ASSEMBLY BUDGET COMMITTEE

STATEMENT TO

ASSEMBLY, No. 442

with committee amendments

STATE OF NEW JERSEY

DATED:  DECEMBER 6, 2018

      The Assembly Budget Committee reports favorably Assembly Bill No. 442, with committee amendments.

     As amended, this bill establishes a joint legislative and executive branch New Jersey Revenue Advisory Board to provide consensus revenue forecasting advice for State budget purposes.  About half of the states successfully employ a “consensus” forecasting process.  A "consensus" process has the virtue of eliminating controversy and allows the participants to focus more clearly on the underlying budgetary issues each year.  In addition, the process outlined in this bill will provide greater public input and transparency to the revenue forecast.

     The New Jersey Revenue Advisory Board will consist of the State Treasurer, ex officio, the Legislative Budget and Finance Officer, ex officio, and a third public member jointly selected by the two State officials.  The third public member shall be qualified by education, training or experience related to State tax policy and revenue analysis.  The bill requires that the advisory board hold at least one public hearing during the second quarter of each State fiscal year to receive public testimony and invite participants who can provide guidance on the current conditions in, and probable outlook for the performance of the economy of the State, as well as the effect of such conditions and such performance on State revenues.  The board must adopt its advisory consensus forecast at a public meeting held on or before January 15 of each State fiscal year and readopt or revise the advisory consensus forecast at a public meeting held on or before May 15 of each fiscal year.

     While the bill does not change the State constitutional responsibility given exclusively to the Governor to certify State revenue available to support annual State appropriations, the bill requires the Governor to explain in the Governor's annual Budget Message any difference in revenue estimates made in the Budget Message compared to the advisory consensus forecasts of State revenues prepared by the board.  The bill also requires the Governor to provide with the Governor's certification of revenue an explanation of any difference in the revenue certification from the latest fiscal year advisory consensus forecast made by the board.

     The existence of the board will encourage collaboration in formulating the professional forecasting advice given by State budget officials on State revenues.  It is intended to promote agreed-upon revenue estimates as a starting point for the budget-making policy debates involving the executive and legislative branch, and encourage a more thorough and regular public discussion of State revenue estimates in advance of State budget deadlines.

     To ensure effective collaboration prior to the formulation of the board’s consensus forecasts, the State Open Public Records Act will not apply to any memorandum, correspondence, notes, report or other communication prepared by, or for the specific use of, a member of the board in the course of the board’s or board member’s consultations, deliberations or official duties except for otherwise publicly accessible reports.

This bill was pre-filed for introduction in the 2018-2019 session pending technical review. As reported, the bill includes the changes required by technical review, which has been performed.

COMMITTEE AMENDMENTS:

      The amendments make technical changes to the bill. The amendments to sections 1 and 5 provide that the advisory board’s first meeting will take place in 2019, instead of 2017. The change to section 4 merely incorporates the language of the latest version of the statute that is amended by the bill.

FISCAL IMPACT:

      This bill has not been certified as requiring a fiscal note.