ASSEMBLY, No. 554

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Assemblywoman TURNER

An Act concerning binding estimates of State revenue for State budget purposes, amending the title and body of P.L.1992, c.75, and amending P.L.1944, c.112, P.L.1990, c.44, and P.L.1993, c.149.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. The title of P.L.1992, c.75 is amended to read as follows:

AN ACT creating a permanent [advisory] commission to provide State revenue forecasts, supplementing Title 52 of the Revised Statutes and making an appropriation.

(cf: P.L.1992, c.75, Title)

    2. Section 1 of P.L.1992, c.75 (C.52:9H-31) is amended to read as follows:

    1. a. There is established a commission to be known as the "State Revenue Forecasting [Advisory] Commission." The commission shall consist of eight members, of whom four shall be appointed by the Governor, two shall be appointed by the President of the Senate and two shall be appointed by the Speaker of the General Assembly, provided that no more than half of the appointments of each appointing authority shall be of the same political party.

    b. In appointing the commission members, the appointing authorities shall select individuals who have knowledge and practical experience in the private sector in the application of economic forecasting, analyzing business trends and cycles, tax accounting, and the preparation and filing of State tax returns. No member shall be a nominee for, or hold, an elective office, other than on a local board of education, or serve in government employment other than public college or university employment during the member's period of service on the commission.

    c. Members of the commission shall serve for a term of four years, except that of the appointments first made to the commission by each appointing authority, half of the appointments shall serve for a term of two years and half of the appointments shall serve for a term of four years. No more than one half of the appointments of an appointing authority may be of the same political party. The term of each member shall be deemed to commence on July 1 of the calendar year of the appointment and shall expire on June 30 of the second or fourth calendar year thereafter, as the case may be for the first or subsequent appointments, but members shall continue to serve during a succeeding term until the appointment andqualification of a successor. Any vacancy during a term shall be filled in the same manner as the original appointment but only for the balance of the unexpired term. Members shall be eligible for reappointment to successive terms. Any member of the commission may be removed for cause by the appointing authority. The members shall serve without compensation but shall be reimbursed for necessary expenses incurred in the performance of their duties, subject to the availability of funds therefor.

    d. The commission shall organize as soon as may be practicable following the appointment of its members, to elect a chairperson from among the members appointed by the President of the Senate and the Speaker of the General Assembly, and to select a secretary, who need not be a member of the commission. The commission may formulate and adopt rules of procedure and operation in furtherance of its responsibilities The commission may divide itself into such task forces and subcommittees as it deems necessary to accomplish its purposes. The commission may meet and hold hearings at such places and times as it shall designate in addition to the hearings required to be held by the commission pursuant to section 3 of P.L.1992, c.75 (C.52:9H-32).

(cf: P.L.1992, c.75, s.1)

    3. Section 2 of P.L.1992, c.75 (C.52:9H-32) is amended to read as follows:

    2. a. The commission shall engage in a continuous study of State tax and revenue collections and related economic conditions with particular attention to the periodic monitoring of revenue collections under the State's tax system and the forecasting of revenues anticipated to be received by the State during the present and next commencing fiscal year.

    b. The commission shall[, at least quarterly, make revenue forecasts which] meet and hold hearings during November, March, April, May and June annually, and during the month immediately preceding the delivery of the Governor's budget message, on or before the 15th day of each of those months, and shall establish not later than the 20th day of each of those months, estimates for the current fiscal year and the next fiscal year, of State revenue anticipated to be realized in each such fiscal year as State Treasury resources in all State funds to support appropriations, including taxes, license fees, other miscellaneous departmental revenue, and revenue transfers to the State Treasury from other funds including federal funds and any unencumbered or unexpected balances that revert to undesignated fund balances in the State Treasury.

    c. The estimates of the commission shall be provided by way of written reports, to the Governor [to assist him] and the Legislature and the most recent estimates of the commission shall be used by the Governor in the preparation of [his] the Governor's annual budget message and [in his certification of] by the Governor and the Legislature as binding estimates of revenues and undesignated fund balances available to support appropriations, and to the members of the Senate Budget and Appropriations Committee and the Assembly Appropriations Committee, or their successors, to assist them during their appropriations hearings and deliberations.

    d. The commission shall make such further interim reports to the Governor, the Legislature and the committees as it shall deem advisable, or as shall be requested by the Governor, the Legislature or by either committee. All official forecasts and reports of the commission shall be made available for public dissemination following their submission to the Governor, the Legislature or the committees. The commission shall consider the expert opinions of its members in formulating its revenue forecasts in addition to the use of traditional quantitative techniques and econometric forecasting and statistical models.

(cf: P.L.1992, c.75, s.2)

    4. Section 11 of article 3 of P.L.1944, c.112 (C.52:27B-20) is amended to read as follows:

    11. The Governor shall examine and consider all requests for appropriations, together with the findings and recommendations of the [commissioner] Director of the Division of Budget and Accounting, and the most recent revenue estimate of the State Revenue Forecasting Commission, and shall formulate [his] the Governor's budget recommendations which shall be transmitted to the Legislature as a budget message on or before the third Tuesday following the first meeting of the Legislature in each year, except a year in which a Governor shall be inaugurated, when [he] the Governor shall do so on or before February fifteenth following the commencement of [his] the Governor's term.

    The budget message shall embody the proposed complete financial program of the State Government for the next ensuing fiscal year, and shall set forth in columnar form detailed as to each source of anticipated revenue and the purposes to which the recommended appropriations and permissions to spend shall apply for each spending agency in substantially the following form:

    A. Revenues for the General [State] Fund, [State Highway System Fund] the Property Tax Relief Fund established pursuant to N.J.S.54A:9-25, the Casino Control Fund established pursuant to section 143 of P.L.1977, c.110 (C.5:12-143), the Casino Revenue Fund established pursuant to section 145 of P.L.1977, c.110 (C.5:12-145), the Gubernatorial Elections Fund established pursuant to N.J.S.54A:9-25.1, all other dedicated funds, Federal aid funds, and trust funds:

    (1) An estimate of all balances to be on hand on the first of July next ensuing which are to be available for appropriations, supported by the calculations used in arriving at the estimated figures;

    (2) An estimate of the anticipated revenues from all sources applicable to the budget period, together with the actual amount earned from each source during the last completed fiscal year, and the estimate of revenues expected to be earned from each source for the current fiscal year.

    The estimates made pursuant to this subsection A. shall incorporate the most recent estimates of the State Revenue Forecasting Commission.

    B. [Mandatory dedications:

    (1) Debt service:

    The amount reserved for the payment of interest and principal of any State bonds heretofore or hereafter issued dedicated and payable from State revenue.

    The amount reserved for payments to the State Highway Sinking Fund as provided by chapter two hundred sixty-two of the laws of one thousand nine hundred and twenty-two and chapter one hundred eighty-one of the laws of one thousand nine hundred and twenty-seven.

    (2) State aid projects as follows:

    (a) Seven million dollars ($7,000,000.00) for the construction, reconstruction, maintenance and repair, operation, policing and lighting of county roads and bridges; for the payment of principal and interest of obligations heretofore incurred for any of such purposes, and for the extension of the county highway system as follows:

    Six million dollars ($6,000,000.00) under the following formula:

    Percentage of population of each county to the total population of the State, according to the last Federal census;

    Percentage of each county road mileage as against total county road mileage in the State;

    Percentage of each county in area as against total area in the State; and

    One million dollars ($1,000,000.00) under the following formula:

    Percentage of population of each county to the total population of the State according to the last Federal census;

    Percentage of each county road mileage as against total county road mileage in the State.

    (b) Three million six hundred seventy-five thousand dollars ($3,675,000.00) to be expended pursuant to the provisions of chapter fifteen of Title 27 "Highways" of the Revised Statutes.

    (c) One million one hundred fifty-five thousand dollars ($1,155,000.00) to be expended pursuant to the provisions of section 27:14-1 of the Revised Statutes.

    (d) Five hundred twenty-five thousand dollars ($525,000.00) to be expended pursuant to sections 27:15-10 to 27:15-13, inclusive, of the Revised Statutes.

    (3) Inland Waterways:

    Ninety thousand dollars ($90,000.00) to the Board of Commerce and Navigation for the construction, reconstruction and maintenance and improvement of the inland waterways as provided by section 54:39-74 of the Revised Statutes.]Deleted by amendment, P.L. , c.   (now pending before the Legislature as this bill).

    C. Appropriations. The total of the appropriations recommended for the ensuing fiscal year in substantially the following form:

    Detailed Budget:

    (1) An itemized statement of all appropriation requests and requests for permission to spend from the General [State] Fund, [State Highway System Fund] the Property Tax Relief Fund established pursuant to N.J.S.54A:9-25, the Casino Control Fund established pursuant to section 143 of P.L.1977, c.110 (C.5:12-143), the Casino Revenue Fund established pursuant to section 145 of P.L.1977, c.110 (C.5:12-145), the Gubernatorial Elections Fund established pursuant to N.J.S.54A:9-25.1, other dedicated funds and Federal aid and trust funds;

    (2) An itemized statement of the amounts recommended by the Governor with respect to item "1" above;

    (3) An itemized statement of all amounts appropriated and permissions granted for the current fiscal year with respect to item "1" above;

    (4) An itemized statement of all amounts appropriated and permissions granted for the last preceding fiscal year with respect to item "1" above detailed as to annual and supplemental appropriations, transfers of appropriations, State Emergency Fund allotments, and permission to spend, as the case may be, and showing also total expenditures, reserves, lapses and unencumbered balances;

    (5) In addition, such other statistical information as may more fully show comparisons and costs of the several departments.

(cf: P.L.1946, c.199, s.1)

    5. Section 12 of article 3 of P.L.1944, c.112 (C.52:27B-21) is amended to read as follows:

    12. The Governor may recommend in connection with [his] the Governor's budget message and under separate head new or additional sources of revenue, and set forth in connection therewith [his] the Governor's recommendations as to the purpose or purposes to which such proposed new or additional revenue may be appropriated. The total of the recommendations in the budget shall not be in excess of the most recent estimate by the State Revenue Forecasting Commission of all funds available for disbursement during the fiscal year to which such recommendations are applicable.

(cf: P.L.1944, c.112, art.3, s.12)

    6. Section 13 of article 3 of P.L.1944, c.112 (C.52:27B-22) is amended to read as follows:

    13. All applications by a spending agency for supplemental appropriations not included in the budget message shall be made, in the first instance, to the [commissioner] Director of the Division of Budget and Accounting in the Department of the Treasury in substantially the same form as is required for regular requests, setting forth how much of the amount requested will be expended in each quarter of the fiscal year. The [commissioner] director shall certify and transmit forthwith such application to the Governor, together with [his] the director's findings, comments and recommendations thereon. The Governor shall transmit to the chairman of the [joint appropriations] Assembly Appropriations Committee and the chairman of the Senate Budget and Appropriations Committee such applications as [he] the Governor shall approve in whole or in part with [his] the Governor's recommendations thereon, but the Governor shall not approve and recommend any appropriation in excess of the total anticipated funds estimated to be available according to the most recent estimate by the State Revenue Forecasting Commission for disbursement during the fiscal year to which such recommendations are applicable.

(cf: P.L.1944, c.112, art.3, s.13)

    7. Section 17 of article 3 of P.L.1944, c.112 (C.52:27B-26) is amended to read as follows:

    17. In order to protect against and meet emergencies that may arise during each fiscal year, the [commissioner] Director of the Division of Budget and Accounting in the Department of the Treasury shall have the power to set aside a reserve out of each appropriation, the exact amount of which shall be determined by [him] the director. Any time during the fiscal year that occasion may require this reserve or any portion of it may be returned to the appropriation to which it belongs, providing the [commissioner] director finds such action necessary.

    Whenever it appears to the satisfaction of the Governor that revenues have fallen seriously below those anticipated according to the most recent estimate by the State Revenue Forecasting Commission, the [commissioner] director, on order of the Governor, shall have the power to revise the quarterly allotments.

(cf: P.L.1944, c.112, art.3, s.17)

    8. Section 37 of article 3 of P.L.1944, c.112 (C.52:27B-46) is amended to read as follows:

    37. The Director of the Division of Budget and Accounting shall prepare, within 60 days following December 31 and 90 days following the last day in which annual appropriations are available for expenditure during each fiscal year, a complete report showing:

    a. Balance sheet of all assets and liabilities for all State funds.

    b. Statement of General State Fund accrued revenues as compared with anticipated revenues.

    c. Summary report of the General State Fund showing the condition of the appropriations, which shall reflect the original appropriation, supplemental appropriations, appropriated revenue, reappropriations, transfers to and from, allotments from the emergency fund and expenditures made against such appropriations.

    d. Such other information as he may deem necessary and proper.

    Such statement, certified by the director, shall be transmitted forthwith to the Governor, and shall be and remain a public document on file in the office of the director, subject to inspection by any citizen of the State, who shall have the right to make or obtain copies thereof under such reasonable regulations as the director may prescribe. Copies of said statement shall be transmitted at the same time to the President of the Senate, the Speaker of the General Assembly, the chairman of the respective appropriation committees, the chairman and secretary of the State Revenue Forecasting Commission, the State Treasurer and the State Auditor. In addition the director shall prepare a summarized monthly report of the General State Fund no later than 30 days following the end of each month which shall reflect the accrued revenues as compared with anticipated revenues, itemized by revenue source for major taxes, by department for miscellaneous revenues, by department for major sources of Federal aid budgeted and with information on income to the General State Fund from the major dedicated and trust funds. The report shall reflect the condition of the appropriations and other such data which the director shall determine.

(cf: P.L.1977, c.158, s.1)

    9. Section 3 of P.L.1990, c.44 (C.52:9H-16) is amended to read as follows:

    3. The amount to be annually credited to the Surplus Revenue Fund shall be determined by the State Treasurer in the following manner:

    a. He shall identify the amount of General Fund anticipated revenue [certified by the Governor] established pursuant to the provisions of Article VIII, Section II, paragraph 2 of the State Constitution upon the approval of the annual appropriation act for the fiscal year immediately preceding the fiscal year in which a credit to the "Surplus Revenue Fund" is required.

    b. He shall determine, from the annual financial report of the General Fund for the fiscal year immediately preceding the fiscal year in which a credit to the "Surplus Revenue Fund" is required, the amount of revenue actually deposited in the General Fund in that fiscal year. If in any preceding fiscal year for which a determination under this subsection is to be made, there is a law enacted which will increase the revenue to the General Fund, the yield from that increase for that preceding fiscal year in which the increase is in effect shall be disregarded in determining the amount to be credited to the "Surplus Revenue Fund."

    c. The amount of the credit to the "Surplus Revenue Fund" shall be an amount equivalent to 50% of the excess, if there be any, of the amount determined in subsection b. of this section over the amount determined in subsection a. of this section. If actual revenue collections pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., for the fiscal year immediately preceding the fiscal year in which a credit to the "Surplus Revenue Fund" is required are less than the amount of revenue collections pursuant to that act as [certified by the Governor] established pursuant to the provisions of Article VIII, Section II, paragraph 2 of the State Constitution upon the approval of the annual appropriation act for that fiscal year, the amount of the credit to the "Surplus Revenue Fund" otherwise calculated pursuant to this section shall be reduced by the difference between the amount so [certified] established and the actual collections.

(cf: P.L.1990, c.44, s.3)

    10. Section 4 of P.L.1990, c.44 (C.52:9H-17) is amended to read as follows:

    4. The Governor shall include in [his] the Governor's annual budget message to the Legislature an estimate of the credit to be made to the "Surplus Revenue Fund" as a reduction of the estimated undesignated fund balance in the General Fund as of July 1 of the fiscal year for which [he] the Governor is making [his] budget recommendations. The amount estimated by the Governor for this purpose shall not be less than 50% of the difference between the amount [certified by him] established pursuant to the provisions of Article VIII, Section II, paragraph 2 of the State Constitution upon the approval of the annual appropriation act for the fiscal year immediately preceding the fiscal year for which [his] the budget recommendations are being made and the amount of revenue anticipated for that preceding fiscal year as reflected in the annual budget message for that preceding fiscal year.

(cf: P.L.1990, c.44, s.4)

    11. Section 5 of P.L.1990, c.44 (C.52:9H-18) is amended to read as follows:

    5. Balances in the "Surplus Revenue Fund" shall not be available for appropriation except as provided in this act. Balances in the "Surplus Revenue Fund" may be appropriated by the Legislature only: a. upon separate certification by the Governor that anticipated revenues in the General Fund are estimated according to the most recent estimate by the State Revenue Forecasting Commission to be less than those [certified by him] established pursuant to the provisions of Article VIII, Section II, paragraph 2 of the State Constitution upon the approval of the annual appropriation act; or b. upon a finding by the Legislature, based on its research, that to offset revenue declines anticipated in the General Fund an appropriation from the "Surplus Revenue Fund" is a more prudent fiscal policy than imposing new taxes or increasing any rate of tax or otherwise modifying the tax structure, including elimination or modification of deductions, exclusions or exemptions.

(cf: P.L.1990, c.44, s.5)

    12. Section 7 of P.L.1990, c.44 (C.52:9H-20) is amended to read as follows:

    7. a. If in any fiscal year there is enacted an appropriation from the "Surplus Revenue Fund" pursuant to section 5 of this act, there shall not be enacted any imposition of new taxes or increases in existing tax rates or tax structure modifications having the effect of increasing revenues except as provided in subsection b. of this section.

    b. If the amount of the decline in revenue collections in the General Fund is greater than the equivalent of 2% of the total available resources in the General Fund as [certified by the Governor] established pursuant to the provisions of Article VIII, Section II, paragraph 2 of the State Constitution upon the approval of the annual appropriation act for the fiscal year in which that revenue decline is anticipated, the restrictions of subsection a. of this section shall not apply and the balances in the "Surplus Revenue Fund" may be appropriated in any other manner as found to be in the best interests of the fiscal condition of the General Fund.

(cf: P.L.1990, c.44, s.7)

    13. Section 8 of P.L.1990, c.44 (C.52:9H-21) is amended to read as follows:

    8. Notwithstanding the restrictions on the appropriation of the balances in the "Surplus Revenue Fund" imposed by section 5 of this act, if balances in the fund exceed an amount equivalent to 5% of the amount [certified by the Governor] established pursuant to the provisions of Article VIII, Section II, paragraph 2 of the State Constitution as total anticipated revenues in the General Fund and the Property Tax Relief Fund upon the approval of the annual appropriation act, the State Treasurer shall send written notice of the amount of that excess to the Governor and to the Legislature through the Senate [Revenue, Finance] Budget and Appropriations Committee and the Assembly Appropriations Committee, or their successor committees or committee. The excess amount as identified in the notice from the State Treasurer shall be available for appropriation by the Legislature in accordance with section 9 of this act.

(cf: P.L.1990, c.44, s.8)

    14. Section 3 of P.L.1993, c.149 (C.52:9H-36) is amended to read as follows:

    3. The council shall:

    a. Submit to the Governor, the State Revenue Forecasting Commission and the Legislature a comprehensive annual report analyzing current economic conditions and forecasting future economic trends, which report shall be submitted not later than January 31 of each year.

    b. Submit to the Governor, the State Revenue Forecasting Commission and the Legislature and any executive department or agency of State government such special and supplementary reports as it deems appropriate in accordance with the purposes of this act.

    c. Assist the members of the Senate Budget and Appropriations Committee and the Assembly Appropriations Committee, or their successors, during their appropriations hearings and deliberations, by providing to these committees, by May 15 of each year, forecasts of economic conditions for the coming fiscal year.

    d. Assist the State Revenue Forecasting Commission and the Governor in the preparation of [his] the Governor's annual budget message, by providing the Governor and commission, by November 15 of each year, forecasts of economic conditions for the coming fiscal year.

    e. Assist the State Revenue Forecasting [Advisory] Commission by providing [it] them timely analyses of current and anticipated future economic conditions.

    f. Advise the Governor, the State Revenue Forecasting Commission and the Legislature and any executive department or agency of the State government on issues involving the use of economic data and explain the methodologies utilized to analyze this data.

    g. Make available for public dissemination all official copies of reports, with supporting analyses and data, following their submission to the Governor, the State Revenue Forecasting Commission, or the Legislature or its committees.

(cf: P.L.1993, c.149, s.3)

    15. This act shall take effect upon approval by the voters of a constitutional amendment to Article VIII, Section II, paragraph 2 of the State Constitution making the most recent estimate of the State Revenue Forecasting Commission binding upon the State budget actions of the Governor and the Legislature.

STATEMENT

    This bill makes binding the State revenue estimates of the current State Revenue Forecasting Advisory Commission for purposes of the State Constitution's balanced budget provision. Currently the Constitution provides that the Governor has the sole responsibility to certify whether there will be enough revenue to meet an appropriation. The bill implements a constitutional amendment proposed in a companion concurrent resolution that gives the renamed State Revenue Forecasting Commission the responsibility for determining whether there will be enough revenue to meet, and therefore permit enactment of, an appropriation.

    The current eight member bi-partisan advisory committee will be required to meet and hold hearings during November, March, April, May and June annually, and the month preceding the date of the Governor's budget message, on or before the 15th day of each of those months, and will establish not later than the 20th day of each of those months, estimates for the current fiscal year and the next fiscal year, of State revenues and unexpended appropriations balances. These estimates will be relied upon by the Governor for the annual budget message and in the administration of the Surplus Revenue Fund and the annual appropriations act. The estimates of the commission will also be available to the Legislature to assist in enacting a balanced State budget.

    The current method employing the Governor's certification of revenue made upon approval of the annual appropriations act is customarily subject to irregular and informal revisions by the Governor or the State Treasurer during a fiscal year. This current system has contributed to the intrusion of institutional biases and partisan politics into the delicate constitutional task of planning and implementing a balanced State budget. While no system can eliminate the uncertainty inherent to revenue forecasting, it is the purpose of this bill to provide the institutional arrangement that will result in the most reliable and universally accepted revenue estimates. The State Revenue Forecasting Commission will draw upon the expertise and experience of the current professional and political participants but with the designated goal of establishing binding estimates upon all budget making participants instead of subjecting revenue estimates from different quarters to the political workings of the budget making process.

Requires State Revenue Forecasting Commission to establish binding estimates of State revenue for State budget.