TRENTON – A bill sponsored by Senate Majority Leader Barbara Buono which requires the Governor to include in his annual budget message a report to the Legislature detailing the impact of State tax expenditures on the Budget was signed into law Tuesday by Gov. Corzine.
“New Jersey is trying to come to grips with a multi-billion dollar deficit, and policy-makers need to have complete information about State spending, whether as a budget line item or through tax expenditures,” said Buono, D-Middlesex.
“Without an annual accounting for the cost and effectiveness of tax expenditure spending, New Jersey lawmakers cannot develop a full understanding of the State’s fiduciary obligations and expenses, and cannot act to end ineffective and costly programs. This new law will make sure that when reviewing the State’s annual budget, we have all the information we need to put together a complete profile of expenditures.”
The bill, S-3153, requires the Governor to include a tax expenditure report each year in his annual budget address to a joint session of the New Jersey Legislature. The report, which will be made available online along with the budget address, will detail the tax credits, exemptions, deductions and other incentives offered as part of the State’s portfolio of programs designed to spur business growth or provide tax relief to those in need, among other purposes. Buono said that while many of these programs serve an important societal benefit, the Legislature must have the information necessary to examine the cost and results of these programs before deciding whether or not to keep them in place.
“It may be that when we’re given an opportunity to evaluate the effectiveness of these programs, we may determine that the cost is worth it to the people of New Jersey,” said Buono. “Many of these programs have a track record of successfully incentivizing new business investment or creating property tax savings for individuals on fixed incomes. But rather than evaluating these programs without any sort of data, we will now be able to make a cost-benefit analysis of these expenditures.”
Buono noted that the legislation is based on best practices identified in the report entitled Promoting State Budget Accountability Through Tax Expenditure Reporting, issued by the Center on Budget and Policy Priorities last April. These best practices include incorporating the report into the budget process, issuing the report regularly, making it available on the Internet, and detailing the estimated amount of State revenue lost for the last completed fiscal year, the current fiscal year, and the fiscal year to which the budget message applies.
“Government transparency has always been the best disinfectant to clean out waste and abuse of taxpayer resources,” said Buono. “By making the report available to the public, we will not only keep legislators apprised of the effectiveness of these programs, but engage the public in the discussion. Through this new law, we’re taking a significant step to give everybody – from the Governor to Legislators to interested taxpayers – an opportunity to see the big picture in terms of the State’s finances.”
The bill received final legislative approval in both houses last Thursday.