Advocating for a Responsible State Budget During a Pandemic

BY BRUCE SHAPIRO

Every year, New Jersey Realtors® Government Affairs team advocates for a responsible state budget that protects homeownership and does not include any taxes or fees affecting the real estate industry. Traditionally, this involves meeting with members of the State Legislature, working with the governor’s office, and attending Senate and Assembly budget committee hearings. This year, New Jersey Realtors® is continuing its state budget advocacy efforts, but in a new way in response to COVID-19.

One of the biggest changes concerning the state budget is that the 2020 fiscal year budget was extended over two months. Under state law, the budget must be enacted by June 30 of every year or else the state runs out of spending money on July 1. In response to the COVID-19 pandemic, the State Legislature and the governor’s office worked together to extend the Fiscal Year 2021 deadline to September 30. The extension will provide the governor and the State Legislature additional time to review the COVID-19 impact on state revenue.

Due to the fact that the new budget for Fiscal Year 2021 will not be adopted until the end of September, the governor and State Legislature had to enact a temporary measure extending spending authority during the past three months. New Jersey Realtors® closely monitored and engaged in these proceedings to ensure there would be no negative impacts to the real estate industry or homeownership.

When Gov. Murphy unveiled his original budget proposal for Fiscal Year 2021 earlier this year, his budget proposal totaled $40.85 billion. This budget did not call for any tax or fee increases affecting real estate, such as an increase to the realty transfer fee (RTF), a seasonal rental tax, or a tax on commissions. At the time, the governor also called for additional state funding for lead service line replacement, a $577 million increase in school funding, a 3.5 percent increase in direct property tax relief and $10 million in funding to promote shared services. New Jersey Realtors® will review the revised budget proposal for Fiscal Year 2021 to ascertain how these funding areas are affected. NJ Realtors ® will also determine if there are any proposed tax or fee increases affecting real estate and homeownership.

Since the beginning of the year, there is an estimated shortfall of up to $10 billion in revenues between the current Fiscal Year 2020 and the pending Fiscal Year 2021 state budgets. Under the law that extended Fiscal Year 2020 to September 30, the governor is required to present a revised budget proposal for Fiscal Year 2021 by August 25.

In advance of Gov. Murphy presenting his revised budget proposal to the State Legislature, he called for federal funds from the federal government to help offset anticipated shortfalls in state revenue. As of late July, no additional federal funds have been approved by Congress. The governor also asked for and received additional borrowing authority from the State Legislature. Now, the State may borrow additional funds to offset revenue decreases due to the COVID-19 pandemic with approval of a newly formed Select Commission on Emergency COVID-19 Borrowing.

Moving forward, New Jersey Realtors® Government Affairs team will closely monitor and engage in the budget process to advocate for a responsible budget that does not contain any tax or fee increases affecting real estate. While the advocacy efforts of New Jersey Realtors® have had to adapt in response to COVID-19, they have continued to ensure the views of the real estate industry are heard loud and clear. These efforts will continue throughout the remainder of the budget process as well as on all issues affecting the real estate industry.