Treasury Releases List of Spending Items Placed in Reserve Pursuant to Governor’s Executive Order Designed to Protect State’s Fiscal Health

(TRENTON) – The Department of the Treasury today released the list of spending items in the newly enacted FY 2020 Appropriations Act that have been placed into reserve pursuant to Executive Order No. 73 signed by Governor Murphy on Sunday.

The Executive Order authorized the Director of Treasury’s Division of Budget and Accounting (more commonly referred to as the Office of Management and Budget) to immediately identify, and place into reserve, items of appropriation in an amount sufficient to ensure that the state budget remains in balance while maintaining a responsible anticipated surplus balance of $875 million, as well as a Rainy Day Fund deposit of $401 million.

“As directed by the Governor, we have compiled a list of appropriation items that have been placed in reserve until further notice,” said David Ridolfino, Acting Director of Treasury’s Office of Management and Budget (OMB). “As noted in the Executive Order, the items placed in reserve will help the state maintain the surplus goals outlined by the Governor. Our review, pursuant to Executive Order 73, is ongoing and will continue as new or additional information regarding individual items of appropriation is available.”

The Executive Order (EO) was deemed necessary after the budget passed by the Legislature included up to $235 million in questionable savings items the administration identified as not likely to materialize, as well as initiatives the Legislature added but failed to adequately fund.

The EO laid out the following criteria for consideration by the Director in identifying spending items to be placed into reserve, including, but not limited to:

• the amount of the item of appropriation;
• the likely statewide or localized impact of the item;
• the history of state support for the item;
• the timing during the fiscal year of any payment(s) in support of the item; and
• the ability to delay payment until later in the fiscal year while monitoring overall budget performance.

The Governor’s EO stipulated that items for consideration should not be limited to legislative additions to the budget, but instead include all items of appropriation. It also stipulated that the following spending items should not be considered for reservation: items supporting current state-administered programs, services, and benefit levels, particularly items that relate to the health, safety, or welfare of residents.

After weighing all of these factors, the Director of the Office of Management and Budget (OMB) notified the Governor and Treasurer that appropriation items totaling $235 million have been identified and placed into reserve. In total, either a portion or all of the full amount appropriated for 64 line items were placed in reserve. A full list of those items is included below and a copy of the Director’s letter is below.

Pursuant to the EO, the Treasurer will monitor whether savings initiatives identified as at risk of non-achievement have actually materialized, and take into consideration monthly revenue collections and other factors, in order to ensure that the estimated Fiscal Year 2020 undesignated fund balance, plus the balance in the Rainy Day Fund, total at least $1.276 billion when added together.

The Treasurer and the OMB Director are authorized to place additional appropriation items in reserve throughout the fiscal year as long as the conditions that necessitate the EO persist. If, upon notification from the Treasurer that amounts in excess of the targeted fund balance are anticipated to be available for expenditure, the Director may release items of appropriation from reserve.