NJ to Delay 2021 State Budget Three Months Due to Coronavirus
TRENTON — State leaders have decided to delay adoption of New Jersey’s 2021 state budget by three months, allowing time to assess the economy and state finances after the worst of the coronavirus pandemic subsides.
State law will have to be changed to allow the 2020 state budget to cover 15 months, rather than 12, and expire on Sept. 30. Lawmakers will also have to work with Gov. Phil Murphy on a supplemental appropriation to keep state government operating in July, August and September.
“We are taking this unprecedented step for a couple of reasons. The first is the necessity to have all hands on deck to see us through this emergency,” Murphy said. “We simply do not have the luxury of time. We must all be focused on the need to see our state and our people through this emergency and to ensure that our immediate needs are met.”
“The second broad reason is more pragmatic. We must enact a fiscally responsible budget. There is simply too much economic and fiscal uncertainty at this time,” he said. “We will need a little time to emerge from this emergency and take full stock of the pace of our economic recovery so we can make smart decisions and enact a well-informed budget.”
Murphy and legislative leaders came to the consensus Tuesday.
“These are certainly unprecedented times, and they require unprecedented action and cooperation,” Murphy said “But that action will ensure a more fiscally prudent state budget.”
The change was announced in conjunction with extending New Jersey’s tax filing deadline by three months, from April 15 to July 15.
The federal government had extended its deadline to mid-July, and for the sake of simplicity state officials wanted to do the same. However, that would have pushed the tax collections at the deadline – which are based on 2019 income and unaffected by the stay-at-home economic shutdown – into a different state fiscal year.
The Legislature had passed a bill that would have moved the deadline to June 30, the scheduled final day of the fiscal year, but Murphy had not acted on it while a decision was being reached.
Murphy said that with the tax filing deadline being moved into July, it wouldn’t have made sense to attempt to even adopt a “shell budget” by the end of June that could them be supplemented as the 2021 fiscal year went along.
Last April, the state treasury collected $3.6 billion of income taxes in April, which include regular withholdings and year-end payments.
“We can’t responsibly put even a stopgap budget together without knowing what that number is,” Murphy said.
Murphy said it’s too soon to say what changes will be made to his original $40.9 billion plan and that he hasn’t thought about whether he will deliver another budget address to the Legislature.
“To make an obvious point, the world has changed dramatically since the budget address I gave, and so we’re going to have to account for that. There’s no other way around that,” he said. “But how exactly we account for that, too early to tell.”
The state constitution provides the needed leeway to make the extended fiscal year legal, said Matt Platkin, chief counsel to Murphy.
“The constitution says you have to have an annual appropriations act for the fiscal year, but it accounts for changes in that fiscal year,” Platkin said. “The fiscal year is set in statute, so what we’ll need to do is pass a new, the Legislature will have to pass a bill … that changes the fiscal year to end on Sept. 30.”
Specifically, that section of the constitution says: “All moneys for the support of the state government and for all other state purposes as far as can be ascertained or reasonably foreseen, shall be provided for in one general appropriation law covering one and the same fiscal year; except that when a change in the fiscal year is made, necessary provision may be made to effect the transition.”