TAX AND REVENUE OUTLOOK...Benjie E. Wimberly (D), 35th District (Parts of Bergen and Passaic) OFFICE...

Prepared by the

April 2019

Of f i c e o f Of f i c e o f L E G I S L AT I V E S E R V I C E SL E G I S L AT I V E S E R V I C E SNew Jersey LegislatureNew Jersey Legislature

TAX AND REVENUE OUTLOOK

A N A LY S I S O F T H E N E W J E R S E Y B U D G E T

F I S C A L Y E A R 2019-2020

S E N AT E B U D G E T A N D A P P R O P R I AT I O N S C O M M I T T E E

Paul A. Sarlo (D), 36th District (Parts of Bergen and Passaic), ChairSandra B. Cunningham (D), 31st District (Part of Hudson), Vice-ChairDawn Marie Addiego (D), 8th District (Parts of Atlantic, Burlington and Camden)Bob Andrzejczak (D), 1st District (All of Cape May, Parts of Atlantic and Cumberland)Nilsa Cruz-Perez (D), 5th District (Parts of Camden and Gloucester)Patrick J. Diegnan Jr. (D), 18th District (Part of Middlesex)Linda R. Greenstein (D), 14th District (Parts of Mercer and Middlesex)Declan J. O’Scanlon, Jr. (R), 13th District (Part of Monmouth)Steven V. Oroho (R), 24th District (All of Sussex, and parts of Morris and Warren)M. Teresa Ruiz (D), 29th District (Part of Essex)Troy Singleton (D), 7th District (Part of Burlington)Samuel D. Thompson (R), 12th District (Parts of Burlington, Middlesex, Monmouth and Ocean)

G E N E R A L A S S E M B LY B U D G E T C O M M I T T E E

Eliana Pintor Marin (D), 29th District (Part of Essex), ChairJohn J. Burzichelli (D), 3rd District (All of Salem, parts of Cumberland and Gloucester), Vice-ChairDaniel R. Benson (D), 14th District (Parts of Mercer and Middlesex)Robert D. Clifton (R), 12th District (Parts of Burlington, Middlesex, Monmouth and Ocean)John DiMaio (R), 23rd District (Parts of Hunterdon, Somerset and Warren)Gordon M. Johnson (D), 37th District (Part of Bergen)Patricia Egan Jones (D), 5th District (Parts of Camden and Gloucester)John F. McKeon (D), 27th District (Parts of Essex and Morris)Raj Mukherji (D), 33rd District (Part of Hudson)Nancy F. Munoz (R), 21st District (Parts of Morris, Somerset and Union)Carol A. Murphy (D), 7th District (Part of Burlington)Edward H. Thomson (R), 30th District (Parts of Monmouth and Ocean)Benjie E. Wimberly (D), 35th District (Parts of Bergen and Passaic)

O F F I C E O F L E G I S L AT I V E S E R V I C E S

Frank W. Haines III, Legislative Budget and Finance Offi cerThomas Koenig, Assistant Legislative Budget and Finance Offi cer

Marvin W. Jiggetts, Director, Central Staff David Drescher, Section Chief, Revenue, Finance and Appropriations Section

NEW JERSEY STATE LEGISLATURENEW JERSEY STATE LEGISLATURE

This report was prepared by the Revenue, Finance and Appropriations Section of the Offi ce of Legislative Services under the direction of the Legislative Budget and Finance Offi cer.

The primary authors were Jordan M. DiGiovanni and Scott A. Brodsky.

Questions or comments may be directed to the OLS Revenue, Finance and Appropriations Section (Tel. 609 847-3835) or the Legislative Budget and Finance Offi ce (Tel. 609 847-3105).

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The FY 2019 and FY 2020

Office of Legislative Services

Tax and Revenue Outlook

Introduction

he Office of Legislative Services (OLS) has prepared this report to assist the members of the Senate Budget and

Appropriations Committee and the Assembly Budget Committee as they develop the FY 2020 annual appropriations bill. The OLS revenue estimates rely on a review of current State revenue collections, revisions to State and federal laws, historical revenue collection patterns, and a variety of economic data and forecasts, as well as professional judgment.

The OLS projects that combined FY 2019

and FY 2020 revenues will be $292 million

less than the estimates in the FY 2020

Governor's Budget Recommendation: • For FY 2019, the OLS revenue estimates are $109.2 million below the Executive budget estimates (page 2). • For FY 2020, the OLS revenue estimates are $182.8 million below the Executive budget estimates (page 3).

Contents

Page

Fiscal Year 2019 Revenue Estimates ............................................... 2 Fiscal Year 2020 Revenue Estimates ............................................... 3 Gross Income Tax ........................................................................... 4 Sales Tax ......................................................................................... 7 Corporation Business Tax ................................................................ 8 Corporation Business Tax – Banking and Financial Corporations .… Petroleum Products Gross Receipts Tax and Motor Fuels Tax .........

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Cigarette Tax ……………................................................................... 11 Realty Transfer Fees …………………………………………………………. Inheritance Taxes …………………………………………………………….. Insurance Premiums Tax ……………………………………………………. Casino Revenue Fund ……………………………………………………….. The Budget’s Year-End Balance .......................................................

12 13 14 15 16

Appendices: Detailed Fiscal Year 2019 Revenue Estimates ............................. A-2 Detailed Fiscal Year 2020 Revenue Estimates ............................. A-3 New Jersey Tax Amnesty Programs ……………………………..…….. A-4

T

OLS Tax and Revenue Outlook FY 2019-2020

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Fiscal Year 2019 Revenue Estimates

Figure 1:

Fiscal Year 2019 Revenue Estimates ($ millions)

Certified Amount

Revised

Amount Change

OLS Est.

Amount

OLS vs. GBM

Difference

Gross Income Tax $15,977.7 $15,562.6 -$415.1 $15,531.4 -$31.2

Sales Tax* 10,136.1 10,057.5 -78.6 9,934.2 -123.3

Corporation Business Tax* 3,046.1 3,708.6 662.5 3,786.0 77.4

CBT Banking & Financial Corporations 202.7 328.6 125.9 339.2 10.6

Petroleum Products GR Total 1,360.5 1,466.4 105.9 1,466.4 0.0

Less PPGR Capital Reserves -725.0 -837.0 -112.0 -830.9 6.1

Inheritance Taxes 457.6 489.2 31.6 481.9 -7.3

Insurance Premiums Tax 597.0 558.7 -38.3 502.6 -56.1

Realty Transfer Fee 378.8 370.5 -8.3 378.8 8.3

$1 Million Assessed Properties 134.0 144.5 10.5 151.4 6.9

Alcoholic Beverage Excise 108.4 114.0 5.6 113.4 -0.6

Other Revenues* 5,736.4 5,774.1 37.7 5,774.1 0.0

Grand Total, All Funds $37,410.3 $37,737.7 $327.4 $37,628.5 -$109.2

See appendices for additional detail. Numbers may not add due to rounding.

* Sales and corporate energy revenues are in Other Revenues.

Governor's Budget Message (GBM)

Figure 1 presents the FY 2019 revenue certification from the Appropriations Act (July 2018), the Executive's revisions as presented in the March 2019 Governor's Budget Message, and the OLS forecast. Highlights of the revenue estimates include:

Executive Office of Legislative Services

• Revised estimates for total revenues are up by $327.4 million from the level certified in the FY 2019 Appropriations Act.

• The total revenue estimate for FY 2019 is

$109.2 million below the Executive's revised projections.

• The estimate for the gross income tax is down $415.1 million.

• The estimate for the gross income tax is $31.2 million below the Executive's.

• The estimate for the sales tax is down

$78.6 million.

• The estimate for the sales tax is $123.3

million below the Executive’s.

• The estimate for the corporation business

tax is up $662.5 million.

• The estimate for the corporation business

tax is $77.4 million above the Executive's.

• The total petroleum products gross receipts tax, including the capital reserves, is up $105.9 million.

• The OLS agrees with the Executive’s petroleum products gross receipts tax estimate, but differs on the amount allocated for capital reserves.

• The inheritance taxes estimate is up $31.6 million.

• The inheritance taxes estimate is $7.3 million below the Executive's.

• The estimate for the insurance premiums tax is down $38.3 million.

• The estimate for the insurance premiums tax is $56.1 million below the Executive's.

• Other revenues are up by $37.7 million

from the levels certified.


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Fiscal Year 2020 Revenue Estimates

Figure 2

Fiscal Year 2020 Revenue Estimates ($ millions)

Amount

Annual

Change Amount

Annual

Change

Gross Income Tax $16,639.4 6.9% $16,551.3 6.6% -$88.1

Sales Tax* 10,456.2 4.0% 10,234.1 3.0% -222.1

Corporation Business Tax* 3,217.4 -13.2% 3,281.0 -13.3% 63.6

CBT Banking & Financial Corporations 271.3 -17.4% 315.0 -7.1% 43.7

Petroleum Products GR Total 1,498.5 2.2% 1,602.0 9.2% 103.5

Less PPGR Capital Reserves -729.3 -12.9% -832.8 0.2% -103.5

Inheritance Taxes 395.2 -19.2% 408.9 -15.1% 13.7

Insurance Premiums Tax 513.9 -8.0% 500.0 -0.5% -13.9

Realty Transfer Fee 370.5 0.0% 378.8 0.0% 8.3

$1 Million Assessed Properties 144.5 0.0% 151.4 0.0% 6.9

Alcoholic Beverage Excise 111.7 -2.0% 116.8 3.0% 5.1

Other Revenues* 5,943.6 2.9% 5,943.6 2.9% 0.0

Grand Total, All Funds $38,832.9 2.9% $38,650.1 2.7% -$182.8

See appendices for additional detail. Numbers may not add due to rounding.

* Sales and corporate energy revenues are in Other Revenues.

Governor's Budget Message (GBM) OLS Estimates

OLS vs. GBM

Difference

Figure 2 displays the Executive FY 2020 revenue estimates as presented in the March 2019 Governor's Budget Message and the OLS forecast. Highlights of the revenue estimates include:

Executive Office of Legislative Services

• The total revenue estimate for FY 2020 is

$1.095 billion above FY 2019, a 2.9% increase.

• The OLS estimate for FY 2020 is $182.8

million below the Executive’s projection, and 2.7% above its estimated FY 2019 total.

• The gross income tax estimate is up

$1.077 billion, or 6.9%. • The gross income tax estimate is $88.1

million below the Executive’s.

• The sales tax estimate is up $398.7 million, or 4.0%.

• The sales tax estimate is $222.1 million below the Executive’s.

• The corporation business tax estimate is down $491.2 million, or 13.2%.

• The corporation business tax estimate is $63.6 million above the Executive’s.

• The CBT banking and financial corporations estimate is down $57.3 million, or 17.4%.

• The CBT banking and financial corporations estimate is $43.7 million above the Executive’s.

• The petroleum products gross receipts tax estimate is up $32.1 million, or 2.2%.

• The petroleum products gross receipts tax estimate is $103.5 million above the Executive, with more receipts allocated for capital reserves.

• The inheritance taxes estimate is down $94.0 million, or 19.2%.

• The inheritance taxes estimate is $13.7 million above the Executive’s.

• The insurance premiums tax estimate is down $44.8 million, or 8.0%.

• The insurance premiums tax estimate is $13.9 million below the Executive’s.


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Note: Unless otherwise referenced, all graphs display actual or OLS estimated revenues.

Gross Income Tax The gross income tax (GIT) is the State’s largest revenue, accounting for roughly 41.3 percent of the projected revenues for FY 2019. FY 2018 was the eighth consecutive year of annual growth, far surpassing more recent fiscal years with collections increasing by roughly 7.7 percent. A large part of the growth in FY 2018 collections was attributable to non-recurring, one-time effects from changes in the federal tax code, such as the repatriation of deferred compensation from hedge fund managers and taxpayers potentially shifting income between tax years to take advantage of more favorable federal tax rates. The Executive has stated that the repatriation of deferred compensation yielded $253 million in non-recurring revenue.

Fiscal Year 2019 Through the first eight months of FY 2019, the GIT was down 5.1 percent, roughly $478.5 million below the same period last

year. The decline is due to an anticipated significant drop in estimated payments made during December and January. The drop largely appears to be the echo of a one-time surge in last year’s December and January estimated payments that was induced by the enactment of the federal Tax Cuts and Jobs Act. Certain taxpayers with significant non-wage income, such as capital gains, dividends, and partnership income, are required to make quarterly estimated payments throughout the tax year. These payments are due towards the middle of April, June, September, and January. The federal Tax Cuts and Jobs Act placed a new $10,000 cap on the federal income tax deduction for state and local taxes (SALT) starting in tax year 2018. Both the Executive and the OLS believe that in order to maximize deductions in tax year 2017, some taxpayers made larger estimated payments during December 2017, to the detriment of


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final payments in April 2018. The Executive believes these additional payments totaled approximately $200 million.

As indicated in Figure 4, aggregate estimated payments received in December and January of FY 2018 totaled $1.662 billion, an increase of $414.7 million. Absent the estimated $253 million in non-recurring revenue and the accelerated payment of $200 million, receipts would have been around $1.209 billion. FY 2019 estimated payments made during the same period dropped $674.7 million. This drop exceeded expectations and suggests that taxpayers shifted their tax payment behavior among tax years 2017, 2018, and 2019 even more than previously thought. Other states, including California, Massachusetts, and Connecticut, also experienced significant declines in estimated payments and attributed the declines to the changes in the federal tax code. Examining other components of the GIT, year-to-date withholding receipts were up approximately three percent, direct payments

were down and refunds were up about 11.8 percent. For FY 2019, the Executive has revised its GIT estimate downward by $415.1 million from the amount certified in July, to $15.563 billion, 3.5 percent growth over FY 2018. The Executive’s estimate for FY 2019 includes a net $219.5 million in revenue from State tax policy changes. Revenue gains resulted from the State’s tax amnesty program ($67.7 million) and the 10.75 percent marginal tax rate levied on gross income in excess of five million dollars ($275 million). Other tax policy changes that reduce collections include the increase in the earned income tax credit ($27.2 million), the increase in the State property tax deduction ($82.2 million), and the child and dependent tax care credit ($14 million). Lastly, an accounting adjustment at the end of FY 2018 resulted in $197 million in GIT receipts being shifted to the corporation business tax, reducing the FY 2018 GIT base and contributing to the downward revision. As is true in most years, the forecast is tied to how the minority of taxpayers who pay the majority of the GIT fared during the prior year. Typically, high-income taxpayers derive a larger share of their annual income


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from more volatile sources than salaries and wages. As a result, they pay the bulk of April final payments and quarterly estimated payments. The assumption shared by both the Executive and the OLS relies on an “April Surprise” of historical magnitude, since taxpayers made significantly lower in estimated payments in December and January. Considering the various tax policy changes and accounting adjustments impacting FY 2019 collections, the OLS is projecting $15.531 billion in GIT collections, roughly $31.2 million less than the Executive. All told, the OLS is anticipating robust growth in final and estimated payments this spring. The OLS assumes that refunds will continue to grow over the remaining months of the fiscal year as a result of previously mentioned policy changes. Lastly, the OLS assumes that the underlying year-to-date trend of about three percent growth in withholding payments will continue. The degree of uncertainty inherent in this forecast, however, is substantially higher than in the average year because of the disruptive effect the federal Tax Cuts and Jobs Act has had on established GIT payment patterns by taxpayers with significant non-wage income.

Fiscal Year 2020 The Executive’s FY 2020 GIT estimate is impacted by legislative enactments during prior fiscal years and a proposal to increase the tax rate imposed on income greater than one million dollars, but less than five million dollars, from 8.97 percent to 10.75 percent. Overall, the Executive projects 6.9 percent growth for the GIT in FY 2020, yielding $16.639 billion.

For purposes of this analysis, OLS accepts the Executive’s estimate of $447 million for the tax rate increase, which has been the historical precedent set by OLS when policy initiatives are included as part of the Executive’s original budget proposal. However, the OLS projects a lower growth rate of 6.6 percent off the OLS’ lower FY 2019 base, yielding $16.551 billion, or $88.1 million less than the Executive. The OLS’ GIT estimate for FY 2020 assumes further growth in withholding receipts at a rate of four percent, as the labor market continues to tighten and the potential for wage growth increases. Withholding accounts for about three-quarters of total GIT collections each year, so the assumption of continued withholding growth is a primary driver of the OLS’ overall forecast for FY 2020. Again, the uncertainty inherent in this forecast is particularly elevated this year. Additionally, the OLS’ FY 2020 GIT estimate rests on the assumption of continued positive growth in quarterly estimated payments and final payments by high-income taxpayers. Estimated payments in FY 2020 are expected to see modest growth given current market and economic conditions. Further, the enactment of the Executive’s policy proposal would likely drive estimated payments and final payments upward, since high-income taxpayers are the ones impacted by the proposal. Refunds are expected grow as taxpayers generate additional income and prior legislative enactments continue to impact GIT revenues. Specifically, the Executive is anticipating the phase up of the earned income tax credit to 39 percent of the federal credit to reduce GIT collections by an additional $32 million.


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Sales Tax Despite a two-step decrease in the sales tax rate from seven percent at the end of 2016 to 6.625 percent on January 1, 2018, the sales tax has continued to produce reliable, moderate rates of growth. FY 2019 performance is up 3.1 percent through the end of February compared to the same months last year. Year-to-date collections include $104.4 million from the State’s tax amnesty program. Adjusting for the differences in tax rates during the first half of FY 2019 and FY 2018 and for amnesty collections, underlying sales tax growth for the year is closer to 4.6 percent. Several other recent policy changes are expected to impact sales tax receipts in FY 2019 and FY 2020. Most significantly, P.L.2018, c.132, was enacted following the recent Supreme Court decision, South Dakota v. Wayfair, to help capture sales tax revenues from remote sellers. However, most sellers took advantage of a provision in the bill which delayed implementation of collection requirements for 180 days. The Executive now expects this law to generate revenues totaling $130 million in FY 2019 and an additional $60 million in FY 2020, for a total of $190 million in FY 2020. Other changes include the expansion of the sales tax to transient accommodations, valued at $8 million annually, and the regulatory expansion of the medical cannabis program, which is expected to yield $5 million in revenue for FY 2019 and an additional $15 million for FY 2020, for a total of $20 million in FY 2020. The Executive decreased its estimate from the $10.136 billion certified last July to $10.057 billion, a drop of $79 million. The Executive expects the sales tax to grow by 4.6 percent in FY 2019. For FY 2020, the Executive estimates $10.456 billion, a four percent increase over its revised FY 2019 estimate. Growth in sales tax collections has slowed down in recent months, and given the delay in implementation for the collection of taxes from remote sellers, the OLS has also adjusted its forecast downward. In FY 2019, the OLS is estimating $9.934 billion, $123.3 million less than the Executive, and $10.234 billion in FY 2020, $222.1 million below the Executive. The difference in the OLS and Executive estimates is mainly due to the OLS’ assumption of a lower base in FY 2019.


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Corporation Business Tax

As stated in prior years’ OLS Tax and Revenue Outlook, the corporation business tax (CBT) is among the most difficult revenues to project, in part because of the lack of a clear correlation between corporate profits and CBT collections. Furthermore, annual collections typically include both payments and refunds from multiple tax years. Business incentive tax credits, which can be delayed, transferred to other taxpayers and applied to other taxes, or adjusted for tax planning purposes, also confound revenue forecasts. Unknown corporate accounting practices and extensive policy changes at the State and federal level in recent years also affect annual payments and produce an unusually high degree of forecasting risk for FY 2019 and FY 2020. In FY 2019, CBT receipts have benefited from policy changes at both the State and federal level. For the first two tax years beginning on or after January 1, 2018, through December 31, 2019, CBT taxpayers with New Jersey allocated taxable net income in excess of one million dollars are required to pay a temporary 2.5 percent surtax on their income. Additionally, the State implemented combined reporting requirements for tax years ending on and after July 31, 2019. Furthermore, in December 2017, the federal Tax Cuts and Jobs Act was enacted, reforming the federal tax code and reducing the top corporate income tax rate from 35 percent to 21 percent. These changes also included an expansion of the federal corporate tax base by establishing new categories of income, which the State now includes as part of the calculation for determining entire net income. Current revenue collections also include several non-recurring amounts, such as an Executive-estimated $200 million from the repatriation of certain earnings held overseas, $81.8 million from the State’s tax amnesty program, and $100 million from a one-time corporate asset sale. In total, the Executive has valued these non-recurring revenues at $481.8 million for FY 2019. Further complicating CBT projections has been the ongoing accumulation of CBT tax credits, which depress revenue growth. For FY 2020, the Executive is projecting an $89 million increase in the amount of tax credits redeemed against CBT tax liabilities. The Executive’s revised estimate increases the certified FY 2019 projection of $3.046 billion to $3.709 billion, 64.2 percent growth over FY 2018. For FY 2020, the Executive projects $3.217 billion, a decrease of 13.3 percent from FY 2019. Collections through February indicate CBT


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revenues are up 95.6 percent year-to-date, and preliminary data from the State’s accounting system show additional growth in March. Given the current rate of growth for CBT collections and the performance of estimated payments during the quarterly payment months, the OLS estimates $3.808 billion in FY 2019, $77.4 million above the Executive’s estimate. The OLS estimate of $3.281 billion in FY 2020 accounts for the loss of non-recurring revenues. Furthermore, the OLS notes that the temporary surtax will be reduced from 2.5 percent to 1.5 percent for tax years beginning on or after January 1, 2020, through December 31, 2021. The OLS anticipates that the reduction in the tax rate could reduce taxpayer estimated payments that are due during the latter half of FY 2020.

CBT on Banking and Financial Corporations The corporation business tax on banking and financial corporations (CBT B&F) raises a fraction of the revenue of the “regular” CBT. However, this tax experienced tremendous growth through the first eight months of FY 2019. Through February, collections totaled $190.2 million, up 263.2 percent over FY 2018 through the same period. This surge is the highest amount booked through the first two quarters in any fiscal year and eclipses annual collections during prior fiscal years. As discussed in the CBT section, CBT B&F receipts are also benefiting from the temporary State surtax, the State’s shift to combined reporting, and the expansion of the federal corporate tax base. The Executive increased its estimate for FY 2019 from the $202.7 million certified last July to $328.6 million. The Executive’s projection assumes that revenues during the second half of FY 2019 will increase by $49.7 million, or 49 percent. For FY 2020, the Executive projects a decline in revenues to $271.3 million, down 17.4%. In contrast, the OLS is more optimistic for both FY 2019 and FY 2020. The OLS estimates that FY 2019 receipts will total approximately $339.2 million, an increase of 122.8 percent over FY 2018. For FY 2020, the OLS is projecting $315.0 million, $43.7 million more than the Executive. The OLS anticipates that the reduction in the tax rate could reduce taxpayer estimated payments that are due during the latter half of FY 2020.

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FY 2018

Actual

FY 2019

Certified

Certified %

Change

FY 2019

Revised

Revised %

Change

FY 2020

Estimated

Estimated %

Change

PPGRT Total $1,374.1 $1,360.5 -1.0% $1,466.4 6.7% $1,602.0 9.2%

Capital Reserves $823.9 $725.0 $830.9 $832.8

Adjusted PPGRT $550.2 $635.5 15.5% $635.5 15.5% $769.2 21.0%

Note: The FY 2019 revised and FY 2020 estimate are based on the OLS' forecast.

Millions of Dollars

Figure 8: Petroleum Products Gross Receipts Tax

Petroleum Products Gross Receipts Tax

(PPGRT) Last July, the Governor certified $1.361 billion from the PPGRT for FY 2019. In March, the Executive increased that estimate to $1.466 billion, or 6.7 percent growth over last year. A portion of total collections, $629.4 million in FY 2019, remains in the General Fund to support transportation debt service payments. The residual, $837 million, is earmarked to the PPGRT Capital Reserves for dedicated transportation purposes. Year-to-date PPGRT revenues through the end of February total $857.7 million, up 3.2 percent. This growth stems primarily from the October 1, 2018 increase in the PPGRT per gallon tax rate of 4.3 cents as set by the State Treasurer pursuant to P.L.2016, c.57. Under that law, a statutory formula determines how much annual revenue the PPGRT is to generate from taxation of highway fuels, and provides for adjustment of the PPGR tax rate in order to collect that amount, known as the highway fuels revenue target. The October 1, 2018 tax rate reflected two years of collections below targets. According to data provided by the Executive, the underlying trend in highway fuel consumption, the key driver of this tax, is negative. Nevertheless, the Executive and OLS concur growth in collections will continue, with the higher tax rate counteracting tax base decline, and the OLS

agrees with the Executive’s FY 2019 estimate. However, the OLS concludes that for FY 2019 the sum of motor fuels tax and PPGRT highway fuels tax revenue will fall short of the highway fuels revenue target, and this difference is to be made up in the following fiscal year. For FY 2020, the Executive estimates the PPGRT will increase to $1.499 billion, growth of 2.2 percent. The capital reserves portion declines to $729.3 million, while the General Fund portion increases to $769.2 million. This reflects the dynamic between total highway fuels revenue and the amount budgeted for debt service. The OLS PPGRT forecast of $1.602 billion for FY 2020 reflects its estimate of the highway fuels revenue target, which includes an adjustment to make up for the shortfall in FY 2019. This estimate shifts more resources into the capital reserves, and has no impact on the net General Fund retention compared to the Executive’s estimates.

Motor Fuels Tax The Executive did not revise its FY 2019 estimate for the motor fuels tax of $500.7 million certified last July, and is projecting $490.7 million for FY 2020, a decline of two percent. These estimates reflect the historical trend of decline in this tax, and the OLS agrees with the Executive’s estimates for FY 2019 and FY 2020.

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Actual Executive Estimates OLS Estimates OLS Difference

FY 2018 FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020

Total Collections All Sources $632.3 $611.6 $590.1 $611.6 $590.1 $0.0 $0.0

Less, Health Care Subsidy Fund -391.5 -391.5 -391.5 -391.5 -391.5 0.0 0.0

Less, Dedication for Debt Service -97.9 -94.8 -91.7 -94.8 -91.7 0.0 0.0

Less, Dedication for Anti-Smoking 0.0 -6.1 -5.9 -6.1 -5.9 0.0 0.0

Total Collections On-Budget $142.9 $119.2 $101.0 $119.2 $101.0 $0.0 $0.0

Figure 9: Cigarette Tax Estimates and Distributions

Millions of Dollars

Cigarette Tax In FY 2018, the cigarette tax yielded roughly $632.3 million in revenue for the State. However,

only a portion of this amount appears as budgeted General Fund revenue (see Figure 9). Of the amounts collected in FY 2018, $391.5 million supported the off-budget Health Care Subsidy Fund, $97.9 million was used off-budget to pay debt service on cigarette tax revenue securitization bonds, and $142.9 million was accounted for on-budget as General Fund revenue. According to the Centers for Disease Control and Prevention, cigarette sales in the United States fell by 3.5 percent in 2017, in line with historical trends. In recent years, electronic cigarette sales have grown considerably, and evidence suggests that some of this growth is coming at the expense of the traditional cigarette market. In addition to annual decreases in consumption, statutory changes have further impacted cigarette sales and collections. Specifically, the legal age to purchase cigarettes, and other tobacco products, was increased at the end of 2017 from 19 to 21. Furthermore, FY 2019 sees the first dedication of one percent of cigarette tax revenues (and tobacco products wholesale gross receipts tax revenues) for anti-smoking initiatives. This dedication is valued at $6.1 million for FY 2019 and $5.9 million for FY 2020. Through February, total cigarette tax revenues were down 4.9 percent. The Executive projects $119.2 million in FY 2019 and $101 million in FY 2020 on-budget cigarette tax receipts. The FY 2019 estimate assumes a 3.2 percent rate of decline in total cigarette revenues from FY 2018. The FY 2020 estimate assumes a 3.5 percent rate of decline in total cigarette revenues from FY 2019. The OLS concurs with the Executive’s estimate for both fiscal years.


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Realty Transfer Fees Since FY 2012, realty transfer fee collections have experienced consistent annual growth, and in recent years have approached pre-recession levels. However, as noted in prior versions of the OLS Tax and Revenue Outlook, the OLS cautioned that several factors could impact future growth in realty transfer fee collections, such as increasing mortgage rates and the tightening supply of homes available for purchase. Nationally, organizations, such as the National Association of Home Builders and the National Association of Realtors, had noted or expected a slowdown in new single-family homes sales and existing home sales through the end of calendar year 2018. A major concern contributing to this decline was affordability, which, in part, was affected by higher mortgage interest rates. Regionally, data from the New Jersey Realtors indicates that closed sales for single family, townhouse-condo, and adult community homes are down year-to-date through February; however, new listings and pending sales for these units are up. On the other hand, the median and average sales prices for single family and townhouse- condo units are up year-to-date. The Executive revised its FY 2019 realty transfer fee estimate to $370.5 million, a 1.6 percent decrease from FY 2018, and is projecting $370.5 million for FY 2020, flat year-over-year. In comparison, the OLS is maintaining the certified amount of $378.8 million for FY 2019 and is projecting an identical amount for FY 2020. The OLS forecast assumes that realty transfer fee collections through the remaining months of FY 2019 will experience little to no growth over FY 2018, but will not decline.

The Executive has increased the outlook for the separate one-percent assessment on property sales

valued over $1 million in FY 2019 to $144.5 million, or five percent growth, and keeps the same estimate for FY 2020. Through February, preliminary collections of $94.5 million were up 13.7 percent, or $11.4 million, above FY 2018. Given year-to-date performance, the OLS is projecting $151.4 million for FY 2019, an increase of 10 percent, and is projecting an identical amount for FY 2020.


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Inheritance Taxes Prior to the enactment of P.L.2016, c.57, New Jersey imposed two separate taxes on the transfer of a decedent’s assets to a beneficiary and on the estate of certain resident decedents. These two taxes, the transfer inheritance tax and the estate tax have been historically referred to as the State’s inheritance taxes with revenues splitting just about evenly between the two taxes. Following the enactment of P.L.2016, c.57, the estate tax exclusion was increased to $2 million on January 1, 2017, and the imposition of the estate tax was fully eliminated on January 1, 2018. Despite the elimination of the estate tax at the beginning of calendar year 2018, FY 2019 continues to receive collections from the estate tax. Estates typically take approximately nine months to complete the tax filing process and payments can extend for several years. From this point forward, no significant estate tax revenues are expected. Through February, receipts from the inheritance taxes totaled $344 million, down 16.2 percent in the aggregate. Of the amounts collected, $277.7 million was from the inheritance tax, up 16.1 percent, and $66.3 million was attributable to the estate tax, down 61.4 percent. The Executive increased its estimate for these combined taxes in FY 2019 from the $457.6 million certified last July to $489.2 million, assuming a decline of 19.2 percent from FY 2018. The OLS is also anticipating collections to come in above the certified amount, but slightly lower than the Executive for FY 2019 at $481.9 million. For FY 2020, both the Executive and the OLS are assuming that revenues from the estate tax will cease and only the inheritance tax will produce revenue. As is the case with any tax imposed on wealth, the transfer inheritance tax has fluctuated widely over the years from double-digit rates of growth in

some years to double-digit rates of decline shortly thereafter. The inheritance tax is dependent on myriad factors, including the number of wealthy decedents during a particular year and the magnitude of their wealth. For FY 2020, the Executive is projecting a further decline in inheritance tax revenues to $395.2 million, down 19.2 percent in the aggregate. The OLS estimate of $408.9 million, down 15.1 percent from its FY 2019 estimate, is $13.7 million less than the Executive. The OLS estimate derives from the assumption that asset values will continue to grow, albeit at a slower rate, over the next fiscal year and will help to offset the projected $74 million in estate tax collections in FY 2019 that are non-recurring for FY 2020.

Assets considered in the calculation of a resident decedent’s inheritance tax liability may include, but are not limited to: Real property (i.e. real estate);

Businesses, bank accounts, stocks, and

investment bonds; and

All other property, such as automobiles,

personal property, furniture, cash and

uncashed checks, or interest in a prior

estate.


14

Insurance Premiums Tax The insurance premiums tax is imposed on the premiums collected on insurance risks in this State. Insurance premiums tax returns are filed on March 1 of each year and finalize the tax liability a taxpayer incurred during the prior calendar year. At the time the annual return is filed on March 1, a taxpayer is also required to make a prepayment equal to 50 percent of the preceding calendar year’s tax liability. A second prepayment is due on June 1 of each year and is equal to 50 percent of the preceding calendar year’s tax liability. Consequently, the third and fourth quarters of each fiscal year account for almost all of insurance premiums tax collections. In recent years, the insurance premiums tax has experienced heightened volatility in collections attributable to tax credits. The State’s incentive programs allow for taxpayers, typically those with corporation business tax liabilities, to convert their incentive awards to tax credit transfer certificates. Those tax credit transfer certificates may then be sold to another taxpayer. In most cases, this happens to be a taxpayer with an insurance premiums tax liability. Based on data provided by the Department of the Treasury during the FY 2019 budget process, approximately 93 tax credit transfer certificates had been issued at the time of the department’s response. Of the 93 tax credit transfer certificates, 69 were issued to insurance premiums taxpayers with a value of $93.5 million, 65.1 percent of the total amount transferred ($139 million). During the first two quarters of FY 2019, insurance premiums tax collections were in

the negative by $43 million, the second consecutive fiscal year of negative activity during those quarters. February receipts, which typically are a portion of those payments due on March 1, were down 10.8 percent year-over-year. Collections through February were down 27.8 percent from the prior year. Unlike the Executive, the OLS has the opportunity to evaluate preliminary collection data for March prior to forecasting revenues. Thus, the OLS can assess aggregate insurance premiums tax collections across February and March. These data indicate a continued decline in receipts, with year-to-date collections down roughly 23.7 percent. The Executive projects $558.7 million in FY 2019, a 5.5 percent decline from FY 2018, and $490.7 million in FY 2020, a decrease of eight percent from the revised FY 2019 estimate. In contrast, the OLS is projecting $502.6 million for FY 2019, a 15 percent decline from FY 2018, and $500 million for FY 2020, essentially flat in comparison to the OLS’ FY 2019 estimate. The difference between the Executive’s estimate and the OLS’ estimate is presumably due to the availability of data. The OLS anticipates the fourth quarter of FY 2019 to be more in line with historical collections, since tax credits are included in the calculation of the March 1 payment. Any overpayments that remain from March 1 will likely impact the June 1 prepayment. The uncertainty and volatility surrounding tax credits has led the OLS to be conservative in its FY 2020 estimate and project nearly flat performance.


15

Casino Revenue Fund Following multiple years of decline, Casino Revenue Fund collections have fluctuated since FY 2014, experiencing both gains and losses through FY 2018. Collections in FY 2014 and each fiscal year thereafter have benefitted from additional revenues due to internet gaming, which was introduced in late 2013. At the end of FY 2018, sports betting was legalized in New Jersey and has contributed alongside internet gaming to propel Casino Revenue Fund collections to its highest level since FY 2012. Actual collections through February totaled $162.6 million, which were up 21.2 percent in comparison to the same period last fiscal year. Of the amounts collected, at least $123 million is from the gross revenue tax, $29 million is from the tax on internet gaming, and $7 million is from the tax on sports betting. Compared to FY 2018, gross revenue tax receipts are up roughly 12.4 percent and internet gaming revenues are up about 31.8 percent.

The Executive projects growth in both FY 2019 and FY 2020 for the three major components of casino taxes. Specifically, the Executive is forecasting that receipts will total $251.8 million in FY 2019, up approximately 15.7 percent over FY 2018, and $261.5 million in FY 2020, up 3.8 percent over FY 2019. The OLS concurs with the Executive’s estimates for both FY 2019 and FY 2020. Considering the strong year-to-date growth in Casino Revenue Fund collections and the expansion of internet based gaming, including sports betting, the OLS expects collections to continue to grow through FY 2019 into FY 2020. The opening of two new casinos in Atlantic City last year has boosted revenues collected from brick and mortar casino establishments. Additionally, both casinos have an online presence and collect internet gaming taxes.


16

The Budget’s Year-End Balance Revenue shortfalls and unplanned expenditures can destabilize the budgets of governments with balanced budget requirements. Contingency reserves, such as rainy day funds, are intended to mitigate potentially disruptive short-term fiscal stress by providing emergency budget resources out of previously saved surplus balances. The Executive projects an FY 2020 year-end balance of $1.2 billion, 3.1 percent of budgeted expenditures. As part of its annual analysis, the OLS typically recalculates the State's year-end budgeted balance based solely on the revenue forecast differences between the Executive and the OLS. All other things being equal, the $292.2 million lower OLS revenue estimates diminishes FY 2020 year-end surplus by about 25 percent, to about 2.2 percent of expenditures. The Executive’s projected 3.1 percent surplus is an improvement over prior years and would mark the highest year-end balance since FY 2008 when the year-end balance was equal to 3.9 percent of budgeted expenditures. Despite the improvement in the anticipated year-end balance, on a percentage basis the amount is still low by national standards.

As reflected in Figure 12, over the last 20 years the State's actual surplus has long fell below national averages. According to an annual survey compiled by the National Association of State Budget Officers, the long-run average state surplus for that period is 8.4 percent. Ultimately, the actual year-end balance will be determined by numerous spending decisions as well as revenue collections. Decisions on these and other matters will be made by the Executive, both budget committees and the full Legislature during the next three months and throughout the next fiscal year.

Appendices to the OLS Tax and Revenue Outlook FY 2019-2020

A-1

Appendices Contents

Page

Detailed Fiscal Year 2019 Revenue Estimates ................................. A-2 Detailed Fiscal Year 2020 Revenue Estimates ................................. A-3 New Jersey Tax Amnesty Programs ..……...…………………………… A-4


A-2

Revenue SourceAppropriations Act (July 2018)

Executive Revised

(March 2019) OLSDiff: OLS - Executive

Major Taxes:Sales Tax, Total $10,223.6 $10,097.2 $9,973.8 -$123.4 Sales Tax, Base 10,136.1 10,057.5 9,934.2 -123.3 Dedicated Transfer to PTRF -780.9 -797.7 -797.7 0.0 Sales Tax, Energy 79.9 48.8 48.8 0.0 Sales Tax, Energy Tax Receipts 788.5 788.5 788.5 0.0Corporation Business Tax, Total $3,054.1 $3,730.3 $3,807.8 $77.4 Corporation Business Tax, Base 3,046.1 3,708.6 3,786.0 77.4 Corporation Business Tax, Energy 8.0 21.8 21.8 0.0Inheritance Taxes* 457.6 489.2 481.9 -7.3Motor Fuels Tax 500.7 500.7 500.7 0.0Insurance Premiums Tax 597.0 558.7 502.6 -56.1Realty Transfer Fee 378.8 370.5 378.8 8.3Motor Vehicle Fees 461.8 448.6 448.6 0.0Cigarette Tax 87.8 119.2 119.2 0.0Petroleum Products Gross Receipts Tax 1,360.5 1,466.4 1,466.4 0.0Less: Petroleum Products GR Capital Reserves -725.0 -837.0 -830.9 6.1Corp. Business Tax - Banking and Financial 202.7 328.6 339.2 10.6Alcoholic Beverage Excise Tax 108.4 114.0 113.4 -0.6Adult-Use Cannabis 0.0 0.0 0.0 0.0Tobacco Products Wholesale Tax 39.5 28.1 28.1 0.0Public Utilities Excise Tax 19.5 21.2 21.2 0.0Opioid Assessment 0.0 0.0 0.0 0.0Subtotal, Major Taxes $16,767.0 $17,435.7 $17,350.8 -$84.9

Misc. Taxes, Fees and RevenuesMedicaid Uncomp. Care Reimbursement 324.8 360.0 360.0 0.0Settlements 200.0 240.0 240.0 0.0Public Utility Taxes (State Retention) 150.5 140.8 140.8 0.0Assessment on Property Sold Over $1 Million 134.0 144.5 151.4 6.9Telephone Assessment 123.0 123.0 123.0 0.0Hotel Occupancy Tax 108.8 108.8 108.8 0.0Asset Value Optimization 0.0 0.0 0.0 0.0Fringe Benefit Recoveries (Interdepartmental) 656.5 652.2 652.2 0.0Interdepartmental Accounts, Other 79.5 84.2 84.2 0.0Other 1,336.5 1,304.8 1,304.8 0.0Subtotal, Misc. Revenues $3,113.6 $3,158.4 $3,165.3 $6.9

Interfund TransfersUnclaimed Personal Property Trust Fund 180.0 170.0 170.0 0.0State Disability Benefit Fund 38.7 39.0 39.0 0.0Enterprise Zone Assistance Fund 39.7 40.0 40.0 0.0Other 207.8 207.5 207.5 0.0Subtotal, Interfund Transfers $466.2 $456.6 $456.6 $0.0

TOTAL GENERAL FUND $20,346.8 $21,050.6 $20,972.6 -$78.0

Property Tax Relief Fund (Income Tax) $15,977.7 $15,562.6 $15,531.4 -$31.2PTRF Transfer from GF (Sales Tax) $802.2 $822.1 $822.1 $0.0

Casino Revenue Fund (CRF) $233.1 $251.8 $251.8 $0.0CRF Taxes $223.4 $242.0 $242.0 $0.0CRF Other $9.7 $9.8 $9.8 $0.0

Casino Control Fund $49.8 $49.8 $49.8 $0.0Gubernatorial Elections Fund $0.7 $0.7 $0.7 $0.0GRAND TOTAL, ALL FUNDS $37,410.3 $37,737.7 $37,628.5 -$109.2

Detailed Fiscal Year 2019 Revenue EstimatesMillions of $


A-3

Revenue SourceMarch 2019

Gov's BudgetGBM % Change

April 2019 OLS

OLS % Change

Diff: OLS - Executive

Major Taxes:Sales Tax, Total $10,465.8 3.7% $10,243.6 2.7% -$222.1 Sales Tax, Base 10,456.2 4.0% 10,234.1 3.0% -222.1 Dedicated Transfer to PTRF -827.8 -827.8 Sales Tax, Energy 48.8 0.0% 48.8 0.1% 0.0 Sales Tax, Energy Tax Receipts 788.5 0.0% 788.5 0.0% 0.0Corporation Business Tax, Total $3,239.1 -13.2% $3,302.8 -13.3% $63.7 Corporation Business Tax, Base 3,217.4 -13.2% 3,281.0 -13.3% 63.6 Corporation Business Tax, Energy 21.8 0.0% 21.8 0.1% 0.0Inheritance Taxes 395.2 -19.2% 408.9 -15.1% 13.7Motor Fuels Tax 490.7 -2.0% 490.7 -2.0% 0.0Insurance Premiums Tax 513.9 -8.0% 500.0 -0.5% -13.9Realty Transfer Fee 370.5 0.0% 378.8 0.0% 8.3Motor Vehicle Fees 487.6 8.7% 487.6 8.7% 0.0Cigarette Tax 101.0 -15.3% 101.0 -15.3% 0.0Petroleum Products Gross Receipts Tax 1,498.5 2.2% 1,602.0 9.2% 103.5Less: Petroleum Products GR Capital Reserves -729.3 -832.8 0.2% -103.5Corp. Business Tax - Banking and Financial 271.3 -17.4% 315.0 -7.1% 43.7Alcoholic Beverage Excise Tax 111.7 -2.0% 116.8 3.0% 5.1Adult-Use Cannabis 60.0 60.0 0.0Tobacco Products Wholesale Tax 29.8 5.9% 29.8 5.9% 0.0Public Utilities Excise Tax 21.8 3.0% 21.8 3.0% 0.0Opioid Assessment 21.5 21.5 0.0Subtotal, Major Taxes $17,349.0 -0.5% $17,247.5 -0.6% -$101.5

Misc. Taxes, Fees and RevenuesMedicaid Uncomp. Care Reimbursement 480.1 33.4% 480.1 33.4% 0.0Settlements 75.0 -68.7% 75.0 -68.7% 0.0Public Utility Taxes (State Retention) 145.0 3.0% 145.0 3.0% 0.0Assessment on Property Sold Over $1 Million 144.5 0.0% 151.4 0.0% 6.9Telephone Assessment 136.0 10.6% 136.0 10.6% 0.0Hotel Occupancy Tax 108.8 0.0% 108.8 0.0% 0.0Asset Value Optimization 50.0 50.0Fringe Benefit Recoveries (Interdepartmental) 616.2 -5.5% 616.2 -5.5% 0.0Interdepartmental Accounts 85.8 1.9% 85.8 1.9% 0.0Other 1,345.0 3.1% 1,345.0 3.1% 0.0Subtotal, Misc. Revenues $3,186.5 0.9% $3,193.4 0.9% $6.9

Interfund TransfersUnclaimed Personal Property Trust Fund 210.0 23.5% 210.0 23.5% 0.0State Disability Benefit Fund 39.0 0.0% 39.0 0.0% 0.0Enterprise Zone Assistance Fund 32.7 -18.3% 32.7 -18.3% 0.0Other 206.0 -0.7% 206.0 -0.7% 0.0Subtotal, Interfund Transfers $487.8 6.8% $487.8 6.8% $0.0

TOTAL GENERAL FUND $21,023.3 -0.1% $20,928.7 -0.2% -$94.6

Property Tax Relief Fund (Income Tax) $16,639.4 6.9% $16,551.3 6.6% -$88.1PTRF Transfer from GF (Sales Tax) $852.2 $852.2

Casino Revenue Fund (CRF) $261.5 3.8% $261.5 3.8% $0.0CRF Taxes $251.7 4.0% $251.7 4.0% $0.0CRF Other $9.8 0.3% $9.8 0.3% $0.0

Casino Control Fund $55.8 11.9% $55.8 11.9% $0.0Gubernatorial Elections Fund $0.7 0.0% $0.7 0.0% $0.0GRAND TOTAL, ALL FUNDS $38,832.9 2.9% $38,650.1 2.7% -$182.7

Detailed Fiscal Year 2020 Revenue EstimatesMillions of $


A-4

New Jersey Tax Amnesty Programs Introduction This background paper provides an overview of the State’s most recent and prior tax amnesty programs. Tax amnesty programs allow taxpayers with outstanding tax liabilities to pay the outstanding amount while avoiding most penalties, partial interest payments, and recovery fees. These programs cover State tax liabilities incurred during a specific time frame, and the program is available for a set duration of time before expiring. The most recent tax amnesty program yielded approximately $282 million in gross revenues for fiscal year (FY) 2019. FY 2019 Tax Amnesty Program P.L.2018, c.46, which was enacted on July 1, 2018, established a 90-day State tax amnesty period, to conclude no later than January 15, 2019. The amnesty period applied to State tax liabilities for tax returns due on and after February 1, 2009 and before September 1, 2017. This tax amnesty program began on November 15, 2018 and ended on January 15, 2019. The enabling legislation appropriated up to $25 million from the proceeds of the program for its administration. Based on information provided by the Executive during the FY 2019 budget process, this tax amnesty program was projected to generate $200 million in revenue during the fiscal year. Of the amounts projected, $75 million was allocated to the sales tax, $75 million was allocated to the corporation business tax, and $50 million was allocated to the gross income tax. Prior to the enactment of P.L.2018, c.46, an informal tax amnesty program was administered at the end of calendar year 2014. Given the short time span between the informal tax amnesty program and the new tax amnesty program, the new tax amnesty program was expected generate less revenue than prior programs. Additionally, the prior and current Executive administrations implemented certain tax enforcement initiatives throughout FY 2018, which netted additional revenues in excess of $200 million across the State’s major revenues. According to the Department of the Treasury, the most recent tax amnesty program yielded approximately $282 million for FY 2019. Of the $282 million collected, $104.4 million was from the sales and use tax, $81.8 million was from the corporation business tax, $67.7 million was from the gross income tax, $15.5 million was from the inheritance taxes, $9.9 million was from the petroleum products gross receipts tax, and $2.7 million was from other miscellaneous taxes. These collections are considered to be non-recurring resources. Data are not available at this time regarding the number of taxpayers that took advantage of the latest tax amnesty program, but historical data can provide perspective.


A-5

Past Tax Amnesty Programs During the 1996 tax amnesty program the State mailed notices to approximately 659,000 delinquent or deficient taxpayers who had an outstanding balance of $817.9 million. Of that amount, roughly $415.5 million was the balance of taxes owed and $402.4 million was penalties and interest. The Division of Taxation processed over 150,000 pieces of mail under the program netting $244.0 million ($359.0 million in gross revenue) after adjusting downward for $115.0 million in compliance enforcement collections which would have otherwise been collected had the amnesty program not been offered. In 2002, the State mailed approximately 545,000 notices, and in 2009 the State mailed approximately 600,000 notices. Past amnesty programs generated the following net amounts of revenue (based on availability): $68.0 million in 1987; $244.0 million in 1996; and $647.1 million in 2009. The OLS is unable to determine if the amounts collected in 2002 ($276.9 million in collections) and 2014 (approximately $75.0 million in collections) are net or gross collections. In 2009, the significantly higher amnesty collections and the higher percentage of that amount attributable to the corporation business tax resulted from two primary factors: 1) the Director of the Division of Taxation implemented a policy to allow audited taxpayers and taxpayers already in the appeal process to participate and resolve assessments in total or by issue; and 2) substantial numbers of amended returns and new taxpayers came forward due to court decisions in New Jersey’s favor related to financial institutions and economic nexus issues. These collections were a recovery of contested assessments, known deficiencies, and an acceleration of revenues that would likely have been collected in an orderly manner absent the amnesty program.

The Office of Legislative Services provides nonpartisan assistance to the State Legislature in the areas of legal, fiscal, research, bill drafting, committee staffing and administrative

services. It operates under the jurisdiction of the Legislative Services Commission, a bipartisan body consisting of eight members of each House. The Executive Director

supervises and directs the Office of Legislative Services.

The Legislative Budget and Finance Officer is the chief fiscal officer for the Legislature. The Legislative Budget and Finance Officer collects and presents fiscal information for the Legislature; serves as Secretary to the Joint Budget Oversight Committee;

attends upon the Appropriations Committees during review of the Governor’s Budget recommendations; reports on such matters as the committees or Legislature may direct;

administers the fiscal note process and has statutory responsibilities for the review of appropriations transfers and other State fiscal transactions.

The Office of Legislative Services Central Staff provides a variety of legal, fiscal, research and administrative services to individual legislators, legislative officers, legislative

committees and commissions, and partisan staff. The central staff is organized under the Central Management Unit into ten subject area sections. Each section, under a section

chief, includes legal, fiscal, and research staff for the standing reference committees of the Legislature and, upon request, to special commissions created by the Legislature.

The central staff assists the Legislative Budget and Finance Officer in providing services to the Appropriations Committees during the budget review process.

Individuals wishing information and committee schedules on the FY 2020 budget are encouraged to contact:

Legislative Budget and Finance Office State House Annex

Room 140, PO Box 068 Trenton, NJ 08625

(609) 847-3105 · Fax (609) 777-2442

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TAX AND REVENUE OUTLOOK...Benjie E. Wimberly (D), 35th District (Parts of Bergen and Passaic) OFFICE...

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