After months of prodding, the Murphy administration on Jan. 17 sent a memo to the Legislature’s Joint Budget Oversight Committee detailing the use of $200 million in federal COVID-19 relief funds received for state fiscal year 2022. The ensuing outrage over revelations that $521,783 went to purchase eight new SUVs for the governor and other top officials should do much more than raise tough questions about the administration’s use of federal tax dollars. Let’s hope it finally prompts a long-overdue examination of the role of the committee itself.
What is the Joint Budget Oversight Committee? Per rules of the state Senate and General Assembly, “JBOC” consists of six senior legislators, with the majority party taking four seats. For as long as anyone in Trenton can remember, and regardless of partisan control, the annual budget and other legislation has included numerous provisions that either mandate disclosure of executive actions related to the budget and managing the state’s debt to JBOC or that require JBOC approval for making mostly routine adjustments to the budget or for entering into certain debt-related transactions, such as refunding bonded debt.
The pandemic years have seen a dramatic increase in the Joint Budget Oversight Committee’s budgeting role. The state received $6.2 billion in aid from the federal American Rescue Plan Act of 2021. The fiscal 2022 state budget, adopted in June 2021, generally required JBOC approval for appropriations of pandemic-relief funds exceeding $10 million individually or $200 million in total. The fiscal 2023 state budget similarly required JBOC approval for pandemic-related appropriations exceeding $20 million individually or $300 million in total, apart from a one-time $60 million appropriation. Both the fiscal 2022 and 2023 state budgets included language providing that “the purposes, projects, and programs to be funded” by federal funds received pursuant to “a federal economic stimulus program or any other similar federal program … shall be subject to the approval of the Joint Budget Oversight Committee” when “the federal law does not delineate the specific purposes, projects, and programs to be funded by the federal funds.” In other words, the Legislature has delegated the awesome power to appropriate billions in unallocated federal aid to JBOC.
Ineffective oversight
Why JBOC? One justification is that it makes sense to consolidate financial oversight functions in a joint committee. That’s reasonable, but then it’s fair to ask whether JBOC has been effective in exercising oversight. It has not. The committee’s meetings are infrequent and, with the quiet bipartisan acquiescence of Trenton’s insiders, generally “fly below the radar” in rubber-stamp obscurity. But sometimes the Joint Budget Oversight Committee makes the news. In June 2021, Republican members of JBOC criticized the Murphy administration for transferring $20 million to a pandemic-relief payment program without seeking or obtaining JBOC approval. There is no indication that JBOC as a committee pushed back. Following complaints that JBOC had been slow to demand the administration disclose its plans for spending federal COVID-19 relief funds and for using a special fund set aside in the budget for debt defeasance and capital projects, JBOC ultimately approved $740 million in spending in November 2021 without receiving or demanding any testimony from the state Treasury department. Committee members thus had no opportunity to ask questions about particular spending items — even if they had wanted to. Moreover, according to press reports, the official meeting agenda provided few details about the spending items and the public had no opportunity to comment.
Is that effective oversight? No. It’s just bad government.
Another justification is that delegating some spending power to the Joint Budget Oversight Committee is “efficient” because good budget management requires a measure of flexibility in the face of changing circumstances. This plausible argument fails for two reasons. First, broad delegations of the Legislature’s appropriations power to a committee are unconstitutional. Second, when it comes to handling changed circumstances, there are readily available constitutional alternatives that would also enhance transparency and accountability.
The letter of the law
Please bear with me while I review the legal context.
Following the federal model, Article IV, Section 1 of New Jersey’s state Constitution vests the legislative (law-making) powers of state government in the Legislature. Article VIII, Section II, paragraph 2 provides in relevant part:
“2. No money shall be drawn from the State treasury but for appropriations made by law. All moneys for the support of the State government and for all other State purposes as far as can be ascertained or reasonably foreseen, shall be provided for in one general appropriation law covering one and the same fiscal year; except that when a change in the fiscal year is made, necessary provision may be made to effect the transition…”
In other words, all appropriations must be made by a law adopted by the Legislature. The state’s annual budget is a law. Although the Constitution provides that the annual appropriation law should support state spending “as far as can be ascertained or reasonably foreseen,” it is silent with respect to any changes within the year, except in the event of a change of state fiscal year. There is no provision for delegating the appropriations power to a committee. Why? Clearly, the framers understood that the Legislature could and should amend the annual appropriations law to accommodate unascertained or unforeseen changes in spending needs.
There is no reason to assume that the full Legislature doesn’t have the capacity to amend the annual appropriations law if it wants or needs to. Supplemental spending bills and end-of-year omnibus reconciliations are already routine. Other jurisdictions’ legislative bodies routinely amend their annual budget during the year. Under the New York City Charter, for example, the mayor is obliged to submit quarterly modifications to the city’s $101 billion budget (about twice New Jersey’s $50 billion budget) to the City Council.
Rather than adopting a process for regular budget modifications that involves the entire Legislature, and therefore a modicum of public accountability, New Jersey’s legislative leaders have utilized a politically expedient but unconstitutional and unnecessary workaround that obscures accountability. Decades of bipartisan acquiescence is no excuse. Delegation of broad appropriation powers belonging to the Legislature should be challenged and struck down.
