Big pension increase for public employees and $ 3.7 billion to deal with national debt added to NJ budget

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The state Senate Democrats said Monday they had reached an agreement with the government. Phil Murphyto add $ 6.9 billion to New Jersey’s public pension fund next year and raise $ 3.7 billion to pay off existing state government debt and avoid future borrowing.

The announcement follows other budget news Monday morning that the Democrats who control the governor’s office and the state legislature have agreed to expand a popular property tax relief program, fund income tax rebates for certain taxpayers, and expand other income tax credits.

They haven’t released the full state budget yet, though the chairman of the Senate’s Budget Committee said he hoped it would be introduced on Monday with committee votes in a day or two. The new fiscal year begins on July 1st.

“This budget meets the legislative priorities that we set from the beginning,” Senate President Stephen Sweeney, D-Gloucester, said in a statement. “It takes the pressure off those who need it, makes strategic investments to fuel our economic recovery, and puts billions of dollars aside to pay off larger debts and stave off future borrowings.”

MORE: NJ tax breaks come thanks to a huge surplus, announce Murphy and Top-Dems

The announcement sheds light on how officials plan to spend some of the state’s $ 10.1 billion in reserves and $ 6.2 billion on the US federal bailout plan. Neither the government nor the legislature had yet publicly announced any spending plans for the two windfalls.

Federal Economic Aid will fund $ 500 million in rental aid, $ 250 million in utility relief, $ 600 million over three years to provide an additional year of eligibility to the state’s special education program for approximately 8,700 students with disabilities, $ 180 million for HVAC improvements in schools in and $ 100 million to expand childcare.

States have three years to use their aid and cannot use it to fund tax cuts, pay off unsecured pension liabilities, or pay off existing debts.

The new budget would also add an additional $ 505 million to the civil servant pension fund next year and freeze $ 3.7 billion on national debt. These would be funded from the massive $ 10.1 billion surplus announced earlier this month.

The state Treasury Department announced in early June that tax collections would be $ 4.1 billion higher this year and $ 1.1 billion higher next year. Monday afternoon’s announcement did not specify how much would remain in the state’s reserves until the end of next year.

This announcement represents billions of dollars in non-operating expenses, in line with the insistence of lawmakers and the governor not to use one-time income for longer-term expenses or new programs.

“We have the advantage that the state revenues are significantly higher than expected, and a considerable amount of federal aid. But we need to be careful and deliberate in using these funds, ”said Senator Paul Sarlo, D-Bergen, chairman of the Senate Budget and Budget Committee. “We cannot afford to be myopic when it comes to fiscal conditions that could change quickly and when using federal funds with finite lifetimes.”

The additional $ 505 million for the pension fund, the worst-funded in the U.S., brings the contribution to $ 6.9 billion next year. At $ 6.4 billion, it was already the largest single payment in the history of the state and the first full payment in a quarter of a century.

The new planned pension contribution is $ 2.1 billion higher than the $ 4.8 billion New Jersey is expected to make this year.

With the higher payment next year, the budget agreement also relieves the pension contribution for fiscal year 2023 – which is forecast at more than $ 6.9 billion as the state increases projected investment income from 7.3 percent to 7 percent per year reduced.

“This budget emphasizes debt reduction, higher pension payments that lead to savings, and strategic investments that address urgent or long-term needs, including childcare, upgrading school heating and ventilation systems, and saving taxes on retirement income,” said Sweeney.

MORE: “Absolutely stunning” NJ Transit’s funding was not topped up in the new state budget, says Top-Dem

Senate Democrats also announced plans to lock in $ 1.2 billion to pay for future infrastructure projects out of pocket instead of tying them up, and $ 2.5 billion to remove existing debt from New Jersey’s balance sheet .

The combined $ 3.7 billion is the same amount the state borrowed last fall to cover a projected shortfall. However, tax revenues increased, making borrowing unnecessary. However, the debt was structured in such a way that it could not be repaid early, prompting officials to look for other ways to ease New Jersey’s debt burden.

Legislators have stated in recent years that they will likely have to borrow money for water infrastructure and school construction projects, and the new trust fund means they can pay for some of these projects out of their own pocket rather than through borrowing.

Author by NJ Advance Media staff Brent Johnson contributed to this report.

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Samantha Marcus can Be reached at the [email protected].



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