Advocates criticize use of dedicated funds to balance budget

TRENTON – The use of dedicated funds to close budget gaps has some groups angry about their priorities being dismissed in order to help balance the state budget.

The Christie Administration is proposing to use $642 million in non-recurring revenues for fiscal year 2013, according to the nonpartisan Office of Legislative Services.

The discussion of such funds, and their apparent increase from last year, raised the ire of Senate Budget Committee Chairman Paul Sarlo, (D-36), Wood-Ridge, who said Christie pledged to reduce reliance on those funds.

Treasurer Andrew Sidamon-Eristoff, who was appearing today before the committee, acknowledged what Sarlo was saying, that the use of such non-recurring revenues is expected to increase in the upcoming fiscal year from $1.2 billion to $1.6 billion.

Among the dedicated funds being diverted to the general fund are $200 million in Clean Energy funds, $200 million from the Affordable Housing Trust Fund and $75 million from New Jersey’s share of a federal foreclosure settlement.

David Pringle, campaign director of the New Jersey Environmental Federation, slammed the decision to divert the Clean Energy funds.

“That’s not taxpayer funds,” he said. “They are ratepayer funds that are designed to go toward clean energy programs to reduce pollution and create jobs. Hopefully, the Legislature will just say no.”

Staci Berger, advocacy director for the Housing and Community Development Network of N.J., also called the diversion inappropriate.

“This is absolutely an inappropriate use of the money,” she said about the state putting municipal affordable housing proceeds into the general fund. “There’s no guarantee they will be used for that purpose. We certainly don’t want it to be used for the governor’s 10 percent income tax cut.”

In his 2011 budget address, Gov. Christie slammed the use of such one-shot revenue increases, promising to decrease the reliance of them.

“We promised to put an end to this practice in Trenton, and in one year we are nearly there,” he said at the time.

But the 2013 fiscal year budget shows the trend turning back slightly. The original plan was to reduce the reliance from 13 percent of the budget in fiscal year 2010 ($3.82 billion of a $28.99 billion budget), to 2 percent, according to the 2011 budget summary ($495.6 million of $29.4 billion).

However, the 2011 budget’s share of one-shot revenues was later revised to 4 percent, to about $1.2 billion, and the budget that was actually signed was $29.7 billion.

“If we are truly talking about a comeback, and we were chastised (for using non-recurring revenues), why is there $1.6 billion in this budget (from non-recurring revenues,” asked Sarlo. “It seems like we are going the other way.”

But Eristoff said the more appropriate way to look at the history of non-recurring revenues, and their use, is as a ratio, or as a percentage, of the budget. For fiscal year 2013, it’s 5 percent, a 1 percent hike from FY 2011, he explained.

The treasurer said he didn’t find the $400 million increase in non-recurring revenues as a big cause for concern.

“It doesn’t seem very extraordinary to me.”

But Sarlo pointed out that a Republican lawmaker, Assemblyman Jay Webber, (R-26), of Morris Plains, had criticized the practice. In May 2009, during the Corzine administration, Webber made the following statement:

“By raiding established funds, the Governor breaches his duty to the people, exposes programs to underfunding when people need services the most, and causes tax increases to cover the inevitable shortfalls when the dedicated funds run out,” he said.  

“Worse, siphoning from dedicated funds drains the people’s trust out of government because their money is not going where the government promised them it would go. Our citizens lose more than their money in these raids — they also lose faith in their elected representatives.”

Advocates criticize use of dedicated funds to balance budget