While Gov. Phil Murphy figured out a way to balance the latest state budget by making last-minute spending cuts and putting some appropriations in reserve, that task will only get harder next year as costs continue to rise amid an increasingly uncertain revenue outlook.
High on the list of rising costs will be another big increase in funding for the public-worker pension system. A record $3.8 billion contribution was just written into the fiscal year 2020 budget.
The contribution for the FY2021 budget is scheduled to be around $4.5 billion, and at the moment there’s no plan in place to cover that hefty increase.
Things also won’t be getting any easier on the revenue side of the ledger as 2021 will be the first fiscal year in which a reduction of the top-end rate for the corporate-business tax — one of the state’s biggest sources of tax revenue — will be in effect for a full 12 months. The tax surcharge was enacted just last year, but its sunset provision will begin to take effect within a matter of months. It’s unclear how much that will impact future tax collections.
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