JOHN REITMEYER | JANUARY 30, 2019
A new report calculates the billions of dollars that flow through the layers of government in the Garden State annually
After analyzing the budgets of over 1,000 government agencies, a right-leaning think tank found that governments in New Jersey are raising more than $86 billion annually from taxes, fees and other revenues. That number does not include federal funds or the revenues of authorities and independent bistate agencies like the Port Authority of New York and New Jersey (which alone has annual operating expenses of $3.3 billion) or the Delaware River Port Authority ($301 million).
The report, “Adding it All Up” by the Garden State Initiative, was a difficult endeavor. The decentralized governing structure of the state — with its hundreds of governments, municipalities and authorities — makes it virtually impossible for residents to get a sense of exactly how much the system costs to run on an annual basis. GSI had to analyze the budgets of numerous agencies, ranging from state and county all the way down to local sewerage authorities.
The total haul soars to well over $100 billion after funds provided by the federal government are added in. And it tops out at $121 billion once investment gains by the public-worker pension funds and revenue from all authorities that operate in New Jersey, including bistate entities like the Port Authority, are factored in.
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The goal of the Morristown-based group’s complicated accounting exercise was to determine just how much it costs to deliver government services in New Jersey. The report also sets the table for a deeper analysis of whether residents are getting bang for their buck. The group is promising to issue follow-up reports exploring ways governments can save money with specific efficiencies. GSI believes it will be able to identify opportunities for at least $1 billion in potential cuts in the coming weeks.
“Taxes are already too high and cutting expenditures haphazardly just to lower costs will cause us to lose the great public services of our state,” according to the report, which was provided to NJ Spotlight in advance of today’s official release.
“The key is to find efficiencies that make government work better for everybody,” the report said.
Governor, lawmakers looking to save
The release of the comprehensive revenue data comes as Gov. Phil Murphy and state lawmakers have been engaged in separate exercises aimed at finding ways to save money in a state that’s well known for levying sky-high taxes.SUBSCRIBE TO NJ SPOTLIGHT NEWSLETTERS Today’s Spotlight Weekly Editor’s Picks
Murphy’s effort has been focused largely on finding efficiencies in the delivery of healthcare for the hundreds of thousands of current and retired public workers whose expenses are funded, at least in part, by state, county and local governments. He has also appointed two shared-services “czars” to help local governments identify other savings opportunities.
Meanwhile, state lawmakers, led by Senate President Steve Sweeney (D-Gloucester), have been pitching a series of recommendations put forward last year by a nonpartisan group of fiscal-policy experts that analyzed existing state policies. Their recommendations include changing public-worker health and pension benefits and forcing some school consolidations.
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GSI looked at the issue of government spending from a more holistic perspective by first trying to get a sense of what it costs to deliver the many services that New Jersey’s roughly 9 million residents rely on, no matter which agency is providing them. It breaks down revenues by individual sources, like property and income taxes, and expenditures by category, such as education and healthcare.
“The common thread of this analysis is a focus on function,” the report said.
Often overlooked accounts
The group’s researchers took pains to make sure they didn’t double-count revenue sources and to also highlight those that often get overlooked or are not included in the annual state operating budget. For example, after tabulating the state’s many “off-budget” accounts — like the Transportation Trust Fund that pays for road, bridge and rail capital improvements — GSI found that total state government revenues are $47.5 billion. That’s about $10 billion above the reported annual budget.
School districts and municipal governments generate another $18 billion and $14 billion in revenue, respectively, according to GSI. County governments and local authorities have revenues of $6.25 billion and $1.9 billion, respectively. State authorities, including bistate agencies, generate $9.5 billion, and federal aid to New Jersey accounts for another $14 billion, GSI found.
To be sure, not all the revenues raised by the governments that operate in New Jersey comes from state residents as portions of major taxes like the state sales and gas taxes are paid each year by out-of-state residents. Each year, residents of other states also pay some share of the tolls, fares and fees levied by the New Jersey Turnpike Authority and the Port Authority and other bistate agencies that operate in New Jersey.
But some governments rely almost exclusively on New Jersey residents to sustain their spending, including local school boards, which generate much of their revenues from local property-tax bills. While Murphy recently lauded slowed growth in the size of New Jersey property-tax bills last year, they remain among the most expensive in the nation at an average $8,767.
Opportunities to give back to taxpayers
School-district spending is among the areas where GSI is promising to provide a more in-depth analysis in future reports. Student-transportation services and spending on school facilities will get scrutinized in those upcoming reports, as will the government inspection and road-maintenance processes.
Credit: GSIRegina Egea
“We chose services that present the best combination of potential cost savings, based on overall magnitude of spending and efficiency potential, service improvements, and ability to actually get (the spending reforms) done,” the report said.
Regina Egea, the group’s president, said the goal is to make as many recommendations as possible by early March, when Murphy puts forward a new state budget proposal. That event usually triggers a deeper discussion of fiscal policy in the run-up to the June 30 deadline for the adoption of a new state budget.