The State Treasurer Elizabeth Maher Muoio & Office of Legislative Services (OLS) Legislative Budget and Finance Officer Thomas Koeing testified before the Appropriations and Assembly Appropriations Committee on Monday on the proposed FY24 state budget. Similar to the Senate Budget Committee hearing last week, in addition to the budget overview and revenue forecast the issue of the increase in State Health Benefits Program was discussed.
New Jersey is facing a budget shortfall of $1.055 billion for FY23 and FY24 under the estimated total of $10 billion proposed by Governor Murphy, according to Thomas Koeing, DLS’ Legislative Budget and Finance Officer. During his testimony Mr. Koeing noted that this shortfall could potentially result in budget cuts or increased taxes to make up for the deficit. The discrepancy in predictions is mainly due to the state's three largest revenue sources: gross income taxes, corporation business taxes, and sales taxes. OLS estimates are below executive estimates for both fiscal years, with a larger discrepancy for FY24.
State Treasurer Elizabeth Maher Muoio provided a budget overview, stating that FY23 revenue growth had exceeded expectations in the first half of the fiscal year. However, some economic uncertainties such as higher interest rates affecting the housing market, consumer behavior, and the banking industry could pose challenges in the coming months. State Treasurer Muoio also presented revenue forecasts for various taxes and non-tax sources, highlighting that some tax collections have declined slightly and expects this trend to continue into the next fiscal year.
Despite the challenges, State Treasurer Muoio emphasized positive aspects of the FY24 budget proposal, including a growing surplus. She stated that the proposed budget aims to maintain fiscal stability and support economic growth in New Jersey.
During the Assembly Budget Hearing, State Treasurer Muoio was questioned on the increase in State Health Benefits by Budget Chair Pintor Marin. It was revealed that there is an estimated increase of $280 million in health care cost benefits over the original amount of $4.1 billion. State Treasurer Muoio will not know the exact rate increase until June when the new rates are announced and recommended that local governments engaging in the local budgeting process anticipate a state health benefit increase within their budget.
Assemblywoman Pintor Marin raised concerns about how the State Health Benefit Program would be impacted as municipalities leave. The Treasurer stated that any difference in cost may be made up through rate increases in the following year, but this is still unclear.
The next budget hearings are scheduled for the week of April 17. The Department of Health, Department of Education, Judiciary, Department of Corrections, Department of Military & Veterans’ Affairs, and Department of Human service will be testifying.
The League will continue to monitor and report on the budget hearings.
Contact: Andrew LaFevre, Legislative Analyst, email@example.com, 609-695-3481, x116.