New Jersey

State Budget Practice Report Cards and Budget Resource Guide

New Jersey was one of nine states given a D-minus average, the lowest possible grade, by the Volcker Alliance for its handling of pension and other postretirement obligations for fiscal 2015 through 2017. It was also one of nine states with an overall D for budget forecasting and six states with an overall D for using budgetary maneuvers to achieve balance.

The New Jersey grade for legacy costs, which includes public worker pensions and other postemployment benefits, primarily health care, reflects its longtime inability to fund either program in line with actuarial recommendations. The state had only 38 percent of the assets needed to meet obligations—it tied with Kentucky for the lowest funding level—and its $135.7 billion in unfunded pension liabilities was second only to California’s $174.1 billion.

Burdened as it is with retirement funding obligations, it is of little surprise that New Jersey also scored poorly in budget maneuvers, the second of five budgetary categories the Alliance evaluated. Such one-time actions included transfers from the New Jersey Turnpike Authority and the Clean Energy Fund to the general fund and the use of expected revenue from pending legal settlements for budget-balancing purposes.

The state’s D in budget forecasting reflects a failure to create multiyear expenditure and revenue forecasts to help it prepare for financial challenges. New Jersey fared better in the reserves and transparency categories, winning average B grades for the period. As with forty-seven other states, New Jersey’s transparency grade speaks to the absence of disclosure of deferred infrastructure replacement costs. Only Alaska and California publish such estimates.

Download Printable State Report Card

To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2017 Volcker Alliance report, Truth and Integrity in State Budgeting: What Is the Reality? which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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