Driven earlier this year by a massive tax windfall, New Jersey set aside billions of dollars to pay down debt and budgeted for its first full pension payment in more than two decades.

There was also enough money in the budget enacted by Gov. Phil Murphy and lawmakers in late June to fund a whole new set of tax relief initiatives while making existing relief programs more generous.

Yet despite recent fiscal progress, New Jersey continues to have one of the worst credit scores among US states. And concerns about taxes – including sky-high property tax bills – remain an eternal problem.

NJ Spotlight News takes a closer look at some of the ways Murphy, a first-term Democrat now seeking re-election, has sought to tackle New Jersey’s many challenges. Today’s episode examines his approach to the state pension system, debt and related tax matters. Future articles will examine the state’s credit rating and taxes. Other issues will include public education, social justice, the environment as well as healthcare and COVID-19.

Pension funding: Like many of his predecessors, Murphy added to the large pension debt of government officials by failing early on to budget enough money for what actuaries would consider the employer’s full annual contribution to the plan of retirement. But Murphy stuck to a schedule of increased pension funding set by his predecessor Chris Christie, and the current state budget allocates nearly $ 7 billion to the pension system, making it the first full state employer pension contribution for over two decades.

Despite reaching this pension funding milestone – and a year ahead of Christie’s timeline – there is no detailed plan to unlock the revenue that will be needed to maintain full pension funding beyond the end of the year. current exercise. And so far, Murphy has resisted bipartisan calls to pass a new round of worker benefits changes that could make it easier for taxpayers as the state seeks to maintain full pension funding.

State debt: New Jersey is one of the most indebted states in the country, but during Murphy’s first years in office, the state saw its total bond debt drop slightly as the rate of new borrowing slowed from relative in the final years of the Christie administration. The recent surge in state pension funding has also started to reduce New Jersey’s large retirement debt.

But last year, Murphy and lawmakers agreed to issue nearly $ 4 billion in long-term debt without voter approval in response to administration fears that the pandemic could cause severe revenue losses. . Although these losses never materialized, taxpayers remain liable for all of the principal and interest charges because the loan has been structured to prevent early repayment. Republicans have also raised concerns in recent weeks over the Murphy’s administration delay in using a special fund created several months ago to help pay down the state’s debt.

Budget reserves: Maintaining an adequate surplus and putting enough money into the state fund for rainy days are often overlooked as top budget priorities. These are tools that New Jersey policymakers can use to ensure that the annual budget isn’t upset if revenues decline or unforeseen spending needs arise, such as when the coronavirus pandemic started the year. last. Shortly after taking office, Murphy pushed to fill the state surplus account. In 2019, his administration also made the first deposit into the state’s Rainy Day Fund – which is only supposed to be used during major emergencies – in about a decade.

However, the state’s improved fiscal reserves still fell short of the revenue losses and spending needs triggered by the pandemic, and Murphy was forced to freeze around $ 1 billion in spending as a result. Property tax refunds for seniors and people with disabilities were among the budget victims. Meanwhile, after a huge windfall in revenue was amassed in the last few months of the past fiscal year, Murphy and lawmakers again spent the balance of the rainy days fund as part of their budget for l election year, leaving this emergency account once again completely dry. . They set aside just over $ 2 billion in the unallocated surplus account.

Revenue forecast: Throughout his two terms, Democrats who control both houses of the Legislature have pressured Christie, a Republican, to carry out a series of budget reforms, including changing the way the State provides revenue for the annual budget. The efforts came after Christie was accused of overestimating income estimates, including to establish a basis for cutting state taxes. More recently, the Murphy administration has also seen its own revenue forecasts questioned, including in the midst of the pandemic.

Lawmakers have for years backed legislation to overhaul New Jersey’s revenue forecasting process, now dominated by the governor’s office and its appointees. Lawmakers cited a consensus forecasting model that has been used in dozens of other states as an example. This model gives lawmakers a larger role, and it also involves taking into account contributions from outside of state government as forecasts come together, all to improve accuracy. But so far, Murphy has refused to adopt the consensus forecasting option.