Top Democrats in Trenton are weighing using an unexpected swell in collections to increase state aid for schools, issue additional aid to small businesses and bump the funding for the Homestead Benefit Program in addition to boosting the state’s pension payment beyond the $6.4 billion contribution proposed by Gov. Phil Murphy this year.
Details remain scant and negotiations between legislative leaders and the administration are still ongoing, though senior Democratic sources in the front office, Assembly and Senate said the initiatives were among the spending options being discussed for the state’s surplus of more than $10 billion.
News of the talks comes amid a swell of revenues that has seen collections come in $4.1 billion above what officials anticipated. At the same time, the state has seen a $6 billion windfall of federal aid made available through the American Rescue Plan, $1.9 trillion stimulus bill President Joe Biden signed into law in March.
Republican lawmakers have called on the governor to use the unexpected swell of funds to fully fund New Jersey’s school funding formula and return tax dollars to residents.
It’s not clear how much additional school aid could emerge from the talks, though the state may see the return of a proposal to add an additional $336 million in school funding the Murphy administration backed away from earlier this year.
Potential small business aid numbers are similarly uncertain.
The governor has previously signed into law bills providing $100 million in aid to a variety of small businesses. In early May, he announced an additional $235 million in funding for small businesses impacted by the pandemic.
Murphy on Monday said he favored boosting funding levels for Homestead, a property tax rebate program meant to defray costs for New Jersey home owners that still calculates payments based on property tax bills from 2006.
The governor and Senate President Steve Sweeney (D-West Deptford) have previously expressed openness to increasing the state’s planned pension payment — already the first full contribution in two-and-a-half decades — above $6.4 billion.
Paying down the pension debt could prove on of the more complicated proposals. Federal rules bar using American Rescue Plan funds to pay down debt or cut taxes.
Sweeney has said lawmakers were aiming to pass a budget by June 21, though optimism about that date among senior legislative and administration Democrats has faltered in recent days. They’re still not expecting much drama, and multiple sources said they felt the appropriations bill could be passed at voting sessions scheduled for June 24.
That’d still be a departure from New Jersey’s budget norms, which often see leaders on West State Street jockeying for a deal until June 30.