ANALYSIS OF THE NEW JERSEY BUDGET DEPARTMENT OF THE TREASURY

Transcription

1 ANALYSIS OF THE NEW JERSEY BUDGET DEPARTMENT OF THE TREASURY FISCAL YEAR PREPARED BY OFFICE OF LEGISLATIVE SERVICES NEW JERSEY LEGISLATURE MAY 2017

2 NEW JERSEY STATE LEGISLATURE SENATE BUDGET AND APPROPRIATIONS COMMITTEE Paul A. Sarlo (D), 36th District (Parts of Bergen and Passaic), Chair Brian P. Stack (D), 33rd District (Part of Hudson), Vice-Chair Jennifer Beck (R), 11th District (Part of Monmouth) Anthony R. Bucco (R), 25th District (Parts of Morris and Somerset) Nilsa Cruz-Perez (D), 5th District (Parts of Camden and Gloucester) Sandra B. Cunningham (D), 31st District (Part of Hudson) Patrick J. Diegnan Jr. (D), 18th District (Part of Middlesex) Linda R. Greenstein (D), 14th District (Parts of Mercer and Middlesex) Steven V. Oroho (R), 24th District (All of Sussex, and parts of Morris and Warren) Kevin J. O'Toole (R), 40th District (Parts of Bergen, Essex, Morris and Passaic) M. Teresa Ruiz (D), 29th District (Part of Essex) Samuel D. Thompson (R), 12th District (Parts of Burlington, Middlesex, Monmouth and Ocean) Jeff Van Drew (D), 1st District (All of Cape May, and parts of Atlantic and Cumberland) GENERAL ASSEMBLY BUDGET COMMITTEE Gary S. Schaer (D), 36th District (Parts of Bergen and Passaic), Chair John J. Burzichelli (D), 3rd District (All of Salem, parts of Cumberland and Gloucester), Vice-Chair Anthony M. Bucco (R), 25th District (Parts of Morris and Somerset) John DiMaio (R), 23rd District (Parts of Hunterdon, Somerset and Warren) Gordon M. Johnson (D), 37th District (Part of Bergen) John F. McKeon (D), 27th District (Parts of Essex and Morris) Raj Mukherji (D), 33rd District (Part of Hudson) Elizabeth Maher Muoio (D), 15th District (Parts of Hunterdon and Mercer) Declan J. O'Scanlon, Jr. (R), 13th District (Part of Monmouth) Eliana Pintor Marin (D), 29th District (Part of Essex) Maria Rodriguez-Gregg (R), 8th District (Parts of Atlantic, Burlington and Camden) Troy Singleton (D), 7th District (Part of Burlington) Benjie E. Wimberly (D), 35th District (Parts of Bergen and Passaic) OFFICE OF LEGISLATIVE SERVICES Frank W. Haines III, Legislative Budget and Finance Officer Thomas Koenig, Assistant Legislative Budget and Finance Officer Marvin W. Jiggetts, Director, Central Staff Catherine Z. Brennan, Section Chief, Revenue, Finance and Appropriations Section This report was prepared by the Revenue, Finance and Appropriations Section of the Office of Legislative Services under the direction of the Legislative Budget and Finance Officer. The primary authors were Jordan M. DiGiovanni and Luke E. Wolff. Questions or comments may be directed to the OLS Revenue, Finance and Appropriations Section (Tel: ) or the Legislative Budget and Finance Office (Tel: ).

3 DEPARTMENT OF THE TREASURY Budget Pages... C-6 to C-7; C-14 to C-15; C-22; C-23 to C-24; D-369 to D-421; E-7; G-4 to G-8 Fiscal Summary ($000) Expended FY 2016 Adjusted Appropriation Recommended State Budgeted $2,351,670 $1,990,307 $1,962,797 (1.4%) Federal Funds 10,155 9,326 9, % Other 1,252,556 1,243,559 1,237,365 (0.5%) Grand Total $3,614,381 $3,243,192 $3,209,488 (1.0%) Personnel Summary - Positions By Funding Source Actual FY 2016 Revised Funded State 3,700 3,600 3, % Federal % Other 1,697 1,683 1, % Total Positions 5,445 5,333 5, % FY 2016 (as of December) and revised (as of January) personnel data reflect actual payroll counts. data reflect the number of positions funded. To be consistent with the data display in the Governor s Budget, the above table includes the funding data in the Department of the Treasury for Higher Educational Services. Other explanatory data for these programs are included in a separate booklet entitled Higher Educational Services. Link to Website:

4 Highlights PROPERTY TAX RELIEF: GRANTS-IN-AID AND STATE AID The Governor s Budget provides $1.91 billion for property tax relief in the Department of the Treasury, which is a $13.1 million decrease from. Grantsin-Aid, which finance direct property tax relief to residents, account for $492.2 million of the total ($35.2 million, or 6.7 percent, less than in ) and State Aid to local subdivisions of State government accounts for the remaining $1.42 billion ($22.1 million, or 1.6 percent, more than in ). Table 1 on page 6 lists aggregated components of the recommended State Aid total. The Administration recommends a $30.6 million funding decrease in for the New Jersey Homestead Property Tax Credit program, renamed the Homestead Benefit Program. The reduction is ascribable to the expected continuation of diminishing enrollments. Specifically, an estimated 592,800 homeowners would collect an average $478 benefit in, after 645,700 homeowners collected an average $474 rebate in. For, the Administration recommends maintaining the parameters of the Senior and Disabled Citizens' Property Tax Freeze program, or Homestead Property Tax Reimbursement program. Specifically, the program would operate under its statutory provisions except that the income eligibility threshold would be $70,000 for tax years 2015 and 2016 in lieu of the statutory $87,007 for tax years 2015 and Overall, the Executive forecasts a $1,219 average payment to 163,300 participants. In, some 167,600 participants received an average $1,217 payment. The anticipated higher average amount is due to rising property tax liabilities offset, in part, by more recent cohorts of program participants with lower average benefits replacing long-time participants with larger average benefits. As proposed, municipalities are to receive $1.136 billion from the off-budget Energy Tax Receipts Property Tax Relief Fund in, which is an increase of approximately $5.7 million above. Two funding sources comprise this appropriation: $788.5 million from the Energy Tax Receipts Property Tax Relief Fund and an amount not to exceed $347.5 million transferred from the Consolidated Municipal Property Tax Relief Aid account pursuant to newly revised budget language. To reduce the State s cash flow borrowing needs, the Administration proposes revising the schedule by which the Energy Tax Receipts Property Tax Relief Fund payments are distributed to municipalities. Specifically, payments would be redistributed such that initial payments would be reduced and final payments would be increased. The proposed appropriation to public employee retirement funds equals $2.51 billion, representing 5/10 th of the actuarially recommended full $5.02 billion State pension contribution, as projected based on July 1, 2016 actuarial valuation data. The contribution was $1.86 billion. Of the recommended $2.51 billion total, the Governor s Budget allocates $108.9 million to Treasury to make the State s required annual payment to the Police and Firemen s Retirement System on behalf of local governmental entities. 2

5 Highlights TREASURY OPERATIONS The Governor s Budget includes an estimated $325.0 million from unspecified Asset Sales as Schedule 1 revenues (page C-6). According to the State Treasurer, this anticipated revenue is comprised, in part, of proceeds from the New Jersey Public Broadcasting Authority s participation in the Federal Communications Commission s Broadcast Incentive Auction. The remainder of the anticipated $325.0 million would be derived from the sale of unspecified State properties. A newly proposed general language provision would divert proceeds from the sale of assets to the General Fund as State revenue. A total of $600,000 is recommended for Gubernatorial transition costs. This amount is unchanged from the total amount budgeted for this purpose in FY 2002 and FY 2006, of which approximately $551,000 and $309,000 were expended, respectively. The Governor s Budget recommends reducing the aggregate appropriation for the Casino Control Commission by $225,000. However, a change in the Services Other Than Personal appropriation for the Casino Control Commission, which is set to increase by $250,000, is for certain information technology integration projects per the Commission s Tactical Plan filed with the Office of Information Technology (OIT). These projects include Employee License System enhancements, OIT security compliance, digital archiving, and SharePoint migration. As in past years, the Governor s Budget includes broad language that would permit the appropriation of additional resources for the Division of Taxation and the Division of Revenue and Enterprise Services without further legislative action. OFFICE OF INFORMATION TECHNOLOGY The Governor s Budget Recommendation proposes to appropriate $26.8 million to OIT to finance the operation and upkeep of the Statewide emergency telephone system. This recommended appropriation is an increase of $13.7 million, or percent, over the adjusted appropriation of $13.1 million. According to the Office of Management and Budget (OMB), the additional funding will be used to transition from the State s existing Statewide network, which delivers call routing and location services to local Public Safety Answering Points (PSAPs), to a network that maintains existing services and implements certain Next Generation features not supported by the current network. The recommended increase is to be partially funded by the imposition of a new fee on pre-paid cellular telephones. According to the Department of the Treasury, this fee is to be imposed through the enactment of a new law, and is estimated to generate $13.0 million in. The Administration recommends the continuation of budget language on page F-5 of the Governor s Budget Recommendation requiring the OIT to approve all Executive Branch purchase requests for information technology and telecommunications equipment, maintenance, and consultant services. The budget language requires the OIT to determine if purchase requests comply with Statewide policies and standards and the Information Technology Strategic Plan approved for each department. One of these policies is a partial moratorium on the procurement of 3

6 Highlights (Cont d) information technology equipment, maintenance, and consultant services that has been in place since ECONOMIC DEVELOPMENT AUTHORITY The Governor s Budget recommends the elimination of funding and corresponding budget language that have provided state matching dollars for a federal grant awarded to the Fort Monmouth Economic Revitalization Authority (FMERA) through the Office of Economic Adjustment in the federal Department of Defense. According to the OMB and information independently obtained from FMERA, the federal grant expires in June and, therefore, additional appropriations and budget language that had allowed additional amounts to be appropriated during the fiscal year are no longer needed in to provide state matching dollars for the grant. The Administration recommends a $6.0 million appropriation for payments in to developers of brownfield sites under the Brownfields and Contaminated Site Remediation Program, some $6.0 million, or 50.4 percent, less than the adjusted appropriation. However, the program s adjusted appropriation is supplemented by $4.9 million in excess account balances carried over from FY 2016, and includes $5.4 million that has been placed in reserve in anticipation of a year-end lapse to the General Fund. This leaves $11.5 million in budget authority. Accordingly, the recommended appropriation ($8.0 million, including $2.0 million in constitutionally dedicated corporation business tax collections anticipated to be used in support of the program, as explained below) is to decrease by $3.6 million, or 31.3 percent, to more closely align with actual program funding needs. According to the OMB, 23 projects are expected to receive funding in. In, 22 projects are expected to be funded. Up to $6.0 million of the appropriation is to be paid out of unexpended Global Warming Solutions Fund balances. Proposed budget language continued from prior years also permits supplemental appropriations to meet unanticipated obligations to be made to the program out of the General Fund or from the constitutional dedication of four percent of annual corporation business tax collections for environmental purposes that support the remediation of the discharges of hazardous substances. The OMB expects that $2.0 million from the constitutional dedication will be used in support of the program, which would increase anticipated FY 2018 program expenditures to $8.0 million. BOARD OF PUBLIC UTILITIES The Governor s Budget recommends diverting an additional $158.3 million in Clean Energy Fund balances to the General Fund in : 1) $82.1 million for New Jersey Transit utility costs; 2) $52.5 million to defray the cost of utilities in State facilities; 3) $20.0 million for the management of State Parks; and 4) $3.7 million to the Office of Sustainability and Green Energy in the Department of Environmental Protection. If the recommended diversions are effectuated, nearly $1.50 billion will have been transferred from the Clean Energy Fund into the General Fund from FY 2008 through. The $1.50 billion does not include amounts that have been transferred annually to the General Fund to defray administrative expenses related to State-funded positions of the Board of Public Utilities (BPU) Office of Clean Energy ($2.7 million in ). The office s administrative costs do not capture the 4

7 Highlights (Cont d) administrative expenses of the private contractor, TRC Companies, Inc., that administers the program on the BPU s behalf. In November 2015, the BPU announced that Applied Energy Group (AEG), a New York-based consulting business, had been selected as the next Clean Energy Program administrator in an effort to improve customer experience by streamlining program management, increasing program flexibility, and updating the information technology system used in connection with the program. In making the announcement, the BPU indicated that AEG would operate under a three-year contract worth approximately $25 million annually. AEG officially commenced management of the program in March A contract amendment, dated November 29, 2016, transferred the contract to TRC Companies, Inc. (TRC) of Lowell, Massachusetts, with the amendment stating that all contract pricing terms and conditions remained unchanged. According to TRC, the change in program administrator will be seamless, largely because it anticipates staff who had been working for AEG to join TRC and work in the same capacity. LEGAL SERVICES OF NEW JERSEY The Governor recommends appropriating $21.1 million to Legal Services of New Jersey (LSNJ) in, $5.0 million, or 19.1 percent, less than the $26.1 million appropriated for the same purposes in. This proposed funding cut, if approved, will result in a 31.2 percent decrease to the line-item from which grant funding has traditionally been appropriated to LSNJ, but will have no impact on the annual disbursements LSNJ receives through the budget from the dedicated 21st Century Justice Improvement Fund. According to OMB, total State support for LSNJ has significantly increased as a result of the dedicated court filing fees appropriated from the 21st Century Justice Improvement Fund, and the proposed cut will return State funding for LSNJ to funding levels that were achieved prior to the establishment of the fund. However, LSNJ contends the cut will negatively affect the number of new cases it can open next year. In testimony submitted to the Assembly Budget Committee in March 2017, LSNJ noted that the proposed cut will reduce LSNJ s projected caseload by 5,000 cases next year, resulting in a denial of assistance to some 15,000 household members who are clients in those cases. OFFICE OF THE PUBLIC DEFENDER The Administration proposes increasing the appropriation for the Office of the Public Defender s (OPD) Trial Services to Indigents by $1.05 million to support the creation of new positions in connection with a workload increase associated with the implementation of the Criminal Justice Reform Act (Bail Reform) (P.L.2014, c.31) and the corresponding constitutional amendment (Article I, Paragraph 11 of the New Jersey State Constitution). Moreover, budget information indicates that the number of funded full-time equivalent positions for OPD s Trial Services to Indigents is recommended to increase from 676 in to 699 in. Background Paper: The New Jersey Earned Income Tax Credit... p. 40 5

8 Highlights (Cont d) Table 1 Department of the Treasury State Aid to Local Governmental Entities FY 2016 STATE AID Expended FY 2016 Adj. App. Recom. Energy Tax Receipts* $1,130,373 $1,130,373 $1,136,026 Police & Firemen s Retirement System State Contribution 61,466 86, ,857 Veterans Property Tax Deductions 52,291 51,200 48,500 Police & Firemen s Retirement System Post Retirement Medical 48,321 55,306 53,071 South Jersey Port Corporation Support 23,999 24,020 22,755 Debt Service Pension Obligation Bonds 18,202 20,787 22,312 Senior and Disabled Citizens Property Tax Deductions 11,933 10,900 9,900 Other Distributed Taxes 7,886 7,886 7,886 Highlands Protection Fund Aid 2,469 4,400 4,400 Public Library Project Fund 3,756 3,735 3,730 County Boards of Taxation 1,881 1,903 1,903 Consolidated Police and Firemen s Pension Fund State Contribution Total State Aid $1,362,725 $1,397,552 $1,419,665 * Energy Tax Receipts totals include annual transfers of varying amounts to the Energy Tax Receipts Property Tax Relief Fund from the Consolidated Municipal Property Tax Relief Aid account. 6

9 Fiscal and Personnel Summary AGENCY FUNDING BY SOURCE OF FUNDS ($000) General Fund Adj. Expended Approp. Recom. FY Direct State Services $473,990 $481,982 $492, % 2.2% Grants-In-Aid 160, , , % (7.8%) State Aid 32,253 34,633 33, % (4.4%) Capital Construction 2, (100.0%) 0.0% Debt Service 400, , ,324 (28.2%) (1.0%) Sub-Total $1,069,009 $1,026,455 $1,015,564 (5.0%) (1.1%) Property Tax Relief Fund Direct State Services $0 $0 $0 0.0% 0.0% Grants-In-Aid 541, , ,200 (9.2%) (6.7%) State Aid 734, , ,520 (39.1%) 4.4% Sub-Total $1,276,594 $956,114 $939,720 (26.4%) (1.7%) Casino Revenue Fund $0 $0 $0 0.0% 0.0% Casino Control Fund $6,067 $7,738 $7, % (2.9%) State Total $2,351,670 $1,990,307 $1,962,797 (16.5%) (1.4%) Federal Funds $10,155 $9,326 $9,326 (8.2%) 0.0% Other Funds $1,252,556 $1,243,559 $1,237,365 (1.2%) (0.5%) Grand Total $3,614,381 $3,243,192 $3,209,488 (11.2%) (1.0%) PERSONNEL SUMMARY - POSITIONS BY FUNDING SOURCE Actual Revised Funded FY State 3,700 3,600 3,669 (0.8%) 1.9% Federal % 2.0% All Other 1,697 1,683 1, % 2.0% Total Positions 5,445 5,333 5,436 (0.2%) 1.9% FY 2016 (as of December) and revised (as of January) personnel data reflect actual payroll counts. data reflect the number of positions funded. AFFIRMATIVE ACTION DATA Total Minority 30.8% 31.1% N/A

10 Significant s/new Programs ($000) Budget Item Adj. Approp. Recomm. Dollar Budget Page ECONOMIC PLANNING AND DEVELOPMENT NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY General Fund, Grants-in-Aid: Fort Monmouth Economic Revitalization Authority $181 $0 ($181) (100.0%) D-381 The Governor recommends the elimination of funding in for the line-item account that has been used to provide state matching dollars for a federal grant awarded to the Fort Monmouth Economic Revitalization Authority (FMERA) through the Office of Economic Adjustment in the federal Department of Defense. According to the Office of Management and Budget (OMB) and information independently obtained from FMERA, the federal grant awarded by the Office of Economic Adjustment expires in June and, therefore, no additional appropriations are needed in to provide state matching dollars in connection with the grant. The Governor also recommends the elimination of corresponding budget language that previously had authorized additional amounts to be appropriated during the course of the fiscal year to the Economic Development Authority (EDA) to secure federal matching funds awarded to FMERA through the Office of Economic Adjustment. That budget language specified that that appropriation of additional amounts to secure federal funds was subject to approval by the Director of OMB, but did not require additional actions to be taken by the Legislature. Fort Monmouth is a former 1,126 acre federal military installation bordering the Monmouth County municipalities of Eatontown, Oceanport, and Tinton Falls, that was closed in September P.L.2010, c.51 established FMERA under EDA s supervision to implement the Fort Monmouth Reuse and Redevelopment Plan, crafted by FMERA s predecessor authority, the Fort Monmouth Economic Revitalization Planning Authority. In redeveloping the fort for civilian use FMERA is to promote economic development, conserve natural resources, provide housing, and advance the overall quality of life in communities affected by the closure of the installation. General Fund, Grants-in-Aid: Economic Redevelopment and Growth Grants, EDA $11,725 $10,010 ($1,715) (14.6%) D-381 This account provides funding for the payment of Economic Redevelopment and Growth (ERG) grants for commercial redevelopment projects that have been approved by EDA and are expected to receive payment in the upcoming fiscal year. The proposed $10.0 million 8

11 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page appropriation to this account for is a $1.7 million, or 14.6 percent, decrease from the amount appropriated for the same purpose in the prior fiscal year. In addition to the anticipated use of $2.2 million in carryforward balances, the $10.0 million is projected to be in line with the level of funding needed to make payments for eight additional redevelopment projects that will be newly eligible for initial grant payments in. According to OMB, 13 projects (11 legacy projects, two Economic Opportunity Act of 2013 projects) are expected to receive grant payments from this account in, and 21 projects (14 legacy projects, seven Economic Opportunity Act of 2013 projects) are expected to receive grant payments in. In addition to the recommended $10.0 million appropriation, the Governor proposes the continuation of budget language that allows the carryforward of unexpended balances that remain in the account at the end of, and for the supplemental appropriation of unspecified amounts during to meet unanticipated ERG payment obligations that may be payable. Under the proposed language, the carryforward of excess balances and the supplemental appropriation of additional amounts to meet unanticipated obligations are subject to approval by the Director of OMB, but do not require additional action by the Legislature. The OMB anticipates the use of $2.2 million in carryforward balances to supplement the program appropriation. P.L.2009, c.90 created the ERG grant program which consists of a State and a municipal component. The law authorized the awarding of legacy State ERG grants to developers of redevelopment projects that yielded net fiscal benefits to the State and would not occur but for the financial assistance provided by the grant. Legacy State ERG grants were available for eligible redevelopment projects sited in certain geographic areas throughout the State. Grant payments equaled up to 75 percent of the annual incremental State tax revenue attributable to a project and could be authorized for up to 20 years. The combined amount of State and municipal ERG grant payments could not exceed 20 percent of a project s total cost. Grant payments begin after completion of a project. In all, the EDA approved $551.6 million in legacy ERG awards to 16 redevelopment projects. The New Jersey Economic Opportunity Act of 2013, P.L.2013, c.161, expanded the ERG program effective September 18, Among its revisions, the law distinguished between commercial and residential redevelopment projects, with commercial development projects continuing to receive ERG grants subject to funding under the annual appropriations act and residential projects receiving ERG tax credits, which do not necessitate funding through an appropriation but do reduce future State tax collections. As of April 23, 2017, the EDA had approved $343.9 million in ERG grants awards under P.L.2013, c.161 to 12 commercial redevelopment projects and $566.2 million to 35 projects under the residential component of the program. 9

12 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page General Fund, Grants-in-Aid: Brownfield Site Reimbursement Fund $12,000 $5,957 ($6,043) (50.4%) D-381 This account provides funding for payments to developers of brownfield sites under the Brownfields and Contaminated Site Remediation Program administered by the EDA. The program s adjusted appropriation is supplemented by $4.9 million in excess account balances carried over from FY 2016, and includes $5.4 million that has been placed in reserve in anticipation of a year-end lapse to the General Fund. This leaves $11.5 million in budget authority. As a result, the recommended appropriation for the program in ($8.0 million, including $2.0 million in constitutionally dedicated corporation business tax collections anticipated to be used in support of the program, as explained below) is to decrease by $3.6 million, or 31.3 percent, to more closely align with actual program funding needs. According to the OMB, 23 projects are expected to receive funding in. In, 22 projects are expected to receive funding. In addition to the recommended $6.0 million appropriation, the Governor proposes the continuation of budget language authorizing the Director of OMB to carry forward unexpended balances that remain in the account at the end of and to appropriate during the course of the upcoming fiscal year additional amounts necessary to meet unanticipated program obligations. The proposed language permits the supplemental appropriations to be allocated out of the General Fund or from the constitutional dedication of four percent of annual corporation business tax collections for environmental purposes that support the remediation of the discharges of hazardous substances. The OMB has indicated that it expects $2.0 million from the constitutional dedication to be used to support the program in, which would increase anticipated program expenditures to $8.0 million. The Governor also proposes the continuation of budget language authorizing the transfer of $6.0 million in unexpended funds held in the off-budget Global Warming Solutions Fund accounts managed by the EDA to the General Fund as State revenue (section 85, page F-10). The proposed language provides for the $6.0 million to be credited to the Brownfield Site Reimbursement Fund for payments to developers of brownfield sites in. The Brownfields and Contaminated Site Remediation Program was established by P.L.1997, c.278 as a tax-increment financing instrument to reimburse developers for up to 75 percent of the costs incurred in remediating abandoned or underused, contaminated, commercial and industrial properties (N.J.S.A.58:10B-26 et seq.). Payments for a project are capped at the amount of incremental State tax revenues the redeveloped project generates. The law created the Brownfield Site Reimbursement Fund as the account in which State tax revenue produced by redeveloped sites is deposited and then disbursed to developers, but in reality the account has obtained funding from a variety of sources, including General Fund appropriations, uncommitted funds from the Global Warming Solutions Fund, and the constitutional dedication of four percent of annual corporation business tax collections for environmental purposes that support the remediation of the discharges of hazardous substances. 10

13 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page ECONOMIC REGULATION BOARD OF PUBLIC UTILITIES General Fund, Grants-in-Aid: Energy Assistance Programs TOTAL: $65,785 $65,785 $0 0.0% D-385 Payments for Lifeline Credits $26,901 $26,901 $0 0.0% D-385 Tenants Assistance Rebate Program $38,884 $38,884 $0 0.0% D-385 The Governor recommends appropriating $65.8 million in for two programs, the Lifeline Credit Program and the Tenants Assistance Rebate Program, that provide energy assistance to certain low-income households in this State. The Board of Public Utilities (BPU) adjusted appropriation for these programs includes $1.5 million that is to be placed in reserve in anticipation of a year-end lapse to the General Fund, leaving $64.3 million in budgeted spending authority. Accordingly, although the recommended appropriation for this purpose is presented as a continuation of existing funding, it is an increase of $1.5 million, or 2.3 percent, above projected expenditures. The recommended $1.5 million increase in funding for these programs is needed to support a year-over-year increase in the number of beneficiaries. According to program data contained in the Governor s Budget Recommendation (page D-384), the number of recipients benefiting from the two programs is to increase by 7,697, from a combined 285,833 recipients in to a combined 293,530 recipients in. Based on this information, the average benefit to be paid to each recipient in is estimated to be $ under the Lifeline Credit Program and $ under the Tenants Assistance Rebate Program. The Lifeline Credit Program provides combined gas and electric utility credits of up to $225 a year to New Jersey residents who are eligible for Pharmaceutical Assistance to the Aged and Disabled, Supplemental Security Income (SSI), NJ FamilyCare only, or Lifeline only. The Tenants Assistance Rebate Program provides a cash payment of up to $225 a year to tenants who are eligible for the Lifeline Credit Program but do not pay their own utility bills. Persons receiving SSI who are eligible for this program receive monthly utility supplements totaling up to $225 a year included in their SSI checks. In accordance with a Memorandum of Understanding with the BPU, the Department of Human Services administers the Lifeline Credit Program and the Tenants Lifeline Assistance Program. The programs receive funding from the off-budget Universal Service Fund by means of an interfund transfer (General Provision 54 on page F-8 of the Governor s Budget 11

14 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page Recommendation). New Jersey ratepayers replenish the Universal Service Fund through the societal benefits charge included in their electric and natural gas bills. GOVERNMENTAL REVIEW AND OVERSIGHT OFFICE OF THE STATE COMPTROLLER General Fund, Direct State Services: Salaries and Wages $8,122 $7,882 ($240) (3.0%) D-389 This account provides funding to pay the salaries and wages of State-supported positions within the Office of the State Comptroller. The office s adjusted appropriation for this purpose includes $1.2 million that is to be placed in reserve in anticipation of a year-end lapse to the General Fund, and includes an additional $0.9 million that has been transferred to a separate account maintained by the State Comptroller to pay for services other than personal. These adjustments leave $6.0 million in budgeted spending authority for the account in FY Accordingly, although the recommended appropriation for salaries and wages is presented as a year-over-year decrease, it is in actuality an increase of $1.9 million, or 31.3 percent, over the amounts projected to be expended for the same purposes in. Salary detail information available to the OLS indicates that the recommended $7.9 million FY 2018 appropriation is to be used to pay the salaries and wages of 90 State-supported positions during the upcoming fiscal year. That same source indicates that in 100 Statesupported positions were expected to be funded from appropriations to the account. Upon inquiry, the OMB indicates that this reduction in the number of estimated positions will not result in layoffs or have an adverse impact on the operational capacity of the Office of the State Comptroller, as those positions were funded but never filled in. P.L.2007, c.52 established the Office of the State Comptroller as an independent State agency allocated in but not of the Department of the Treasury. The office s budgeted 130 full-time employees (90 State-supported, 40 federal-supported) conduct audits of government finances, engage in government procurement contract audits and monitoring, review the efficiency and effectiveness of State and local governmental entities, and investigate misconduct, waste, and abuse at all levels of State government and within the State s Medicaid program. The office consists of four divisions: the Audit Division, the Investigations Division, the Procurement Division, and the Medicaid Fraud Division. Each division is led by a director who reports to the State Comptroller. For, the Governor recommends a $13.7 million appropriation for the office, including $8.8 million in State and $4.9 million in federal funds. 12

15 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page FINANCIAL ADMINISTRATION DIVISION OF REVENUE AND ENTERPRISE SERVICES General Fund, Direct State Services: Administration of State Revenues and Enterprise Services TOTAL: $32,314 $32,120 ($194) (0.6%) D-393 Special Purpose: Wage Reporting/Temporary Disability Insurance $1,200 $800 ($400) (33.3%) D-393 Additions, Improvements and Equipment $1,502 $1,708 $ % D-394 Other Direct State Services Accounts $29,612 $29,612 $0 The Administration recommends reducing the total appropriation for the Division of Revenue and Enterprise Services (DORES) by an aggregate $194,000, resulting from two changes: a $400,000 decrease in Wage Reporting/Temporary Disability Insurance partially offset by a $206,000 increase in Additions, Improvements and Equipment. According to OMB, the $400,000 decrease is due to improved efficiencies in the electronic processing of records and revenues associated with the Temporary Disability Insurance program. This budget line is funded from the State Disability Benefits Fund; thus, the reduction is also displayed in Schedule 1 revenues (page C-8). The DORES centrally manages the collection and processing of revenues related to Temporary Disability Insurance. The second recommendation, an additional $206,000 for Additions, Improvements and Equipment, is the result of DORES line of credit payments increasing. Line of credit financing is available to State agencies to pay for their short-term (three years) equipment needs, such as computers, furniture, and vehicle purchases. 13

16 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page CASINO CONTROL COMMISSION Casino Control Fund, Direct State Services: Administration of Casino Gambling TOTAL: $7,738 $7,513 ($225) (2.9%) D-393 Salaries and Wages (CCF) $3,475 $3,023 ($452) (13.0%) D-393 Employee Benefits (CCF) $1,677 $1,842 $ % D-393 Services Other Than Personal (CCF) $350 $600 $ % D-393 Maintenance and Fixed Charges (CCF) $1,466 $1,333 ($133) (9.1%) D-393 Additions, Improvements and Equipment (CCF) $275 $220 ($55) (20.0%) D-394 Other Direct State Services Accounts (CCF) $495 $495 $0 The Governor s Budget recommends reducing the aggregate appropriation for the Casino Control Commission by $225,000. Specifically, two components impacting this budget line are: a $287,000 net reduction in total Personal Services (Salaries and Wages and Employee Benefits) offset largely by a $250,000 increase in Services Other Than Personal. According to OMB, the $287,000 decrease in the Casino Control Commission s total Personal Services appropriation is the result of savings due to attrition and the backfilling of those positions at lower salaries. Additionally, the change in the Services Other Than Personal appropriation, which is set to increase by $250,000, is for certain information technology integration projects per the Commission s Tactical Plan filed with the Office of Information Technology (OIT). These projects include Employee License System enhancements, OIT security compliance, digital archiving, and SharePoint migration. The Casino Control Commission, along with the Division of Gaming Enforcement within the Department of Law and Public Safety, is responsible for the regulation of legalized casino gaming in New Jersey. 14

17 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page DIVISION OF TAXATION All Other Funds: Taxation Services and Administration $151, ,238 ($6,549) (4.3%) D-394 This budget line aggregates several off-budget funds administered by the Division of Taxation and reflects the funds administrative expenses and transfers to other State agencies. In FY 2018, four components account for $144.8 million of the appropriation: (1) $97.9 million in anticipated collections from that part of the cigarette tax whose proceeds are deposited in the Dedicated Cigarette Tax Revenue Fund and pledged for the payment of debt service on the Cigarette Tax Revenue Refunding Bonds, Series 2012, as authorized in P.L.2004, c.68; (2) $25.9 million transferred from the New Jersey Domestic Security Account which contains the proceeds from the first $2 of the $5 per day vehicle rental surcharge pursuant to section 54 of P.L.2002, c.34 (C.App.A:9-78), as amended by P.L.2006, c.42 to the Departments of Agriculture, Health, and Law and Public Safety for the Agro-Terrorism Program, Medical Emergency Disaster Preparedness for Bioterrorism program, State Police salaries related to Statewide security services, and counter-terrorism programs operated by the Office of Homeland Security and Preparedness; (3) $17.0 million for the cost of Division of Taxation Compliance and Enforcement Activities; and (4) $4.0 million associated with the Meadowlands Regional Assessment (N.J.S.A.5:10A-82) whose proceeds are used for Meadowlands adjustment payments to municipalities in the Meadowlands district that by statutory formula are entitled to receive payments. The projected decrease in this budget line is from a reduction in the anticipated amount of revenue needed to pay scheduled Cigarette Tax Revenue Refunding Bonds, Series 2012, debt service in. For, the anticipated debt service payment is $104.5 million. This payment is reduced to $97.9 million for, a decrease of $6.5 million. Of note, the difference between the amount deposited in the Dedicated Cigarette Tax Revenue Fund and the required debt service payment is required to be appropriated to the General Fund in accordance with General Provision 65 on page F-8 of the Governor s Budget. 15

18 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page GENERAL GOVERNMENT SERVICES DIVISION OF PURCHASE AND PROPERTY General Fund, Direct State Services: Purchasing and Inventory Management TOTAL: $9,057 $9,257 $ % D-398 Special Purpose: Gubernatorial Transition Governor $0 $250 $250 NA D-398 Gubernatorial Transition Governor-Elect $0 $250 $250 NA D-398 Gubernatorial Inaugural Commission $0 $100 $100 NA D-398 Other Direct State Services Accounts $9,057 $8,657 ($400) (4.4%) A total of $600,000 is recommended for Gubernatorial transition costs. This amount is unchanged from the total amount budgeted for this purpose in FY 2002 and FY 2006, of which approximately $551,000 and $309,000 were expended, respectively. Pursuant to P.L.1969, c.213 (N.J.S.A.52:15A-1 et seq.), the Gubernatorial Transition Act was enacted to promote the orderly transfer of executive power in connection with the expiration of the term of office of a Governor and the inauguration of a new Governor. The Director of the Division of Purchase and Property is authorized, upon request, to provide certain services and funds as necessary to assist with the preparations of the Governor-elect and to assist the former Governor with concluding the affairs of his office for a period not to exceed six months. 16

19 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page OFFICE OF INFORMATION TECHNOLOGY General Fund, Direct State Services: Salaries and Wages $28,323 $26,823 ($1,500) (5.3%) D-404 The Governor recommends a $1.5 million, or 5.3 percent, decrease in funding for Office of Information Technology (OIT) salaries and wages. According to the OMB, this reduction in funding is recommended as a result of the elimination of certain funded vacancies in, but will not result in layoffs or have an adverse impact on the operational capacity of the OIT. The Appropriations Act funded 733 full-time positions in OIT. However, personnel data included in the Governor s Budget Recommendation (page D-404) indicate that only 724 positions were filled as of January That same source of data suggests that in the upcoming fiscal year OIT is expected to have 727 funded full-time positions, or three more than the number of positions that are currently filled. The $26.8 million appropriation recommended by the Governor for is one portion of the total, overall funding that is available to support funded OIT full-time positions. In addition to this State appropriation, salary detail information available to the OLS indicate that OIT s salaries and wages account will be supplemented by $37.5 million in other salary resources available for filled positions in, including funds made available through federal reimbursements and other State funds. The OIT provides information technology services to State agencies and has a recommended budget of $164.1 million to fulfill its core responsibilities, which include information technology governance, application development and maintenance, enterprise data center operations and telecommunications, and enterprise services. Excluding the proposed $27.7 million for the Office of Emergency Telecommunication Services (Statewide System), the OIT s recommended appropriation is $136.4 million. Of this amount, transfers of federal and dedicated funds from State agencies for billable OIT services account for $60.5 million, or 44.4 percent, and General Fund appropriations for the remaining $75.9 million, or 55.6 percent. General Fund, Direct State Services: Additions, Improvements and Equipment $27,377 $26,677 ($700) (2.6%) D-404 The Governor proposes a $26.7 million appropriation to the OIT to cover contractual line of credit debt service obligations in. This recommended level of appropriation is displayed as a $700,000 decrease in funding from the account s adjusted appropriation, but is in actuality an increase of $9.6 million, or 56.7 percent, from the $

20 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page million in budget authority remaining, if certain factors affecting the adjusted appropriation are taken into consideration. During, these factors include the reappropriation of $6.7 million in unspent account balances from the prior fiscal year, transfers totaling $3.1 million to other accounts maintained by the OIT, and $14.0 million placed in reserve in anticipation of a year-end lapse to the General Fund as the result of line of credit underspending. Upon inquiry, the OMB notes that the $700,000 reduction recommended by the Governor for reflects a reallocation of funding to the OIT s Statewide Emergency Telecommunication system, and can be sustained due to trends. In general, line of credit financing is available to State agencies to pay for short-term (three years) equipment needs, such as computers, furniture, and vehicles purchases. The OIT s current line of credit payments finance capital investments as part of a multi-year initiative to update and upgrade the State s core information technology infrastructure and to improve data center safety, power, and capacity. General Fund, Direct State Services: Statewide Emergency Telecommunication System $13,122 $26,822 $13, % D-404 The Governor recommends a $26.8 million appropriation to the account that is used to finance the operation and upkeep of the Statewide emergency telephone system. This recommended appropriation is an increase of $13.7 million, or percent, over the adjusted appropriation of $13.1 million. According to OMB, the account will be funded at $28.4 million in, including $1.6 million in carryforward balances. The recommended funding level is therefore to increase by $15.3 million, or percent. Information provided by OMB indicates that the additional funding is needed to support the State s transition from the existing Statewide network, which delivers call routing and location services to local Public Safety Answering Points (PSAPs), to a network that maintains existing services and implements certain Next Generation features not supported by the current network. According to OMB, the recommended appropriation for FY 2018 is sufficient to cover the cost of maintaining the existing network, and support the transition to a new network. Information separately provided by the Department of the Treasury indicates that the recommended increase in funding for is to be partially offset through the enactment of a new law imposing a new fee on pre-paid cellular phones. This new fee will, if enacted, extend the $0.90 mobile telecommunications service and telephone exchange service fee that is currently imposed on landline and monthly cell phone subscribers to pre-paid cellular telephone customers, and is estimated to generate $13.0 million in additional revenue in FY

21 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page Over the past two decades, there has been a national movement to modernize the existing system. The goal of this movement, typically referred to as Next Generation 9-1-1, is to update the service infrastructure in the United States to improve public emergency communication services by utilizing current and emerging telecommunication technologies. These improvements will permit individuals in need of assistance to communicate back and forth with dispatchers by text, photo, and video, and will allow information to be shared in real-time with first responders. Additionally, the improvements will allow calls to be routed to dispatch centers automatically and location data from cell phones, which currently remains is available but remains unreliable. STATE SUBSIDIES AND FINANCIAL AID Property Tax Relief Fund, Grants-in-Aid: Homestead Benefit Program (PTRF) $322,500 $291,900 ($30,600) (9.5%) D-407 The Administration recommends a $30.6 million funding decrease in for the New Jersey Homestead Property Tax Credit program (N.J.S.A.54: et seq.), renamed the Homestead Benefit Program. The decrease in actual spending, however, would be less than the line-item reduction would suggest. This is so because the program s adjusted appropriation includes $9.1 million that has been placed in reserve in anticipation of a yearend lapse to the General Fund, leaving $313.4 million in budget authority. Overall, the Executive estimates that 592,800 homeowners would collect an average $478 benefit in FY 2018, after 645,700 homeowners collected an average $474 rebate in. The reduction in the program s appropriation is ascribable to the Administration s expectation that the recent trend of diminishing enrollments will continue. Although the program s eligibility criteria have not changed since FY 2010, the number of claimants is projected to fall by 346,300, or 34.9 percent, from 992,000 in FY 2010 to 645,700 in. Some 84,200 fewer seniors, or 16.4 percent, are projected to participate in the program in FY 2017 (429,800 participants) than in FY 2010 (514,000 participants). But the more significant decline would be among non-seniors whose participation is projected to drop by 262,100 claims, or 54.8 percent, from 478,000 claimants in FY 2010 to 215,900 in. For all claimants combined, the Administration projects a further 8.2 percent contraction in to 592,800 participants. The department has conveyed that its own analysis suggests that bracket creep is the primary driver of the erosion in program participation, as the incomes of many former non-senior participants, in particular, have grown beyond the $75,000 eligibility threshold. Table 2 on page 22 indicates the benefit amounts individuals would receive under statutory provisions, the amounts they actually received in, and the amounts they would 19

22 Significant s/new Programs ($000) (Cont d) Budget Item Adj. Approp. Recomm. Dollar Budget Page receive in, according to proposed language in the Governor s Budget. The following paragraphs elaborate on the details. Statutory Program: Under the program s statutory structure, a homeowner s credit amount is based on the homeowner s gross income and the homeowner s property taxes paid in the last calendar year up to $10,000. Credits equal 20 percent of allowable property taxes paid up to $10,000 for incomes up to $100,000, 15 percent of allowable property taxes paid up to $10,000 for incomes over $100,000 up to $150,000, and 10 percent of allowable property taxes paid up to $10,000 for incomes over $150,000 up to $250,000. A homeowner who is disabled, blind or 65 years of age or older receives the higher of the payment to which the homeowner is entitled under the above schedule or an amount equal to the amount by which property taxes paid in a tax year exceed five percent of the claimant's gross income subject to the following ranges: if the gross income is not over $70,000 the claimant receives a $1,000 to $1,200 benefit, if the gross income is over $70,000 but not over $125,000 the claimant receives a $600 to $800 benefit, and if the gross income is over $125,000 but not over $200,000 the claimant receives a $500 benefit. Statutory tenant rebates in are $150 for all tenants with incomes up to $100,000, with tenants who are disabled, blind or 65 years of age or older with incomes not exceeding $70,000 receiving up to $850. Governor s Budget: The proposed language maintains the parameters of the budgeted program. That is, relative to statutory provisions, the Governor s Budget proposes to: a) eliminate rebates for non-senior homeowners with incomes above $75,000 and senior homeowners with incomes above $150,000; b) reduce rebates from 20 percent to 10 percent of property taxes paid up to $10,000 for senior homeowners with incomes not exceeding $100,000 and for non-senior homeowners with incomes not exceeding $50,000; c) reduce rebates from 20 percent to 6.67 percent of property taxes paid up to $10,000 for non-senior homeowners with incomes between $50,000 and $75,000; d) reduce rebates from 15 percent to 5 percent of property taxes paid up to $10,000 for senior homeowners with incomes between $100,000 and $150,000; e) eliminate the alternative benefit computation under which claimants who are disabled, blind or 65 years of age or older receive the higher of the payment to which they are entitled under the above schedule or an amount equal to the amount by which property taxes paid in a tax year exceed five percent of the claimant's gross income subject to the ranges indicated in the above paragraph; and f) maintain 2006 property taxes, as opposed to Tax Year 2016 property taxes, as the basis for calculating homestead benefits. The Governor also proposes continuing the elimination of the homestead property tax rebate program for tenants. Property Tax Relief Fund, Grants-in-Aid: Senior and Disabled Citizens Property Tax Freeze (PTRF) $204,900 $200,300 ($4,600) (2.2%) D-407 For, the Governor recommends maintaining the parameters of the Senior and Disabled Citizens' Property Tax Freeze program, or Homestead Property Tax Reimbursement 20