent).[5]

The StayNJ proposal leaves many of these low-income seniors behind, however, as the program excludes renters entirely. Renters have significantly less wealth and lower incomes than their home-owning peers. Renters also make up a substantial percentage of New Jersey’s senior population: Roughly one in five New Jersey seniors rent their homes, including more than half of Hispanic/Latinx and Black seniors.[6] Given the disparities in homeownership, this proposal will widen the racial wealth gap instead of helping close it. As noted in the appendix, senior renters number in the thousands in each legislative district.

With lower incomes, less wealth, and no equity in their home, seniors who rent are at high risk of being priced out and evicted.[7] This is illustrated by recent Census survey data showing that one in five New Jersey senior renters reported missing the last month’s rental payment.[8]

The concentration of homeownership in wealthier income brackets is clear when looking at how many people in each income range would qualify for StayNJ. Of those in the top one percent of earners in New Jersey, 40 percent would receive a tax cut from StayNJ, while a mere 5 percent of those in the lowest-income quintile would receive anything.

Beyond the exclusion of renters, this program may actually make senior housing affordability more challenging. Research shows property tax cuts for wealthy homeowners can stifle housing development and growth, stagnating the housing market and decreasing affordability, as Proposition 13 did in California.[9]

Instead of a tax cut targeted to wealthy homeowners, state lawmakers have other avenues to help reduce senior poverty: expanding outreach for enrollment in food assistance programs like SNAP, reducing health care and prescription drug costs, and increased funding for rent assistance,[10] foreclosure assistance, and housing counseling.

Using the tax code to assist seniors with high costs can only be successful if the changes are targeted to help those who need it most. StayNJ fails to do so.

3. StayNJ Threatens New Jersey’s Fiscal Health

During the Murphy administration, state lawmakers have made great progress towards fixing New Jersey’s financial health after years of mismanagement and not paying the bills. Thanks to a series of full pension payments, increased taxes for millionaires and the most profitable corporations, and strong investments in key factors that promote economic growth like public schools and infrastructure, the state finds itself on solid fiscal footing for the first time in decades.[11]

But StayNJ would jeopardize this progress by pouring billions of dollars into the hands of those who need it least, all without a revenue source to pay for it. To put the sheer size of StayNJ in perspective, its $1.2 billion sticker price is roughly equivalent to the entire budget for the state Department of Health.[12] The bill also lacks funding for administrative costs associated with the new program at the local or state level, which could balloon the cost even further. The $1.2 billion fiscal note for StayNJ may also be an undercount: The Murphy administration estimates that the annual cost is closer to $2 billion, and NJPP’s analysis indicates a cost of $2.2 billion for the state, though we were unable to model the impact of ANCHOR given the lack of public data on who has received tax credits through the new program thus far.

This expensive proposal takes place against a backdrop of reduced revenues and tax cuts for billion-dollar corporations. The Treasury forecast already anticipates $2 billion less in revenue collections over Fiscal Years 2023 and 2024.[13] And those forecasts do not include $1 billion in annual revenue that will be lost if lawmakers cut the corporate tax rate at the end of the calendar year, as they are poised to do.[14] Even a small economic downturn could wipe out the already-tenuous state surplus and make it difficult for lawmakers to balance future budgets without severe cuts to other programs and services.

There are More Efficient and Effective Ways to Help Seniors Stay in New Jersey

When designing policies to make the state more affordable for seniors, lawmakers should target support to the residents who need the most help. Instead, StayNJ would do the opposite by targeting benefits to New Jersey’s wealthiest households while leaving many low-income seniors behind entirely. The program’s poor design, coupled with its billion-dollar price tag and lack of a funding source, should have lawmakers looking for other ways to help seniors stay in New Jersey.

Appendix: Senior Renters by Legislative District

Source: U.S. Census Bureau, 2020 Demographic and Housing Characteristics Table H13

End Notes

[1] NJPP analysis of Institute on Taxation and Economic Policy modeling. Data on file with author.

[2] NJ Dep’t of Community Affairs, 2022 Property Tax Information (2023), https://www.nj.gov/dca/divisions/dlgs/resources/property_docs/22_data/22taxes.xls

[3] NJ Dep’t of Community Affairs, 2022 Property Tax Information (2023), https://www.nj.gov/dca/divisions/dlgs/resources/property_docs/22_data/22taxes.xls

[4] Derek Hall, N.J. senior tax relief bill fueling sudden drama and talk of state shutdown. Here’s what’s in it., NJ.com, May 28, 2023, https://www.nj.com/politics/2023/05/nj-senior-tax-relief-bill-fueling-sudden-drama-and-talk-of-state-shutdown-heres-whats-in-it.html

[5] Kaiser Family Foundation, Poverty Rate by Age, 2021, https://www.kff.org/other/state-indicator/poverty-rate-by-age/?currentTimeframe=0&sortModel=%7B%22colId%22:%2265%2B%22,%22sort%22:%22desc%22%7D.

[6] U.S. Census Bureau, 2020 Demographic and Housing Characteristics: H13B (Black), H13D (Asian), H13H (White Non-Hispanic), H13I (Hispanic/Latino).

[7] Annie Nova, He’s 75 and facing eviction. Many other older renters are, too. CNBC.com, June 22, 2021, https://www.cnbc.com/2021/06/22/millions-of-renters-may-soon-be-evicted-heres-one-familys-story-.html

[8] U.S. Census Bureau, Household Pulse Survey Week 57 (April 26 – May 8, 2023), Housing Table 1b, https://www2.census.gov/programs-surveys/demo/tables/hhp/2023/wk57/housing1b_week57.xlsx

[9] İmrohoroğlu, Ayşe, Kyle Matoba, and Şelale Tüzel. 2018. “Proposition 13: An Equilibrium Analysis.” American Economic Journal: Macroeconomics, 10 (2): 24-51. https://www.aeaweb.org/articles?id=10.1257/mac.20160327

[10] Will Fischer, Douglas Rice & Alicia Mazzara, Center on Budget and Policy Priorities, Research Shows Rental Assistance Reduces Hardship and Provides Platform to Expand Opportunity for Low-Income Families, Dec. 5, 2019, https://www.cbpp.org/research/housing/research-shows-rental-assistance-reduces-hardship-and-provides-platform-to-expand.

[11] Christian Wade, New Jersey receives ratings upgrade over ‘solid’ recovery, The Center Square, Apr. 7, 2023,  https://www.thecentersquare.com/new_jersey/article_8f8ef360-d550-11ed-b2e5-4b80b8a6a8b7.html

[12] State of New Jersey, Budget in Brief: Summary of Budget Recommendations, Fiscal Year 2024, https://www.state.nj.us/treasury/omb/publications/24bib/BIB.pdf at p. 70.

[13] Derek Hall, N.J. tax revenues plummet billions below Murphy budget estimate. Are the good times over?, NJ.com, May. 18, 2023, https://www.nj.com/politics/2023/05/nj-tax-revenues-plummet-billions-below-murphy-budget-estimate-are-the-good-times-over.html

[14] State of New Jersey, Budget in Brief: Summary of Budget Recommendations, Fiscal Year 2024, https://www.state.nj.us/treasury/omb/publications/24bib/BIB.pdf at p. 65.

Stop the Sunset: Corporate Tax Cut Would Benefit the Biggest and Most Profitable Businesses

Posted on by Sheila Reynertson

Editor’s Note: This report was updated on March 15, 2023 to reflect that the proposal to eliminate the Corporate Business Tax surcharge would cost New Jersey $1 billion in annual revenue, according to Governor Murphy’s FY 2024 Budget in Brief. A previous version of the report estimated it would cost at least $600 million annually.

With corporate profits at record-breaking levels and tax evasion on the rise, New Jersey lawmakers are poised to give the biggest and most profitable businesses operating in the state a multi-million dollar tax break at the end of 2023. A proposal to eliminate the Corporate Business Tax surcharge will cost New Jersey at least $1 billion in annual revenue, threatening the state’s ability to sustainably fund programs and infrastructure that families, communities, and businesses rely on.[1] This change would only benefit a select few highly profitable corporations, providing an average tax cut of $5 million to companies with more than $100 million in annual profits.

The Corporate Business Tax Surcharge is Targeted to Corporations That Can Afford It

The Corporate Business Tax (CBT) is New Jersey’s third largest source of revenue, supporting vital investments — like transportation infrastructure, open space, pre-K-12 schools, and so much more — that make the state an attractive place to raise a family or start a business. In 2018, state lawmakers amended the corporate tax code by adding a surcharge on profits over $1 million.[2] This targeted change helped the state meet its longstanding obligations, like ramping up school funding and making full pension payments, and generated sustainable funding for safety net programs and public services at the height of the pandemic.[3]

Only the wealthiest corporations are required to pay the 2.5 percent tax on every dollar of net profit above $1 million, including multi-national businesses like Amazon, Walmart, and Bank of America that do business in New Jersey but are not headquartered here. The vast majority of New Jersey businesses, 98 percent, do not pay the surcharge at all because their annual profits fall below the $1 million profit threshold. In fact, just over 2,500 corporations pay the surcharge, according to the most recent state data.[4] By targeting mega-corporations that make millions, if not billions, in profits every year, the surcharge is a sustainable revenue stream paid by the businesses that can afford it, sparing “mom-and-pop” businesses across the state.

Allowing the CBT surcharge to sunset at a time of unprecedented corporate profit margins would come at a significant cost while primarily benefiting a select few, ultra-profitable businesses. Roughly 70 percent of the corporate tax cut would go to businesses with more than $10 million in annual profits. Corporations with more than $100 million in profits would receive the largest tax cut, averaging $4,952,000.

Corporations Are Making Record Profits While Paying Less in Taxes

New Jersey’s strong CBT revenue collections in the last few years are a clear indicator that corporations are thriving, and the surcharge has neither hurt their bottom line nor driven them out of the state — an exaggerated talking point favored by business lobbyists to lower their tax obligations. From 2009 to 2021, corporate tax revenue in New Jersey increased by 212 percent, with the largest increase happening between 2020 and 2021, the latest year data is available.[5]

And while the most profitable corporations in New Jersey may be paying slightly more in state taxes, they continue to avoid paying what they truly owe by taking advantage of loopholes in the tax code and lobbying for tax cuts at the federal level. Wealthy corporations received a massive tax cut during the Trump administration, as the 2017 “Tax Cuts and Jobs Act” cut the U.S. federal corporate tax rate from 35 percent to 21 percent,[6] its lowest level since 1946.[7] The tax law also maintained blatant tax loopholes commonly used by wealthy corporations, allowing them to send their profits to tax havens like the Cayman Islands, completely disinvesting from the United States.

Tax avoidance is so common — and without consequence — that the amount of questionable tax dodging by corporations has nearly doubled in a decade’s time from $164 billion in 2010 to $235 billion in 2020.[8] Until the Internal Revenue Service rebuilds its hollowed out workforce, especially employees with experience working with complex tax filings, wealthy corporations can and will continue to reap the benefits of a rigged tax code.[9] Recouping a portion of this foregone revenue at the state level is an entirely appropriate countermeasure to these blatant efforts to minimize business tax obligations.

Maintaining the Surcharge Benefits Working Families and the State’s Finances

Revenue generated by the surcharge will be necessary to balance the state budget as pandemic-related federal assistance expires. Signed into law in March 2021, the American Rescue Plan (ARP) provided billions of dollars in flexible funding for states and local governments to begin reversing the harms done by the pandemic and promote an equitable economic recovery. New Jersey’s state government received $6.2 billion in flexible aid, helping lawmakers maintain funding for public programs and services and expand financial assistance to renters, public hospitals, small businesses, and child care providers, among others in need.[10]

Once federal funds are gone, new and recently expanded programs and services will require funding from the state, and there will be less revenue to go around if the CBT surcharge is eliminated. The state’s new universal newborn home visit program, for example, tapped $6 million in one-time fiscal recovery dollars to fund the first year. That casts doubt on whether the state will be able to sustainably fund the program in future years. Similar concerns arise around ARP allocations for programs that are normally supported by state funds, like grants for mental health services ($15 million) and capital improvement projects across the state ($50 million).

With rising costs, growing obligations, and looming end of federal relief aid, policymakers must provide a path of sustainability for the economic future of the Garden State. That starts with a commitment to long-lasting renewable revenue to meet the state’s current and future needs and a permanent surcharge on wealthy corporations is a smart first step.

 

End Notes

[1] State of New Jersey, Department of the Treasury, Office of Revenue and Economic Analysis, New Jersey Corporation Business Tax: Statistical Report for Return Years 2016–2018, August 2022. https://www.state.nj.us/treasury/economics/documents/pdf/stats/CBT-100-SOI-TY2016-2018.pdf#page=22;Legislative Fiscal Note for A4721, September 2020. https://www.njleg.state.nj.us/bill-search/2020/A4721/bill-text?f=A5000&n=4721_E1

[2] Chapter 48. https://pub.njleg.state.nj.us/Bills/2018/PL18/48_.PDF

[3] Chapter 95. https://pub.njleg.state.nj.us/Bills/2020/PL20/95_.PDF

[4]State of New Jersey, Department of the Treasury, Office of Revenue and Economic Analysis, New Jersey Corporation Business Tax: Statistical Report for Return Years 2016–2018, August 2022. https://www.state.nj.us/treasury/economics/documents/pdf/stats/CBT-100-SOI-TY2016-2018.pdf#page=22

[5] U.S. Bureau of Economic Analysis and U.S. Census Bureau at Federal Reserve Bank of St. Louis Economic Research Division, Federal Reserve Economic Data, https://fred.stlouisfed.org (Last updated Dec. 22, 2022). Without comprehensive public data on corporate profits in New Jersey, CBT revenue collections can be used as a proxy given that the tax is paid as a percentage of profits made in the state.

[6] The Tax Cuts and Jobs Act (TCJA), Public Law 115–97.

[7] Tax Policy Center, Historical Corporate Income Marginal Tax Rates, Tax Years 1942-2022, February 2022. https://www.taxpolicycenter.org/statistics/marginal-corporate-tax-rates

[8] The Washington Post, As IRS audits waned, big businesses racked up unapproved tax breaks, July 2021. https://www.washingtonpost.com/business/2021/07/14/corporate-tax-break-irs/?itid=hp-more-top-stories

[9] ProPublica, How the IRS was gutted, December 2018. https://www.propublica.org/article/how-the-irs-was-gutted

[10] New Jersey Policy Perspective, New Jersey Has Less than $1 Billion Left in American Rescue Plan Funds, August 2022. https://www.njpp.org/publications/blog-category/new-jersey-has-less-than-1-billion-left-in-american-rescue-plan-funds/

How an Expanded Child Tax Credit Would Help More Hard-Working New Jersey Families

Posted on by Peter Chen

In 2022, New Jersey became the seventh state to enact a refundable state-level Child Tax Credit to help families meet the high costs of raising kids.[i] Under the new program, eligible families will receive up to $500 for every child under six years old as early as January 2023.[ii]

The success of the Child Tax Credit lies in its simplicity: It directs cash relief to families with kids who need it most. It is a straightforward, commonsense program with long-lasting benefits. When families can pay for basic expenses — like groceries, housing, and child care — and save for their children’s futures, it improves child wellbeing immediately and makes it more likely for children to reach their full potential later in life.

Recognizing the power of direct cash relief for families, the Legislature passed the Child Tax Credit with substantial bipartisan support in both houses.[iii] Indeed it was Republican lawmaker Aura Dunn who urged her colleagues on the Assembly floor to “go bold” and expand the tax credit when it was first created, saying that more children and families should qualify as bigger kids come with bigger costs.[iv]

To build on the success of the Child Tax Credit, state lawmakers can and should expand the program with a higher maximum credit and so more families qualify for financial support. This report lays out the logical next steps for the Child Tax Credit and would make New Jersey a more affordable place to start and raise a family.

NJPP proposes a two-fold expansion to the existing law: expanding the Child Tax Credit to $1,000 for young kids under six years old, and opening eligibility to children ages 6-11.

This expansion targets two important limitations of the original credit:

  1. Its higher dollar amount reflects the needs of New Jersey families and the higher costs that they face with rising inflation.
  2. It recognizes that children have costs that do not end when they turn six and assists families whose children have aged out of the original credit.

The expanded credit would help 441,000 more families, including 713,000 children, across the state. On average, families receiving the credit would get $567.[v]

A History of Expanding Tax Credits Proven to Work

New Jersey created its Child Tax Credit just last session. Why expand it again so soon?

There’s certainly precedent. State lawmakers expanded New Jersey’s Earned Income Tax Credit (EITC) for working families in three straight years after it was created in 2000.[vi] In recent years, lawmakers have continued expanding the credit, reaching 40 percent of the federal credit amount in 2020.[vii]

Like the Earned Income Tax Credit, an expanded Child Tax Credit has a strong track record at the federal level for reducing child poverty and increasing household budgets for food, housing, and basic expenses.[viii] These programs also have a “multiplier effect” as the tax credits are often spent immediately and locally, stimulating the broader economy.[ix] But with the federal Child Tax Credit back to its pre-pandemic levels, families in New Jersey will see their benefits decline at a time when high costs cut deeply into working-class family budgets and financial security.[x]

In short, the Child Tax Credit is a highly effective anti-poverty and pro-family policy that should be expanded similar to other working families tax credits.

Measuring the Benefits of an Expanded Child Tax Credit

NJPP’s proposed expansion to the existing Child Tax Credit has two key components: a higher age limit so children up to 11 years old can be claimed, and a higher credit amount to better support families.

Increased Age Range

The age limit would be lifted from children under age 6 to children under age 12. Children do not stop having costs as time goes on.[xi] Expanding the age range will also cover a wider range of families and boost the credit amount for already-eligible families who also have children in the older age range.

Increased Credit Amount

The proposed credit would continue to honor the much-needed public investment in young children by providing a credit up to $1,000 for the current age range of children under age 6. A higher benefit for young children recognizes that young children are more likely to live in poverty than their older counterparts.[xii] For children ages 6-11, the maximum credit amount would be $500.

This expansion would reach roughly 441,000 families and provide benefits for 713,000 additional children. On average, a family receiving the credit would get $567, helping defray the daily costs of raising children.

Table showing examples of how an expanded child tax credit would benefit households. Household 1 with one parent, one child age five with a $25,000 would receive $1000 under the new credit, $500 with old credit. Household 2 with two parents, a child age 4 and a child age 7 with a household income of $45,000 would receive $900 under the new credit, $300 with old credit. Household 3 with two parents and one child age 10 with a household income on $75,000 would receive $100 under the new credit, $0 with the old credit.
These changes would provide meaningful relief to families who are experiencing the effects of high post-pandemic inflation, especially working-class and middle-class families, who reap the lion’s share of the benefits.

These higher dollar amounts also push the credit towards more poverty reduction. Recent estimates by the Institute on Tax and Economic Policy show that to achieve a 25% reduction in child poverty, maximum credit amounts would have to be upwards of $2,000, but a $1,000 maximum credit pushes the state in the right direction.[xiii]

Making New Jersey the Best Place to Raise a Family

The New Jersey Child Tax Credit is an effective, popular, and bipartisan program that gives working families the cash relief they need to make child-rearing more affordable. New Jersey should build on its successful program to expand the eligible age range and increase the benefit amount, especially for young children.

As Assemblywoman Dunn argued on the Assembly floor, it’s time for New Jersey lawmakers to go big and go bold when it comes to making the state the best place in the country to raise a family.

End Notes

[i]  California, New York, Massachusetts, Colorado, New Mexico, and Vermont also have refundable state child tax credits. Other states have non-refundable or temporary credits. See Sophie Collier et al., State Child Tax Credits and Child Poverty: A 50-State Analysis (2022) at p. 9, https://itep.sfo2.digitaloceanspaces.com/Report-State-Child-Tax-Credits-and-Child-Poverty-A-50-State-Analysis-2022.pdf.

[ii] P.L. 2022, c. 115.

[iii] The final votes were 76-2 in the Assembly and 31-6 in the Senate. See New Jersey Legislature, Bill S2523 Sca (1R), Session 2022-2023, https://www.njleg.state.nj.us/bill-search/2022/S2523.

[iv] New Jersey Assembly GOP, Democrats reject Dunn’s “big and bold” child tax credit (June 30, 2022), https://www.youtube.com/watch?v=DtfMHBanHoM at 1:40.

[v] Analysis of New Jersey taxpayer data by Institute on Taxation and Economic Policy, on file with author.

[vi] New Jersey Division of Taxation, New in 2001 (2002), https://www.nj.gov/treasury/taxation/pdf/new2001.pdf at p. 1.

[vii] N.J. Stat. § 54A:4-7(2). The credit amount started at 10% in 2000, increasing to 15% in 2001, 18% in 2002, and 20% in 2003.

[viii] See Bradley L. Hardy, Center on Budget and Policy Priorities, Child Tax Credit Has a Critical Role in Helping Families Maintain Economic Stability (April 14, 2022). https://www.cbpp.org/research/federal-tax/child-tax-credit-has-a-critical-role-in-helping-families-maintain-economic

[ix] Natalie Holmes and Alan Berube, Brookings Institute, The Earned Income Tax Credit and Community Economic Benefits (November 20, 2015).

The Earned Income Tax Credit and Community Economic Stability

[x] See Chuck Marr et al., Center on Budget and Policy Priorities, Year-End Tax Policy Priority: Expand the Child Tax Credit for the 19 Million Children Who Receive Less Than the Full Credit (December 7, 2022), https://www.cbpp.org/research/federal-tax/year-end-tax-policy-priority-expand-the-child-tax-credit-for-the-19-million; Joshua Klick & Anya Stockburger, Bureau of Labor Statistics, Inflation Experiences for Lower and Higher Income Households (December 2022), https://www.bls.gov/spotlight/2022/inflation-experiences-for-lower-and-higher-income-households/home.htm.

[xi] See Mark Lino et al., U.S. Dep’t of Agriculture, Expenditures on Children by Families, 2015 (March 2017), https://fns-prod.azureedge.us/sites/default/files/resource-files/crc2015-march2017.pdf at 24, tbl. 1.

[xii] See Areeba Haider, The Basic Facts about Children in Poverty, January 12, 2021 at fig. 4, https://www.americanprogress.org/issues/poverty/reports/2021/01/12/494506/basic-facts-children-poverty/

[xiii] Institute on Taxation and Economic Policy, Columbia Center on Poverty and Social Policy, Child Tax Credit Options for Reducing Child Poverty: New Jersey (2022), https://itep.sfo2.digitaloceanspaces.com/Child-Tax-Credit-Options-New-Jersey-2022.pdf at p. 3

Stop the Raids: The Clean Energy Fund Should Fund Clean Energy

Posted on by Alex Ambrose

The health and safety of every New Jersey resident is threatened by the state’s reliance on fossil fuels to power our homes, businesses, and transportation. Fossil fuels — such as gas, oil, and coal — account for a majority of carbon dioxide and greenhouse gas emissions, with a large percentage generated by energy produced for heat and electricity.[i] Air pollution and environmental toxins disproportionately harm New Jersey’s low–income families and residents of color, who are more likely to live and work closest to sources of pollution.[ii]

In recent years, state lawmakers and the Murphy administration have set ambitious goals to reduce emissions that will require a transition to alternative energy sources that are clean, affordable, sustainable, and reliable. Renewable sources of energy have many advantages to fossil fuels — they are abundant, increasingly cost-efficient, healthier, and create jobs — but they require investments in new technology and infrastructure. The state’s Clean Energy Fund, which is supported by a surcharge on monthly utility bills, is designed to support these investments in renewable energy, but the fund has been consistently raided by lawmakers to plug holes in the state budget. Since Fiscal Year 2010, lawmakers have raided nearly $2 billion from the fund, hampering the state’s ability to meet its clean energy goals, improve air quality, and mitigate against the worst harms of the climate crisis.[iii]

New Jersey’s Reliance on Fossil Fuels Threatens Public Health and Safety

Almost all of the energy consumed and produced in New Jersey comes from nonrenewable sources that pollute the air we breathe and the environment more broadly. In 2020, nearly 95 percent of energy consumed in the state came from nonrenewable sources, with nearly three-quarters of New Jersey families relying on natural gas as their primary heating fuel[iv]. In 2021, 90 percent of New Jersey’s energy production came from nonrenewable sources such as natural gas[v].

As a result of this overreliance on nonrenewable energy, New Jersey consistently ranks among states with the worst air quality in the nation, and this burden is not shared equally. People of color are significantly more likely to live in a county that received an ‘F’ on the American Lung Association’s most recent air quality report card than white people.[vi][vii] Air pollution cuts life expectancy by more than 2 years, and particulate matter poses a larger threat to human health than cigarettes.[viii]

Gas- and diesel-powered transportation are the biggest sources of air pollution in New Jersey, and natural gas and oil account for almost all of the state’s energy-related emissions.[ix][x] Natural gas leaks also release air toxins into the atmosphere which are linked to illnesses such as cancer.[xi]

The burning of fossil fuels and the resulting air pollution come at a severe cost to New Jersey families in regard to both their health and personal finances. In addition to the costs associated with treating illnesses linked to pollution, the prices of nonrenewable energy are on the rise, as exemplified by a recent double-digit rate increase by gas providers serving millions of residents across the state.[xii] A recent report from the New Jersey Board of Public Utilities found that gas energy prices may continue to rise, particularly for low-income families who cannot afford more efficient appliances and heating and cooling systems.[xiii] Investing in 21st century technologies that promote clean energy would not only reduce nonrenewable energy consumption and improve air quality, but also save families money in the short- and long-term.

The Clean Energy Fund: A Path to Funding New Jersey’s Clean Energy Future

New Jersey lawmakers recognize the threats associated with fossil fuels and the importance of transitioning to a clean energy economy. Since 2018, state lawmakers and the Murphy administration have set the following clean energy goals:

  • 50 percent of energy consumed must come from renewable energy sources by 2030,[xiv] and 100 percent of energy consumed must come from clean energy by 2050[xv]
  • 80 percent reduction in greenhouse gas emissions by 2050 (compared to 2006 levels)[xvi]
  • 100 percent of new NJ Transit bus purchases are electric by 2032[xvii]
  • 100 percent of state-owned light-duty vehicle (i.e. passenger car) sales are electric by 2032[xviii]
  • 11,000 MW of offshore wind production by 2040[xix]
  • 2,000 MW of energy storage by 2030[xx]

 

Meeting these clean energy targets will not happen on their own, however; they will require the right policies and funding mechanisms to steward the transition to a clean energy economy.

The Clean Energy Fund is New Jersey’s primary mechanism for financing clean energy investments and incentivizing the use of clean energy through the state’s Clean Energy Program. Established in 1999, the fund is supported by the Societal Benefits Charge on residential and commercial energy bills, which is set by the Board of Public Utilities and funds numerous social and clean energy programs.[xxi] In 2021, the fund collected more than $380 million in revenue to invest in clean energy, with the average customer paying less than $65 annually on their household electricity bill, and less than $63 annually on their gas bill, into the Societal Benefits Charge. [xxii][xxiii]

The Clean Energy Program primarily funds two types of investments: energy efficiency measures and renewable energy infrastructure. The energy efficiency measures provide funding for businesses and homeowners to retrofit existing buildings for clean energy technology and purchase more energy-efficient appliances. Investments in renewable energy infrastructure include support for solar technology, development of an offshore wind industry, creation of energy storage, and more.

The Clean Energy Fund is not as effective as it should be, however, as it has been raided for years by Republican and Democratic administrations alike. Since Fiscal Year 2010, lawmakers have raided the Clean Energy Fund to plug budget holes and finance line items unrelated to clean energy, such as state park maintenance and utility bills for state buildings. In total, lawmakers have raided $1.98 billion (in 2022 dollars) from the Clean Energy Fund.[xxiv] The diversions include $242 million under Governor Corzine, more than $1.2 billion under Governor Christie, and more than $533 million under Governor Murphy.[xxv]

While the Clean Energy Fund has been used to plug various budget holes over the years, the largest percentage of funds were diverted to NJ Transit operations. Public transportation is essential to a thriving New Jersey and deserves to be fully funded, but not at the expense of much-needed investments in clean energy. Ideally, NJ Transit would be funded through the state budget or a new, dedicated source of revenue, and the Clean Energy Fund would be used for its intended purpose. Lawmakers should not be robbing Peter to pay Paul.

In the FY 2023 budget, new language was added that states the Clean Energy Fund raids directed to NJ Transit can be used to pay for bus electrification and other clean energy projects.[xxvi] However, there is no mandate or guarantee that the funds will be used for those purposes. Since the funding is directed to NJ Transit operations, not capital projects, it is unlikely it will be invested in clean energy projects as the new budget language suggests. Until these raids end, New Jersey will continue to shortchange and delay its transition to a clean energy future.

End the Raids, Invest in New Jersey’s Future

There is no shortage of opportunities to use the Clean Energy Fund for its intended purpose, from electrifying NJ Transit’s bus fleet, to assisting low-income families with purchasing new energy efficient appliances and heating systems, to developing clean energy infrastructure. Investing in clean energy projects will reduce air pollution across the state, make energy more affordable for families, and create good-paying jobs in the burgeoning green energy economy. State lawmakers have already set admirable goals for the state’s clean energy future, now it’s time to stop raiding the Clean Energy Fund to make these goals a reality.

End Notes

Note:
In the context of this report, clean energy means any energy that does not produce greenhouse gas emissions. Renewable energy means any energy that uses a source like sunlight or wind that cannot be consumed or depleted.

[i]New Jersey Department of Environmental Protection, New Jersey Greenhouse Gas Inventory, December 2022. https://dep.nj.gov/wp-content/uploads/ghg/2022-ghg-inventory-mcu_final.pdf pages 3-4

[ii] American Lung Association, Disparities in the Impact of Air Pollution, 2022. https://www.lung.org/clean-air/outdoors/who-is-at-risk/disparities

[iii]Reported in 2022 dollars. NJPP Analysis of FY2010-FY2023 Appropriations Acts.

[iv]New Jersey State Profile and Energy Estimates, 2020. U.S. Energy Information Administration. https://www.eia.gov/state/?sid=NJ#tabs-1

[v]New Jersey State Profile and Energy Estimates. U.S. Energy Information Administration. https://www.eia.gov/state/?sid=NJ

[vi]American Lung Association, State of the Air Report Card Key Findings, 2022. https://www.lung.org/research/sota/key-findings

[vii]NJ Spotlight News, Air quality worse for communities of color, 2022. https://www.njspotlightnews.org/2022/04/air-pollution-ozone-particle-pollution-communities-of-color-american-lung-association/

[viii]Air Quality Life Index, Pollution Facts. https://aqli.epic.uchicago.edu/pollution-facts/

[ix]New Jersey Department of Environmental Protection, Bureau of Mobile Services. https://dep.nj.gov/stopthesoot/

[x]U.S. Energy Information Administration, State Energy-Related CO2 Emission Data Tables. https://www.eia.gov/environment/emissions/state/excel/table2.xlsx

[xi]Environmental Protection Agency, Basic Information about Oil and Natural Gas Air Pollution Standards. https://www.epa.gov/controlling-air-pollution-oil-and-natural-gas-industry/basic-information-about-oil-and-natural-gas

[xii]NorthJersey.com, NJ heating bills in line for double-digit increases after state OKs big rate hikes, 2022. https://www.northjersey.com/story/news/2022/09/08/nj-natural-gas-bills-approved-hikes-pseg-njng/66934128007/

[xiii]New Jersey Energy Master Plan Ratepayer Impact Study, August 2022. https://nj.gov/bpu/pdf/reports/2022-08-13%20-%20BPU,%20EMP%20Ratepayer%20Impact%20Study%20Report_PUBLIC_Brattle.pdf#page=6

[xiv]N.J. Stat. Sec. 48:3-87.8. (d)(2) 2022. https://pub.njleg.gov/bills/2018/PL18/17_.HTM

[xv]Executive Order No. 28, 2018. https://www.nj.gov/infobank/eo/056murphy/pdf/EO-28.pdf

[xvi]N.J. Stat. Sec. 26:2C-38.2. 2022. https://pub.njleg.state.nj.us/Bills/2018/PL19/197_.PDF

[xvii]N.J. Stat. Sec. 48:25-3a.(9)(b). 2022. https://pub.njleg.gov/bills/2018/S2500/2252_U2.PDF

[xviii]N.J. Stat. Sec. 48:25-3a.(8)(b). 2022 https://pub.njleg.gov/bills/2018/S2500/2252_U2.PDF

[xix]Executive Order No. 307, 2022. https://nj.gov/infobank/eo/056murphy/pdf/EO-307.pdf#page=5

[xx] N.J. Stat. Sec. 48:3-87.8. 1(d). https://pub.njleg.gov/bills/2018/PL18/17_.HTM

[xxi]N.J. Stat. Sec. 48:3-60.12a. 2022. https://www.njcleanenergy.com/files/file/23_.pdf

[xxii]Reported in 2022 dollars. New Jersey Board of Public Utilities Response to Office of Legislative Services Budget Analysis, Fiscal Year 2022. https://pub.njleg.state.nj.us/publications/budget/governors-budget/2023/BPU_Response_2023.pdf#page=7

[xxiii]Reported in 2022 dollars. NJPP Analysis of New Jersey Board of Public Utilities Response to Office of Legislative Services Budget Analysis, Fiscal Year 2022. https://pub.njleg.state.nj.us/publications/budget/governors-budget/2023/BPU_Response_2023.pdf#page=8

[xxiv]Reported in 2022 dollars. NJPP Analysis of FY2010-FY2023 Appropriations Acts.

[xxv] Reported in 2022 dollars. NJPP Analysis of FY2010-FY2023 Appropriations Acts.

[xxvi]New Jersey Office of Management and Budget, FY 2022 Appropriations Act, 2021. Page 187, lines 44-48. https://www.nj.gov/treasury/omb/publications/23bill/AppropriationsAct.pdf

People Pay, Hospitals Profit: Rising Prices Drive High Health Care Costs

Posted on by Brittany Holom-Trundy

Editor’s note: This report was updated on March 15, 2023 to include new hospital data from RAND and clarify that the cost of hospitals overcharging was $1.2 billion from 2016 to 2018. 

Everyone in New Jersey deserves access to affordable health care, yet rising health care prices put high-quality coverage out of reach for far too many. The cost of medical care has outpaced both income growth and inflation for decades, driven in part by increasing hospital prices.[1] When hospitals charge beyond what’s needed to cover their daily operating costs, working families pay more for the same level of care. Recent spikes in premiums for New Jersey state employees highlight how rising health care costs are also passed on to public employees and state and local governments, stretching their budgets thin and costing the state more than $1.2 billion between 2016 and 2018.[2] By reining in high hospital prices, state lawmakers can make health care more affordable for patients, public employees, and state and local governments alike.

Excessive Prices Cost State and Local Governments Billions

Escalating prices for health insurance coverage are often attributed to increased utilization, costs to cover services, and inflation; however, these changes do not fully account for the significant climbs. This leaves rising prices and profits as not-so-hidden factors that could be costing state and local governments hundreds of millions of dollars each year.[3]

In New Jersey, increases in spending have outpaced utilization increases for years.[4] The state health benefits programs for public employees — the State Health Benefits Program (SHBP) and the School Employees’ Health Benefit Program (SEHBP) — are estimated to cover nearly 54,000 fewer people in Fiscal Year 2023 than in Fiscal Year 2015.[5] At the same time, medical benefit costs have increased by approximately $417 million (2022 Dollars).[6] Because of rising health care costs, the state must dedicate more funds toward this coverage each year despite having fewer people covered.

Hospital prices make up a significant portion of rising insurance costs, as the more that hospitals charge, the higher the price of coverage. There is little standardization of hospital prices paid by insurance plans, which are privately negotiated between insurance companies and hospitals.[7] As a result, the “Allowed Amount,” as these prices are known on insurance claims, often exceeds what experts estimate is needed for efficient, quality care.[8] In New Jersey, hospital prices far outpace Medicare rates, which the Centers for Medicare and Medicaid Services sets at amounts that “reasonably efficient providers would incur in furnishing high-quality care.”[9] They also outpace the higher commercial breakeven rate, an estimated “rate a hospital needs to receive from commercial payers to cover all of its expenses for hospital inpatient and outpatient services, without profit.”[10] This includes coverage for uncompensated care, bad debt, and expenses that Medicaid and Medicare do not cover. In New Jersey, the breakeven rate for hospitals is estimated to be approximately 150 percent of Medicare rates.

Claims data shows just how significantly the Allowed Amount for hospital prices in the state health benefits plans outweigh the costs for those same services and procedures at Medicare and commercial breakeven rates. From 2016 to 2018, state health benefits programs paid, on average, prices equal to 230 percent of Medicare rates for inpatient and outpatient care, and 1.5 times the commercial breakeven rate.[11]

With prices like these, programs like the SHBP and the SEHBP could be paying at least $400 million more per year than what we would expect to cover medical costs if prices were set to cover costs at the commercial breakeven level.

State Lawmakers Need to Rein in Rising Health Care Costs

With the potential loss of at least $400 million every year, New Jersey policymakers should look to better regulate and reduce high hospital prices. Cracking down on rising prices would provide savings to public employees and state and local governments alike, protecting the health care of the public workforce, reducing health care costs, and freeing up funds for other public investments.

While the state’s Office of Health Care Affordability and Transparency has spearheaded a new benchmark program to rein in the growth of health care costs with data-driven analysis, state lawmakers should explore other ways to contain costs driven by hospital pricing, such as price caps and reference-based pricing.[12] To put New Jersey on a path toward a more equitable future, the state cannot simply stick to one-time fixes as bandaids and continue to raise the cost of premiums on public employees and state and local governments. Instead, leaders must do more to rein in hospital costs to control premium costs.

End Notes

[1] New Jersey Office of Health Care Affordability and Transparency, New Jersey Health Care Affordability, Responsibility, and Transparency (HART) Program Blueprint, 2022, pg. 6. http://www.cshp.rutgers.edu/Downloads/Benchmark_Blueprint_March_31_2022.pdf

[2] New Jersey Monitor, Double-digit hike in insurance premiums approved for government workers, 2022. https://newjerseymonitor.com/2022/09/14/double-digit-hike-in-insurance-premiums-approved-for-government-workers/

[3] Health Affairs, It’s Still The Prices, Stupid: Why The US Spends So Much On Health Care, And A Tribute To Uwe Reinhardt, 2019. https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05144

[4] Health Care Cost Institute, 2018 Health Care Cost and Utilization Report: State Spending Trends, 2019. https://healthcostinstitute.org/interactive/2018-health-care-cost-and-utilization-report

[5] NJPP Analysis of FY 2017 – FY 2023 Budget Detail. New Jersey Office of Management and Budget, Budget Detail FY 2017 – FY 2023. https://www.nj.gov/treasury/omb/

[6] Ibid.

[7] For a study of the variability of prices charged by hospitals, see RAND Corporation, Prices Paid to Hospitals by Private Health Plans, 2022. https://www.rand.org/pubs/research_reports/RRA1144-1.html

[8] HealthCare.Gov, Allowed Amount, 2022. https://www.healthcare.gov/glossary/allowed-amount/

[9] RAND Corporation, Nationwide Evaluation of Health Care Prices Paid by Private Health Plans, 2020. https://www.rand.org/pubs/research_reports/RR4394.html; Centers for Medicare and Medicaid Services, Medicare Inpatient Prospective Payment System (IPPS) & New Technology Add-on Payment Provision, 2020, pg. 2. https://www.hhs.gov/sites/default/files/1.3-treitel-cms-508.pdf; Medicare Payment Advisory Commission, March 2022 Report to the Congress: Medicare Payment Policy, 2022. https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_v3_SEC.pdf

[10] The commercial breakeven rate is calculated from annual hospital filings with the Centers for Medicare and Medicaid Services, and takes into account a variety of factors, including patient hospital costs, shortfalls or profit from public coverage programs, administrative costs, revenue from all sources, and much more. The details on how this is calculated can be found at: National Academy for State Health Policy, Understanding NASHP’s Hospital Cost Tool: Commercial Breakeven, 2022. https://www.nashp.org/policy/health-system-costs/understanding-hospital-costs/commercial-breakeven/

[11] RAND Corporation, Nationwide Evaluation of Health Care Prices Paid by Private Health Plans, 2020. https://www.rand.org/pubs/research_reports/RR4394.html; National Academy for State Health Policy, Hospital Cost Tool, 2022. https://d3g6lgu1zfs2l4.cloudfront.net/

[12] New Jersey Office of Health Care Affordability and Transparency, Home Page, 2022. https://nj.gov/governor/admin/affordablehealthcare/index.shtml; New Jersey Office of Health Care Affordability and Transparency, New Jersey Health Care Affordability, Responsibility, and Transparency (HART) Program Blueprint, 2022. https://nj.gov/governor/news/news/562022/docs/20220331a_Benchmark-Blueprint.pdf; National Academy for State Health Policy, Disrupting Hospital Price Increases: Using Growth Caps in Insurance Rate Review, 2021. https://www.nashp.org/disrupting-hospital-price-increases-using-growth-caps-in-insurance-rate-review/; National Academy for State Health Policy, Overview of States’ Hospital Reference-Based Pricing to Medicare Initiatives, 2021. https://www.nashp.org/overview-of-states-hospital-reference-based-pricing-to-medicare-initiatives/

New Jersey’s Black Students Suffer a Decline in Access to School Mental Health Staff

Posted on by Mark Weber

Concern about the aftermath of the COVID-19 pandemic, along with renewed fears about school shootings, have put the mental health of New Jersey’s students into the spotlight.[i] Federal data show 74 percent of public schools in the Northeast report an increase in students seeking mental health services since the start of the pandemic.[ii] The state Legislature has responded by introducing several bills that directly address the need for schools to take an active role in identifying and treating student mental health issues.[iii]

Given these serious concerns, it is important to assess recent trends in New Jersey schools’ capacity to address students’ mental health. This report looks at these trends through a racial justice lens, specifically addressing this question: How has access to school mental health staff changed for Black, white, Hispanic/Latinx, Asian, and other students over the past decade?

Analysis of the available data shows a clear trend: While access to mental health staff for white and Asian students has increased over the past several years, it has decreased for Black students. A decade ago, Black and Hispanic/Latinx students had an advantage over white students in access to mental health staff; now white students have the advantage (albeit a small one).

Given New Jersey’s much higher poverty rates for children of color, and the profound influence poverty has on mental health, these trends are a cause for great concern. Additionally, studies show that school districts that enroll more students of color are more likely to impose disciplinary actions on their students, compounding this growing inequity. In other words: New Jersey’s Black and Hispanic/Latinx students are more likely to live in poverty and more likely to be suspended from school, even as their access to mental health professionals is decreasing.

Uneven Access to Mental Health Staff

Student mental health problems can be identified and treated by a variety of school staff. We include the following positions in the overall category of school mental health staff: nurses, counselors, psychologists, social workers, anti-bullying specialists, and substance use coordinators. The figure below shows the changes since 2008 in access to these staff for students of different races and ethnicities (see the “Methodology” section below for details).

Fewer School Mental Health Staff for Black Students, More for White Students

In 2008, all public schools in New Jersey had, on average, 8.2 mental health staff per 1,000 students; this rose to 8.6 staff per 1,000 in 2020. During the same period, mental health staff per 1,000 white students rose from 7.4 to 8.5.

In contrast, mental health staff per 1,000 Black students decreased from 10.3 to 8.5. For Hispanic/Latinx students, the figures declined from 9.0 to 8.4 per 1,000. In other words: During a period where access to mental health staff increased for New Jersey’s white and Asian students, access for Black and Hispanic/Latinx students decreased.

These trends have not been uniform across all mental health staff positions. The figure below shows trends by race/ethnicity for school nurses: while the number of nurses per 1,000 students has increased for white students, it has declined for Black and Hispanic/Latinx students. Notably, nurse staffing for Asian students remains considerably lower than for other races/ethnicities.

Number of School Nurses Declines for Black and Hispanic Students

Over the same period, school counselor staffing has changed dramatically. In 2008, there were 2.7 counselors per 1,000 white students; this rose to 3.2 per 1,000 by 2020. In contrast, Black students had 4 counselors per 1,000 in 2008; this dropped to 2.6 per 1,000 by 2020. It should be noted that the American School Counselor Association recommends 4 counselors per 1,000 students; overall, New Jersey remains far behind this goal.[iv]

More School Counselors for White Students, But a Sharp Decline for Black & Hispanic Students

Black and Hispanic/Latinx students still have an advantage in social workers per 1,000 students over white and Asian students. The gap, however, is narrowing, as the number of social workers for Black and Hispanic/Latinx students has declined.

Still More Social Workers for Black & Hispanic Students, But the Gap is Closing

Why Mental Health Staffing for Schools Matters, Especially for Students of Color

Some may argue that these trends in school mental health staffing reflect a move toward parity: A decade ago, white students had less access to these staff than children of color, but now their access is equivalent. This argument, however, fails to recognize a basic truth: New Jersey’s students of color are more likely to live in poverty than the state’s white students and, as a result, have greater mental health needs.

Poverty Rates Are Much Higher for Black and Hispanic Students Than for White and Asian Students

The poverty rates for Black/African-American and Hispanic/Latinx children are more than three times that for white or Asian children. This is critical, as a large body of research shows poverty has a profoundly negative impact on children’s mental health.[v] Certainly, more school mental health staff for white and Asian students would be, by itself, laudable; however, the accompanying trend of less access to these staff for Black and Hispanic/Latinx students raises serious concerns.

It is important to note that greater poverty rates and decreasing access to mental health staff for students of color are occurring in an environment where those same students are more likely to suffer harsh disciplinary consequences.

Students in School Districts with Greater Numbers of Black and Hispanic Students Spend More Days Out of School Due to Suspensions

As a New Jersey school district’s percentage of white students increases, it is, on average, less likely to have students miss school due to a disciplinary suspension.[vi] In contrast, schools with higher percentages of Black or Hispanic/Latinx students tend to have their students miss more days of school due to suspension. Research shows a clear link between student mental health and school discipline: when students feel supported and safe in school, disciplinary consequences diminish.[vii] The unequal discipline meted out to students of color is, therefore, yet another indicator that they are not getting access to the mental health supports they need.

As NJPP has previously reported, greater access to school staff of all sorts is directly influenced by school funding policies.[viii] Yet New Jersey’s students of color are much more likely to attend schools that are underfunded, according to the state’s own law, than white students.[ix] While the short-term infusion of federal school funds tied to the pandemic could help schools reverse trends in mental health staffing for students of color over a short period, longer-term funding solutions are necessary.

Such funding, however, should be guided by analyses like the one above. Lawmakers will not be able to address staffing trends that are racially unequal unless and until they are aware of them. Monitoring the deployment of school personnel of all types by student race—and by other student characteristics—should be the regular and ongoing work of policymakers.

Methodology

This report relies on two data sources from the New Jersey Department of Education: staffing files (obtained through Open Public Records Act requests) and enrollment files (available publicly at: https://www.nj.gov/education/doedata/enr/). All staffing files observations represent a school staffer, each with an accompanying job code. I aggregate the workers in different jobs for each school district (weighted by full-time equivalency); I then divide that aggregate by the total number of students in the district. These fractions of a staffer are then assigned to each student regardless of race/ethnicity. The numbers of students and the fractions of staff are then totaled across the state for each race/ethnicity category, as well as for all students. These figures are used to generate the “staff per 1,000 students” figures found in this report.

End Notes

[i] Wall, Patrick. (8/23/21) “How schools are racing to respond to a mental health crisis.” NJ Spotlight News. https://www.njspotlightnews.org/2021/08/student-mental-health-needs-nj-schools-response-pandemic/

[ii] 2022 School Pulse Panel, April findings. Institute of Education Sciences. https://ies.ed.gov/schoolsurvey/spp/#tab-4

[iii] Donyéa, Tennyson (6/10/22) “N.J. committee approves new school safety, teen mental health measures.” WHYY. https://whyy.org/articles/n-j-school-safety-teen-mental-health/

[iv] American School Counselor Association. “School Counselor Roles & Ratios” https://www.schoolcounselor.org/About-School-Counseling/School-Counselor-Roles-Ratios “Since 1965, ASCA has recommended a student-to-school counselor ratio of 250:1.” This translates to 4 counselors per 1,000 students.

[v] Schmidt, K. L., Merrill, S. M., Gill, R., Miller, G. E., Gadermann, A. M., & Kobor, M. S. (2021). Society to cell: How child poverty gets “Under the Skin” to influence child development and lifelong health. Developmental Review, 61, 100983. https://doi.org/10.1016/j.dr.2021.100983
Gibson, K., Abraham, Q., Asher, I., Black, R., Turner, N., Waitoki, W., McMillan, N., Child Poverty Action Group (N.Z.), & New Zealand Psychological Society. (2017). Child poverty and mental health: A literature review. http://www.cpag.org.nz/assets/170516%20CPAGChildPovertyandMentalHealthreport-CS6_WEB.pdf

Evans, G. W. (2016). Childhood poverty and adult psychological well-being. Proceedings of the National Academy of Sciences, 113(52), 14949–14952. https://doi.org/10.1073/pnas.1604756114
Coley, R. J., & Baker, B. D. (2013). Poverty and Education: Finding the Way Forward. ETS. https://www.ets.org/research/policy_research_reports/publications/report/2013/jqkw

[vi] We use data from the 2018-19 school year as this was the last full school year before the covid-19 pandemic caused school closures.

[vii] Prins, S. J., Kajeepeta, S., Hatzenbuehler, M. L., Branas, C. C., Metsch, L. R., & Russell, S. T. (2022). School Health Predictors of the School-to-Prison Pipeline: Substance Use and Developmental Risk and Resilience Factors. Journal of Adolescent Health, 70(3), 463–469. https://doi.org/10.1016/j.jadohealth.2021.09.032 https://www.jahonline.org/article/S1054-139X(21)00491-2/fulltext

[viii] Weber, M. (2021) The Consequences of School Underfunding. New Jersey Policy Perspective: Trenton, NJ. https://www.njpp.org/publications/report/the-consequences-of-school-underfunding/

[ix] Weber, M. & Baker, B. (2020) School Funding in New Jersey: A Fair Future for All. New Jersey Policy Perspective: Trenton, NJ. https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/

New Jersey’s Teacher Pipeline: The Decline in Teacher Candidates Continues

Posted on by Mark Weber

A teacher shortage is hitting the nation, and New Jersey is no exception.[1] The problem has become so widespread that the Legislature’s Joint Committee on Public Schools recently held hearings on the issue, at which school leaders described shrinking hiring pools, fewer certificated teachers being available as long-term substitutes, and a surge of retirements. [2]

Schools can adequately replace these teachers if enough well-educated workers consider a career in public education. Unfortunately, even before the increased pressures on teachers and more school staff considered leaving their positions, fewer candidates were enrolling in and completing teacher training programs. If New Jersey does not act soon, there will not be enough qualified candidates to replace teachers leaving the profession.

The Decline in New Jersey Teacher Candidates Continues

The number of those completing teacher preparation has declined sharply in New Jersey. The 2018-19 school year was the first time in two decades when the number of New Jersey’s new teacher candidates was below 3,000, according to the most recently available data.[3]

New Jersey Has Far Fewer Teacher Candidates Than a Decade Ago, Despite Recent Uptick

Decreases in the number of students do not explain the teacher decline. Seven years ago,  almost five people completed teacher preparation for every 1,000 students in New Jersey; now, there are barely two.

New Jersey Colleges and Universities Produce Fewer Teachers Than the Rest of the US

On top of that, New Jersey’s colleges and universities – the providers of teacher training– produce far fewer teachers per 1,000 students than the rest of the nation, suggesting that the Garden State might be over reliant on out-of-state teacher trainings programs.

Not all teacher training programs lead to college degrees that prepare candidates for a career in teaching. But the number of teaching degrees awarded in a year is still an important measure of educator recruitment. The most recent data is troubling: New Jersey’s colleges and universities awarded a record low number of teaching degrees in 2020.[4]

Number of New Jersey College Students Earning Teaching Degrees Is Rapidly Declining

Some reports have noted that teacher shortages are particularly acute in math, science, and special education.[5] To explore this issue, the graph below shows the proportion of the number of people completing teacher training programs and earning credentials in a variety of areas. The graph also shows these proportions for the New Jersey teacher workforce in the same year.[6] As an example: 41 percent of the teacher candidates who completed their programs in 2018-19 earned a credential in elementary education. In contrast, 32 percent of the teacher workforce held a position teaching in elementary education that same year.

Majority of Teacher Jobs and Candidates Are in Elementary and Special Education

For the reasons below, the solution to the problem of teacher shortages is not simply to shift teacher candidates away from areas such as elementary education and toward math and other understaffed areas.

  • While math and science teacher candidates are proportionally “underproduced” compared to elementary candidates, the same is true for foreign language and art teachers, as well as, to a lesser degree, music, and physical education teachers. So the problem of “underproducing” teachers is not confined to only a few curricular areas.
  • Though special education is reportedly a hard-to-staff area, teacher candidates are proportionally overproduced, albeit by a slim margin. Shifting more teachers away from elementary and toward special education might help, but only if there are enough overall certifications to meet school districts’ staffing needs in all areas of teaching.
  • Even if elementary teachers are “overproduced,” excess teachers are needed for positions as long-term and short-term substitutes. As numerous school leaders testified before the Joint Committee on the Public Schools, the lack of qualified personnel to fill teaching positions during maternity leaves and sick leaves, or due to mid-year retirements, has become a serious problem.[7] Having more certificated candidates than full-time positions creates a pool of qualified workers who are available to fill these jobs.

 

Recommendations

While getting teacher candidates to consider teaching in hard-to-staff areas is important, there is little evidence that this alone will solve the current teaching shortage, especially if those completing teacher preparation programs find the profession unsatisfying and opt to leave after a short time for other careers. To deal with teacher shortages, getting more overall qualified candidates to enter and remain in the teaching profession must be the primary goal. These recommendations should be considered to improve the recruitment and retention of teachers:

  • Increase teacher compensation to attract the best candidates. Recent research confirms a well-documented “teacher wage gap,”  even when benefits are considered in addition to salary.[8] In today’s tight labor market, school districts are at a disadvantage compared to fields that can offer better wages, flexible schedules, and less pressure in the workplace.
  • Shore up the state teacher pension system and stop degrading teacher health care benefits. As NJPP reported previously, teacher retirement and health care benefits have eroded over the past decade[9] And this affects newer teachers more than veterans. New pension “tiers,” for example, have led to benefits packages that are substantially less generous for teachers in their 20s and 30s compared to those earned by older teachers.[10] If degraded benefits are not replaced with better wages, young, well-qualified job aspirants will have even less incentive to become teachers.
  • Streamline the process of obtaining a teacher certification as much as possible without sacrificing rigor. The state continues to implement programs like EdTPA, a portfolio assessment for student teachers, that recent research shows to be both ineffective and potentially harmful. These barriers to entry should be removed immediately.[11]
  • All of the state’s teacher preparation providers should continue to work together to attract teacher candidates of color. Research shows there are many benefits to a diverse teacher workforce.[12] New Jersey should expand its programs to recruit and retain teachers of color.
  • New Jersey’s leaders should commit to improving the state’s level of appreciation and regard for its educators. Teachers have been caught in the middle of culture war battles over masking, critical race theory, gender identity, sexual orientation, and other issues. New Jersey, unlike other states, has wisely avoided introducing controversial laws that would surveil and punish teachers (and students) for simply doing their jobs. Policymakers must continue, through their words and actions, to send a clear message to prospective teachers that New Jersey values its educators, sees them as professionals, and supports their work.

 

End Notes

[1] Cooper, D. and Hickey, S.M. (February 3, 2022) Raising pay in public K–12 schools is critical to solving staffing shortages. Economic Policy Institute. https://www.epi.org/publication/solving-k-12-staffing-shortages/

[2] Joint Committee on the Public Schools, NJ Legislature. Tuesday, February 22, 2022 https://www.njleg.state.nj.us/live-proceedings/2022-02-22-10:00:00/JPS/Meeting

[3] Figures for 2016-17 and 2017-18 do not match our 2019 report as those figures were updated in later data releases.

[4] To determine the number of degrees awarded that are directly relevant to teaching, I sum the number of bachelor’s and master’s degrees awarded in education and add certificates above the baccalaureate level. I only include institutions that are designated in the IPEDS data as offering teacher certification. I then subtract all degrees with Classification of Instructional Programs (CIP) codes designated as the following: Curriculum and instruction; Educational Administration and Supervision; Educational/Instructional Media Design; Educational Assessment, Evaluation, and Research; Social and Philosophical Foundations of Education; Education, Other. This method likely overstates the number of degrees awarded that would be directly relevant to teaching, as degrees that do not lead to certification may still be included in the total.

[5] Teacher Shortage Areas. U.S. Department of Education. https://tsa.ed.gov/#/home/

[6] The Title II data includes subject area codes that align with staffing data from the NJDOE; however, there are differences. For this graph, I exclude all observations in the staffing data that designate staff as administrators, teacher coaches, educational service providers (counselors, nurses, etc.), or non-certificated staff. I also exclude teachers of family and consumer sciences, industrial arts, and vocational education; these areas are not included in the Title II data. Special education positions are designated in the staffing data by their “jobcode subcategory”; I align these positions with the Title II codes for teachers of students with disabilities, teachers of deaf or hard of hearing students, or teachers of blind or visually impaired students. All of these categories are designated “special education” in the graph. Teachers of middle grades (5-8) are assigned to curricular areas; for example, a teacher with a “Mathematics Grades 5-8” jobcode is designated as teaching math. Elementary teachers, including those with jobcodes in elementary math, English, science, and social studies are assigned to the “elementary” category. For teachers with multiple job codes I use the first code designated (“job code 1”).

[7] Jennings, Rob (2/22/22). “Teacher shortage is a ‘crisis,’ N.J. state legislators say after educators raise alarm.” NJ.com. https://www.nj.com/education/2022/02/teacher-shortage-is-a-crisis-nj-state-legislators-say-after-educators-raise-alarm.html

[8] Cooper, D. and Hickey, S.M. (February 3, 2022) Raising pay in public K–12 schools is critical to solving staffing shortages. Economic Policy Institute. https://www.epi.org/publication/solving-k-12-staffing-shortages/
Weber, M. (2019) New Jersey’s Teacher Workforce, 2019: Diversity Lags, Wage Gap Persists, pp. 26-28. https://www.njpp.org/reports/in-brief-new-jerseys-teacher-workforce-2019-diversity-lags-and-wage-gap-persists.

[9] Weber, M. (2019) New Jersey’s Teacher Workforce, 2019: Diversity Lags, Wage Gap Persists, pp. 26-28. https://www.njpp.org/reports/in-brief-new-jerseys-teacher-workforce-2019-diversity-lags-and-wage-gap-persists.

[10] “Retirement Planning Member Guidebook” (January, 2022). New Jersey Department of Pensions and Benefits. https://www.nj.gov/treasury/pensions/documents/forms/sp0774.pdf

[11] Gitomer, D. H., Martínez, J. F., Battey, D., & Hyland, N. E. (2019). Assessing the Assessment: Evidence of Reliability and Validity in the edTPA. American Educational Research Journal. https://doi.org/10.3102/0002831219890608
Chung, Bobby W., and Jian Zou. (2021). Teacher Licensing, Teacher Supply, and Student Achievement: Nationwide Implementation of edTPA. (EdWorkingPaper: 21-440). Retrieved from Annenberg Institute at Brown University: https://doi.org/10.26300/ppz4-gv19

[12] Weber, M. (2019) New Jersey’s Teacher Workforce, 2019: Diversity Lags, Wage Gap Persists, pp. 26-28. https://www.njpp.org/reports/in-brief-new-jerseys-teacher-workforce-2019-diversity-lags-and-wage-gap-persists.

Breaking Down Governor Murphy’s FY 2023 Budget Proposal

Posted on by Sheila Reynertson

Governor Murphy delivered the first budget address of his second term with New Jersey flush with cash, thanks to stronger than expected revenue collections. Along with targeted federal aid, higher wages, and new, sustainable sources of revenue, this kind of economic growth proves that progressive tax policy is fiscally responsible tax policy. These resources provide the state a big opportunity to invest in communities – with an emphasis on policies that are proven to build the economy from the bottom up and the middle out. The Governor’s $48.9 billion spending plan takes advantage of this windfall by attending to such long-standing obligations as a full pension payment for a second year in a row, another big increase in school aid, as well as no fare hikes for NJ Transit commuters and a property tax relief program to replace the Homestead credit.

With “affordability” the buzz word in Trenton — the Governor mentioned it more than 20 times in the speech — some of the new proposals raise the question: who does this budget make New Jersey more affordable for? The economic fallout of the pandemic continues to wreak havoc in thousands, if not millions, of households across the state, especially among those lacking the financial resources to weather tough times. Many workers who risked their lives on the job as COVID-19 swept through New Jersey have received no assistance. Families with young children still face school closures and a low availability of child care.[1] The state’s poverty rate remains quite high at the same time the highest earners nationally have seen their wealth grow even further.[2] Housing advocates warn of a spike in evictions without additional help. It’s important for policymakers to understand that these devastating effects of the pandemic will not disappear on their own.

A more balanced and equitable approach to crafting the next state budget is essential – one that centers people and communities with the greatest need to ensure an equitable recovery. Proven policies like cash assistance, tax credits for hard-working families, affordable health care, child care, and reliable and cleaner public transit are needed now more than ever to make New Jersey affordable for all.

Healthy State Finances Could Support More Investment

New Jersey’s financial picture is the brightest it has been since before the pandemic, with overall tax collections up 21.7 percent compared to this time last year.[3] Thanks in large part to a strong stock market, wage growth, and an uptick in consumer spending, the state has a $4.5 billion surplus.[4] This comes on the heels of enormous federal support sent to New Jersey state and local governments overwhelmed by the health and economic damage wrought by the pandemic.[5] These resources provide a once-in-a-generation opportunity to target immediate relief and make long-overdue investments in New Jersey’s underserved communities, rebuild emergency savings, and put our state on a path to a more equitable economy.

Absent from the budget are major improvements to a state tax code that still has inequitable features and does not bring in as much revenue as it could for important public investments that help communities thrive. While the state appears to be in good fiscal shape in the short term, additional resources will be critical to sustain investments in such areas as public education, the public employee pension system, and property tax relief once federal pandemic relief funds are exhausted and amid an uncertain global landscape.

Pensions

The FY 2023 budget includes another full pension fund contribution — which would be the second in as many years — to bolster the retirement security of more than 800,000 public workers and retirees. A full payment is a necessary step in the pension fund’s long road back to solvency after more than two decades of skipped or incomplete payments. The proposed $6.82 billion payment is possible due to another year of healthy tax collections and New Jersey Lottery receipts, plus freed-up resources thanks to federal COVID-19 relief funds.[6]

If the pension fund’s annual returns cool off in tandem with financial markets, it is expected that resources from other state-funded support and services will have to be siphoned to make the required payments.

Rainy Day Fund

New Jersey’s surplus is expected to total more than 10 percent of the state’s general fund — nearly double what it was in FY 2021. Despite such a robust buffer, the Governor’s proposal does not include replenishing the state’s rainy day fund.

New Jersey has a rocky history when it comes to keeping its emergency savings account ready to cover costs incurred from such unexpected events as a hurricane or a deep recession. A healthy rainy day fund enables the state to meet increased demand for essential state services instead of resorting to deep, harmful budget cuts at a time when families and communities need help the most. New Jersey was left with no choice but to do exactly that when faced with drastic shortfalls at the start of the pandemic. The rainy day fund would have been more robust had it not been left empty for 11 years. Budget experts recommend having enough socked away to run state operations for at least two months.[7]

With an expected $4.6 billion surplus, New Jersey could easily make a deposit of, say, $1.5 billion now and still have billions in surplus to shore up any mid-year shortfalls next year.[8]

Federal Pandemic Relief

New Jersey’s economy works best when it works for all of us. An inclusive recovery is one where those hit hardest by the pandemic — workers of color, and Black and brown women in particular — reach full employment and have the resources they need to make ends meet. That’s why it’s so important for New Jersey to its spend Fiscal Recovery Funds (FRF) in ways that reflect the principles set by the Biden administration: to directly address the public health crisis, help the people who need it most, and reduce racial and economic inequities exposed and worsened by the ongoing pandemic.

With $3.5 billion in federal relief funds from the American Rescue Plan Act still unallocated, the state should immediately act to stabilize residents facing hardship and keep their children safe from the short- and long-term effects of poverty. Based on past economic crises, it’s clear that some New Jersey residents will continue to experience hardship even after the effects of the pandemic begin to subside.

The most straightforward way to boost household income of families living paycheck to paycheck is to provide direct cash payments with no strings attached and regardless of immigration status. This proposed budget would use $53 million of federal funds for $500 direct payments to individual, low-paid ITIN holders —  an alternative to the now-expired Excluded New Jerseyans Fund. Another approach to FRF-funded cash assistance should be to compensate low-paid workers for the risks taken during the shutdown and as COVID-19 variant surges swept through the state.

Relief funds could also be used to spearhead a robust overhaul of departmental IT platforms, as well as an outreach campaign and application assistance for all social assistance and support services, not just those funded by federal relief dollars. This campaign could target communities that face systemic barriers to learning about and accessing support programs, including immigrants and people of color with low incomes, and should be tailored to families living in poverty who are less likely to owe and file taxes and, as result, may miss out on tax credits for low-paid workers and their families.

Bringing More Relief to Working Families

Every family in New Jersey deserves to live the American Dream and raise their children with the basics they need to thrive. But New Jersey’s high cost of living means that families often need support to pay for rent, bills, unexpected health care costs, and food. The state has a variety of programs to put money into families’ pockets. The proposed budget would increase funding for some helpful programs, but more remains to be done to remove barriers to economic security for working families who do not get paid enough or receive enough hours to pay for everyday expenses.

Tax Credits for Working Families

 Since 2000, the New Jersey Earned Income Tax Credit (EITC) has provided a critical lifeline to workers and their families.[9] With this tax credit, the state pays back low- and moderate-wage workers for a percentage of their earned income, lowering their taxes or, for those owing little or no taxes because of low incomes, providing cash.

The EITC is a powerful poverty-reduction tool. It helps to reduce racial income inequality while raising low-income households’ bank balances. In FY 2019, over 530,000 households claimed the credit, averaging about $850 per credit. Beginning in tax year 2021, adults ages 18-21 and adults 65 and over without dependents became eligible to apply for the credit, closing key gaps left by the preexisting credit and making 90,000 more taxpayers eligible.[10] The FY 2023 budget continues strong support for the EITC with $114 million in additional funding.[11]

But the EITC could be improved further by eliminating barriers that keep some workers excluded from the credit, such as immigrants who file taxes with an (ITIN). New Jersey should also build on the credit’s anti-poverty effects and raise the credit amount to 50 percent of the federal credit.

Property Tax Relief

Property taxes are a perennial source of concern among New Jersey residents and, fittingly, were a big theme of Governor Murphy’s budget address. The Governor’s ANCHOR proposal would revamp the state’s flagship property tax relief program, the Homestead rebate, by increasing overall taxpayer benefits, eligibility, and funding by more than $570 million. Expanded property tax relief under the proposed ANCHOR would be phased in over three years.

The ANCHOR program would provide relief to homeowners with up to $250,000 in annual income and renters making up to $100,000. Renters, who tend to have lower incomes than homeowners, were previously not eligible for Homestead rebates.

The ANCHOR proposal would expand property tax relief to households earning up to $250,000, well into the top 20 percent of New Jersey households.[12] As proposed, it would provide more funding ($158 million) to households earning $150,000 or more than it would to all renters ($101 million).[13]

Temporary Assistance for Needy Families

During the pandemic, millions of individuals and households needed increased assistance. Yet, enrollment in WorkFirst NJ — the state’s Temporary Assistance for Needy Families (TANF) program — has dropped below pre-pandemic levels.[14] This decrease is the direct result of the outdated changes in “welfare” during the 1990s that supporters said would assist very low-income families with cash assistance, child care, and job placement.

But the strict eligibility requirements these changes imposed are a barrier to more residents qualifying for WorkFirst NJ and have kept the program’s maximum benefit levels for cash assistance far too low to lift families out of poverty. TANF benefits max out at 30 percent of the Federal Poverty Level —  a mere $559 per month for a single-parent family of three.[15] That inadequate level of support is slated to remain the same, based on the Governor’s proposal for FY 2023.[16]

To meet its goals of helping families and individuals rise from poverty, the WorkFirst NJ program should be reformed in next year’s budget, with higher benefit levels to better reflect the state’s cost of living and new rules so families are no longer punished for saving money and children are no longer cut off from resources.

Bringing Equity to Education Funding 

New Jersey’s public schools consistently rank among the best in the nation, thanks to robust state funding. Schools with adequate funding can provide students with a high-quality education, as well as better health, counseling, and other services to those having difficulty reacclimating after an abrupt and prolonged pivot to online learning. Adequate funding also helps school districts recruit and retain well-qualified teachers[17] and helps keep school buildings in good repair and safe in the face of the ongoing pandemic.[18]

K-12 School Funding

School funding is one of the biggest investments New Jersey makes in any year. Yet, state lawmakers have never fully funded New Jersey’s school funding formula as mandated in the School Funding Reform Act, or SFRA.This formula defines how much each school district needs to provide an “adequate” education. While many affluent districts spend above this amount, many districts spend well below it.[19] Ensuring that all schools have adequate funding must be the top educational priority of the Legislature and the Governor in the current budget cycle and beyond.

In FY 2021, New Jersey schools received $2.4 billion less than the adequacy level set by SFRA. A substantial portion of this adequacy gap was due to districts not contributing their “local fair share,” but the state’s contribution was still well below what it should have been under the law.[20] Many of the students suffering from this chronic underfunding are Black and Hispanic/Latinx children whose districts cannot raise adequate revenues due to systemically racist housing practices.[21]

For FY 2023, the Governor proposed increasing K-12 formula aid by $578 million. This additional aid, as well the redistribution of aid to underfunded districts, will help close the adequacy gap. Still, a large number of students will be enrolled in underfunded schools. As previously reported, funding targets set by SFRA are likely inadequate.[22] This proposed increase is a step toward providing New Jersey’s schools with what they need to properly educate the state’s children. But more work remains to correct the course toward equity.[23]

Pre-Kindergarten

For younger students, New Jersey’s investment in pre-kindergarten education continues to grow steadily. Governor Murphy’s budget proposes $991.9 million toward existing and new Pre-K programs — a 41 percent increase since FY 2009. Of the proposed $70 million increase for FY 2023, $40 million will support 3,000 new seats in 40 school districts.[24]

Greater Investments Needed for Health

COVID-19 Response

As essential workers, working families, and communities continue to face immediate and long-term harm from the COVID-19 pandemic, investments in public health, mental health services, and the broader health care system continue to be essential for an equitable recovery.

Federal dollars through the American Rescue Plan and increased Medicaid and hospital funding support many of these services. In response to a spike in the need for mental health services, the Governor has proposed a $12.8 million allocation to establish a new federally mandated 988 suicide and crisis helpline, as well as allocating American Rescue Plan funds toward student mental health initiatives.[25]

But more is needed. Funding for federally-qualified health centers (FQHCs), for instance, remains below pre-pandemic levels.  These nonprofit, community-based organizations offer comprehensive primary care services and are a key safety net provider for historically underserved people.

Finally, state dollars toward reimbursing charity care continue to grow despite great strides in health insurance expansion. Charity care is the system under which hospitals provide services without charge to patients who cannot afford to pay and are reimbursed by the state. After a recent change in the funding formula for charity care, the Governor’s budget proposes $339 million in funding for FY 2023, an increase of 17.4 percent over pre-pandemic levels.[26] As the state continues to expand coverage for more residents, these costs should decrease in the future.

Harm Reduction

Health care for people who use drugs should meet people where they are, focusing on reducing harm rather than punitive treatments. This helps people who use drugs find their paths to long-term health. Last year saw an increase in state spending to support syringe-access programs, continuing a trend of greater investment since FY 2020.[27] However, this funding was not fully allocated due to restrictions on establishing new syringe access programs beyond the current seven.

This year, state policymakers expanded their commitment to overcoming these obstacles, as Governor Murphy signed two pieces of legislation to decriminalize syringe possession and remove restrictions to expanding syringe-access programs across the state.[28] Funding for the program in the proposed budget reflects this commitment to establishing more harm reduction centers, with an additional $500,000 – a 10 percent increase over the current fiscal year[29]

Reproductive Health Care

Every New Jersey resident, regardless of gender, income, or immigration status, deserves access to the reproductive health care that meets their needs. Legislation signed by Governor Murphy at the beginning of the year codifies abortion rights, yet necessary access and equity improvements remain unaddressed.

Funding in the FY 2023 budget reflects the Murphy administration’s continued commitment to maternal and infant health services in response to New Jersey’s wide racial disparities. This includes an additional state appropriation of $8.5 million to the new Universal Home Visiting program, which entitles all parents with newborn infants to at least one free postpartum home visit.[30] New Jersey is only the second state to implement such a policy.[31] However, the initial proposed budget provides no information on whether covered contraceptive and prenatal services would be expanded to include abortion care.

Cover All Kids Implementation

All kids deserve quality, affordable health care, and New Jersey has taken significant steps toward that goal. After passing Cover All Kids legislation in June 2021, the state eliminated waiting periods and premiums in  NJ FamilyCare, the state’s publicly-funded health insurance program, and expanded outreach to improve enrollment of eligible children.[32] Now, the Governor has proposed taking the next important step toward universal access for children by expanding eligibility for NJ FamilyCare to all children, regardless of immigration status. To fund the expansion, $11 million has been set aside in the proposed FY 2023 budget.[33]

State Subsidies on Marketplace

For many New Jersey residents, health insurance continues to be unaffordable, even with financial assistance that lowers premiums for those with plans in GetCoveredNJ, the state-run health insurance marketplace. To address this, the state introduced additional state subsidies that reach more residents on GetCoveredNJ in 2021.[34]

More than 324,000 residents enrolled during open enrollment for 2022, an increase of 54,000 over  2021.[35] To meet the growing need, funding for these subsidies would increase by roughly 10 percent in FY 2023 to $168 million.[36]

More Pandemic Relief Needed for Immigrants

Excluded New Jerseyans Fund

No one should have to live in fear that getting sick or other circumstances beyond their control will cost them their home or the ability to put food on the table. To ensure this basic protection during the health and economic crises of the past two years, unemployment insurance benefits and federal relief checks were sent to families and individuals. But undocumented New Jerseyans, who are disproportionately represented in service sector jobs, were ineligible forthese programs.

To address this gap, the Murphy administration created the Excluded New Jerseyans Fund, a $40 million state program to support workers ineligible for federal pandemic relief. Using funds from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, the relief program got off to a rough start. An onerous application process dictated by federal rules kept the majority of eligible residents from receiving assistance. When the fund expired at the end of 2021, the administration replenished the program using  American Rescue Plan relief funds instead, which allowed for a much simpler application process. When this version of the program ended in February, the Excluded New Jerseyans Fund received over 35,000 applications, making clear that the $40 million total fell far short of the needs of New Jersey’s immigrant communities.[37]

Now, the Governor proposes a one-time, $53 million relief fund for Individual Taxpayer Identification Number (ITIN) holders who have not received federal stimulus aid. This new program will build upon the Excluded New Jerseyans Fund and provide a $500 benefit to over 100,000 ITIN holders.[38] This investment is key to an inclusive recovery but, as outlined above, does not quite match the need. Individual ITIN holders deserve a $2,000 benefit, matching what the majority of working families in New Jersey received during the peak of the pandemic.

Criminal Justice: More Support Needed for Community Programs

Community-Based Violence Interruption Programs

All New Jerseyans deserve to feel safe in their communities but, often, police responses to issues of public safety cause more harm than good, especially for people who face a legacy of racism, classism, and misogyny. Community-based violence interruption programs that do not involve a law-enforcement response are effective, preventive tools that help keep people safe and out of the criminal justice system.

To combat violent crime, especially shootings, the Governor’s proposal maintains a $10 million investment to support the state’s existing violence intervention programs, which includes 25 nonprofits in 15 communities across the state.[39] Continuing to fund these programs is essential to building upon a safer New Jersey for all and, as the need for a non-police response to crises becomes increasingly evident, the budget should include increased funding for more alternative response teams.

Toward Sustainable Funding for NJ Transit

New Jersey’s future prosperity depends on a safe and reliable transportation system that works for everyone. Over the past decade, however, New Jersey has shortchanged the public with inadequate investments in NJ Transit, resulting in delays, cancellations, and overcrowding. What’s more troubling is that transportation is mostly powered by fossil fuels, which are major contributors to air pollution and worsen the dangers posed by climate change.

While the Governor proposes $2.76 billion for NJ Transit operations — a 21 percent increase since FY 2008 — with no fare hikes, this doesn’t tell the whole funding story.[40] The state continues to supplement funding for the transit authority by diverting $82.1 million from the Clean Energy Fund — resources meant to offer financial incentives, programs, and services to help save energy, money, and the environment, not fund public transit.

At the same time, the governor proposes using $721 million from the Turnpike Authority to supplement NJ Transit operations.[41] While this is a more reliable source for NJ Transit — and more appropriate than using revenue from the Clean Energy Fund — the state continues to use capital funds to fund operations, which is not sustainable in the long run. For instance, the $4.5 billion in capital needed to implement NJ Transit’s electric bus replacement program still has no identifiable funding source.[42]

The good news is that NJ Transit has been granted $1.6 billion in federal relief funds to support operations plus another $4.2 billion from the federal Infrastructure Investment and Jobs Act to improve public transit infrastructure.[43] This massive investment will enable NJ Transit to retain employees and maintain safe and reliable bus and rail services –  without further diversions from other sources.

 

End Notes

[1] According to the most recent Household Pulse Survey data, for New Jersey families with kids under age 5, the majority of households had to have a parent stay home to care for children. U.S. Census Bureau, Household Pulse Survey: January 26 – February 7, 2022: Education

Table 1. New Jersey Childcare Arrangements in the Last 4 Weeks for Children Under 5 Years Old, February 2022. https://www.census.gov/data/tables/2022/demo/hhp/hhp42.html

[2] Board of Governors of the Federal Reserve System, FEDS Notes: Wealth Inequality and COVID-19: Evidence from the Distributional Financial Accounts, August 2021. https://www.federalreserve.gov/econres/notes/feds-notes/wealth-inequality-and-covid-19-evidence-from-the-distributional-financial-accounts-20210830.htm

[3] New Jersey Office of Legislative Services, January 2022 Revenue Snapshot. https://www.njleg.state.nj.us/publications/budget/ols-snapshots/FY22_January.pdf

[4] State of New Jersey, Governor’s FY2023 Budget in Brief, March 2022 at pg. 8 (hereinafter “Budget in Brief”). https://www.nj.gov/treasury/omb/publications/23bib/BIB.pdf

[5] New Jersey Governor’s Disaster Recovery Office, Financial Summary by Federal Act, December 2021. https://gdro.nj.gov/tp/en/financial-analysis/financial-summary

[6] Budget in Brief at pg. 18.

[7] Government Finance Review, Uncertainty, Risks, and Budgets in the Age of Coronavirus, June 2020 at pg. 27. https://gfoaorg.cdn.prismic.io/gfoaorg/33f669de-20be-4e13-8186-ec2cd632f3c4_GFR_04-2020-UncertaintyRisksBudgets.pdf

[8] Budget in Brief at pg. 73.

[9] New Jersey State Library, Legislative History for P.L. 2000, c. 80. https://repo.njstatelib.org/xmlui/bitstream/handle/10929.1/20234/L2000c80.pdf?sequence=1&isAllowed=y

[10] See New Jersey Department of the Treasury, Press Release: As Filing Season Kicks Off, Treasury Reminds Taxpayers that More Money is Available to More People Than Ever Before Under Expanded Earned Income Tax Credit Program, January 28, 2022. https://www.nj.gov/treasury/news/2022/01282022.shtml

[11] Budget in Brief at pg. 50.

[12] U.S. Census Bureau, American Community Survey 2019 5-Year Estimates, Table B19080: Household Income Quintile Upper Limits (indicating upper limit of 80th percentile at $166,319).

[13] NJPP analysis of Budget in Brief at pg. 12.

[14] New Jersey Department of Human Services, Current Program Statistics, December 2021, 2021. https://www.state.nj.us/humanservices/dfd/news/cps_dec21.pdf

[15] New Jersey Department of Human Services, New Jersey State Plan For Temporary Assistance for Needy Families (TANF), FFY 2021-FFY 2023, 2020, pg. 63, Attachment B. https://www.state.nj.us/humanservices/dfd/programs/workfirstnj/tanf_2021_23_st_plan.pdf

[16] Budget in Brief.

[17] New Jersey Policy Perspective, New Jersey’s Shrinking Pool of Teacher Candidates, May 2020. https://www.njpp.org/publications/report/new-jerseys-shrinking-pool-of-teacher-candidates/

[18] New Jersey Policy Perspective, New Jersey’s School Re-openings Are Racially Unequal, October 2020. https://www.njpp.org/publications/blog-category/new-jerseys-school-re-openings-are-racially-unequal/

[19] New Jersey Policy Perspective, School Funding in New Jersey: A Fair Future for All, November 2020. https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/

[20] New Jersey Policy Perspective, School Funding in New Jersey: Preparing Now for the 2020-21 School Year, August 2020. https://www.njpp.org/publications/report/school-funding-in-new-jersey-preparing-now-for-the-2020-21-school-year/

[21] New Jersey Policy Perspective, Separate and Unequal: Racial and Ethnic Segregation and the Case for School Funding Reparations in New Jersey, September 2021. https://www.njpp.org/publications/report/separate-and-unequal-racial-and-ethnic-segregation-and-the-case-for-school-funding-reparations-in-new-jersey/

[22] New Jersey Policy Perspective, New Jersey School Funding: The Higher the Goals, the Higher the Costs, February 2022. https://www.njpp.org/publications/report/new-jersey-school-funding-the-higher-the-goals-the-higher-the-costs/

[23] New Jersey Policy Perspective, New Jersey School Funding: The Higher the Goals, the Higher the Costs, February 2022. https://www.njpp.org/publications/report/new-jersey-school-funding-the-higher-the-goals-the-higher-the-costs/

[24] Budget in Brief at pg. 13.

[25] Budget in Brief at pg. 63 and 44.

[26] New Jersey State Assembly, A6072 – Increases number of hospitals eligible for highest amount of charity care subsidy payment; appropriates $30 million, 2021. https://legiscan.com/NJ/bill/A6072/2020; PoliticoPro, Middlesex Dems fast-track bill to boost charity care for St. Peter’s Hospital, 2021. https://subscriber.politicopro.com/article/2021/12/03/middlesex-dems-fast-track-bill-to-boost-charity-care-for-st-peters-hospital-9427950; NJPP Analysis of FY 2022 Detailed Governor’s Budget; Budget in Brief atpg. 32.

[27] New Jersey Policy Perspective, Shining a Light on New Jersey’s FY 2022 Budget, 2021. https://www.njpp.org/publications/report/shining-a-light-on-new-jerseys-fy-2022-budget/

[28] Office of Governor Phil Murphy, Governor Murphy Signs Legislative Package to Expand Harm Reduction Efforts, Further Commitment to End New Jersey’s Opioid Epidemic, 2022. https://www.nj.gov/governor/news/news/562022/20220118b.shtml

[29] NJPP Analysis of FY 2022 Detailed Governor’s Budget; Budget in Brief at pg. 30.

[30] Legiscan, S690 – Establishes Statewide universal newborn home nurse visitation program in

DCF, 2021. https://legiscan.com/NJ/bill/S690/2020; Budget in Brief at pg. 25, 62.

[31] NJ Spotlight News, Home visits boost health of newborns, mothers, July 2021. https://www.njspotlightnews.org/2021/07/new-nj-law-provides-home-based-wellness-checks-for-mothers-and-newborns/

[32] Budget in Brief at pg. 27-28.

[33] Budget in Brief at pg. 27 and 63.

[34] GetCoveredNJ, Get Financial Help, 2021. https://nj.gov/getcoverednj/financialhelp/gethelp/#premiumtaxcredit

[35] NJPP Analysis of GetCoveredNJ Final Snapshots, 2021 and 2022.

[36] NJPP Analysis of FY 2022 Detailed Governor’s Budget and Budget in Brief, pg. 28.

[37] Budget in Brief at pg. 41.

[38] Budget in Brief at pg. 41.

[39] Budget in Brief at pg. 41.

[40] Budget in Brief at pg. 33.

[41] Budget in Brief at pg. 33.

[42] NJ Transit. Capital Plan Project Sheets, Appendix B: Bus Fleet. pg 7. https://njtplans.com/downloads/capital-project-sheets/Bus%20Fleet%20-%20Project%20Sheets.pdf

[43] Senator Bob Menendez, “Menendez, Booker Announce $1.6B in ARP funding to support NJ Transit.” Press Release, January 12, 2022. https://www.menendez.senate.gov/newsroom/press/menendez-booker-announce-16b-in-arp-funding-to-support-nj-transit; Senators Cory Booker, Bob Menendez, “Bipartisan Infrastructure Investment and Jobs Act Delivers for NJ.” Press Release, August 13, 2021. https://www.booker.senate.gov/news/press/booker-menendez-bipartisan-infrastructure-investment-and-jobs-act-delivers-for-nj

[44] P.L. 2021, c. 308. Available at https://www.njleg.state.nj.us/Bills/2020/PL21/308_.HTM.

[45] Budget in Brief, at pg. 26.

[46] New York Times, Tracey Tully. “2,258 N.J. Prisoners Will Be Released in a Single Day,” November, 9 2020. https://www.nytimes.com/2020/11/04/nyregion/nj-prisoner-release-covid.html

[47] New York Times, Tracey Tully. “2,258 N.J. Prisoners Will Be Released in a Single Day,” November, 9 2020. https://www.nytimes.com/2020/11/04/nyregion/nj-prisoner-release-covid.html

[48] New Jersey Monitor, Sophie Nieto-Munoz. “Early release for hundreds of ex-offenders across N.J.” February 11, 2022. https://newjerseymonitor.com/2022/02/11/early-release-for-hundreds-of-ex-offenders-across-n-j/

[49] New Jersey Office of Management and Budget. Summary of Governor’s Budget Recommendations: State of New Jersey FY2023 Budget in Brief, Pg. 42. March 8, 2022. https://www.nj.gov/treasury/omb/publications/23bib/BIB.pdf

[50] According to the most recent Household Pulse Survey data, for New Jersey families with kids under age 5, the majority of households had to have a parent stay home to care for children. U.S. Census Bureau, Household Pulse Survey: January 26 – February 7, 2022: Education

Table 1. New Jersey Childcare Arrangements in the Last 4 Weeks for Children Under 5 Years Old, February 2022. https://www.census.gov/data/tables/2022/demo/hhp/hhp42.html

[51] Board of Governors of the Federal Reserve System, FEDS Notes: Wealth Inequality and COVID-19: Evidence from the Distributional Financial Accounts, August 2021. https://www.federalreserve.gov/econres/notes/feds-notes/wealth-inequality-and-covid-19-evidence-from-the-distributional-financial-accounts-20210830.htm

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