New Jersey’s budget ‘Labyrinth’

Our New Jersey budget was a main topic of discussion during this past week’s conference call, hosted by Conservatives with Attitude.  Guest speaker Assemblyman Joe Malone spiked my curiosity about some illusive aspects of the budget.  I am certainly a novice at understanding budgets, but will present here some concerning and even disturbing ways that NJ spends our money.

After a two-week delay of the budget message, Governor Corzine released his Fiscal 2010 Budget in Brief, which is 174 pages.  From this point there will be many committee meetings and discussions.  In the end thousands of pages of supporting documentation will culminate in a full release of the final budget comprising some 700 pages. The budget is set up with multiple sections.  Budget schedules are a good depiction of what priorities the state sets.  Income resources to the state are identified that will provide funding for programs, services, and other identified items.  One can view a users guide to the budget, which is packed with some great information.

There is a lot of important data that is not clearly identifiable and understandable in the New Jersey budget.  Any data discussed below will be reflective of budgets from prior years as there is not yet detailed data for the FY 2010 budget.  Critical information missing from the budget in brief, but slated to be in the final budget, are a tremendous amount of what are called ‘language recommendations’.   Some language is needed to allow flexibility for the state to operate under the budget, which is a moving target.  But language that states “such additional sums as may be required” may be concerning.  This type of wording would make me wonder if programs could be under-stated, resulting in a budget that is lower than realities would depict.  This could be a real ‘can of worms’ as it leaves an open door for overspending the budgeted amount.

A lot of the language involves transfers of money from and to various accounts and funds.  It is too difficult and often virtually impossible to follow the money trail.  Below is one example from the Department of Transportation, page D-394.

“Notwithstanding the provisions of any law or regulation to the contrary, of the amounts hereinabove appropriated for the Department of Transportation from the General Fund, $12,500,000 thereof shall be paid from funds received or receivable from the various transportation-oriented authorities pursuant to contracts between the authorities and the State as are determined to be eligible for such funding pursuant to such contracts, as shall be determined by the Director of the Division of Budget and Accounting.”

A true test of the transparency of such a statement, along with the $12.5 million, will be if the new budget specifically announces the disposition of the money as it relates to the language.

Here is one more example from the Department of Human Services, page D-209.

“Of the amount hereinabove appropriated for the NJ FamilyCare program, there shall be transferred to various accounts, including Direct State Services and State Aid accounts, such amounts, not to exceed $6,000,000, as are necessary to pay for the administrative costs of the program, subject to the approval of the Director of the Division of Budget and Accounting.”

There are also exclusions from our New Jersey budget.   It is easy to show revenue coming in from the multitude of taxes, fees, and other sources.  But what impact does this have on the budget and taxpayers when items such as tax exemptions, credits, and preferential treatments are given to some ‘groups’?  There is impact because it is money that could have been collected, so others have to make up the difference.  Our budget contains no analysis or listing of these exclusions called “tax expenditures” and whether they are justified from year to year.

Another area of the budget is most intriguing to me involves state agencies.  We are not privy to view the finances of these independent authorities on the budget, although they impact us immensely.  There are some clues of their operations when they are granted a line item in the budget.  There is one section in the budget that is called Interdepartmental Accounts, the appropriation is $3.307 billion.  The mission and goals are “…provide funds for the cost of certain services that are administered centrally on behalf of all agencies of State government.”  I would like to learn more about this section and will pass on what I find.

In my perusing of the budget I notice a lot of funds going to non-profit or not for profits presumably under contract of some sort with the state.  In the Department of Community Affairs under Program Classifications, page D-60, appears this statement.

“Provides assistance to nonprofit groups, local governments, and other local organizations in improving the quality of life for the state’s low—income population. In addition to serving as the New Jersey Office of Economic Opportunity (C.52:27D–7), supports programs for disadvantaged groups, community action agencies, community development, community recreation (especially for the disabled), the Hispanic community, weatherization and lead–based paint hazard control.  The Center for Hispanic Policy, Research and Development (CHPRD) ensures the empowerment of the Latino/Hispanic community of the state through the provision of grants to Hispanic community–based organizations for innovative programs and initiatives; technical assistance and referral services aimed at empowering Hispanic community—based organizations; creating training/employment opportunities for Hispanic college interns (a source of potential leadership); conducting and supporting research on Hispanics in New Jersey; developing public/private partnerships that would enrich CHPRD programs and initiatives and provide additional resources; and recognizing the contributions of the Latino community in New Jersey.”

Since my mind is inquisitive, I question who the numerous groups are throughout the budget that are receiving our hard earned money.  I have found through exploring some of the community groups web pages that they in turn sometimes redistribute money to other groups.  Where it ends up would require some intense investigation.

After many hours, days, even weeks of surveying our New Jersey budget I conclude that there is a lot to be desired in it’s presentation.  Transparency and plain language on the disbursements of monies would be helpful and should be carried on to future years with specific notations so we could follow the disposition of financial language provisions.  When generalized language terms are used they can cover for understated line item spending thereby minimizing the general spending outlined in the budget, giving an appearance of a reduced budget.  The maze of legal language and generalized terms used furthers the ability to hide spending and allow the shuffling of money.

For New Jersey to fix its fiscal woes, it must know where every dollar of our taxes is going, and why it is being spent.  Anything less will result in continued increases in the areas of spending, borrowing, and taxing.