The current budget process, the Integrated Planning and Budgeting Process, was first implemented for the production of the fiscal year 1990 - 1991 State Budget, replacing other systems such as Zero-Based Budgeting (ZBB) and the Planning, Programming, and Budget System (PPBS).  It uses several key features from previous budget processes and is designed to result in planning-driven budgets.  Implementation of the budget process usually begins during the month of April, some 15 months prior to the year for which the budget will be effective.  The State Budget cycle is set on a fiscal year basis, which extends from July 1 to June 30 of the following year.

To formally initiate the process, the Office of Management and Budget (OMB) provides salary projection reports and technical budget instructions to the departments in August.  Among other things, this enables the agencies to determine how their base budgets, including any desired reallocations, should be arranged in the coming budget year.  Any recommended changes later identified in the budget process will be applied to this base.

The ensuing planning process, includes reviews of the Governor’s program priorities, economic forecasts, demands assumptions, and analyses of selective program areas.  OMB provides general guidance to each State agency in September, including establishing preliminary budget targets.

Agencies prepare planning documents that describe: (1) their ability to provide current services within the budget target (including projections of mandatory growth); (2) the agencies’ priorities for reduction of current services if requested; and (3) priority packages representing either expansion of current programs or new programs. OMB reviews the planning documents with the agencies from November through mid-January, when preliminary recommendations are agreed upon.

During the months of January and February, the Director of OMB reviews budget recommendations with the State Treasurer, the Governor, and the Governor’s staff.  Normally, the Governor makes the final decisions in February.

The planning portion of the budget process culminates in the final submission of the agency budget request to OMB in February, which is forwarded to the Legislature.  The Budget Message, representing the Governor’s recommendations on how revenues should be allocated, is delivered to the Legislature on or before the fourth Tuesday in February (unless superceded by legislation).  From year to year, the Budget is the single most important policy statement that the Governor makes as he or she allocates the State’s resources for programs and services.

The annual review process for capital spending requests and recommendations, which runs somewhat parallel to the process described above, has several stages.  All State departments requesting capital funding must submit a seven-year Capital Improvement Plan to the New Jersey Commission on Capital Budgeting and Planning.  Each capital project request must include an operating impact statement. The Commission schedules public hearings for each agency, analyzes the capital requests, and recommends projects to the Governor.  The Governor, in turn, selects projects to be recommended in the annual Budget Proposal.

The Legislature, through a series of hearings conducted by its appropriations committees, reviews the Budget Proposal and makes changes.  The Legislature also reviews the revenue estimates included in the Governor’s Budget and, based upon several additional months of actual revenue collections in the current fiscal year, makes adjustments to the these revenue projections and surplus estimates. 

The Budget, including changes made by the legislative committees, then must be approved by the Senate and the Assembly. According to the New Jersey Constitution, a balanced Budget must be approved as an Appropriations Act and signed by the Governor before July 1.  After the Legislature passes the Appropriations Act, the Governor has the power to veto specific appropriations (line items) or appropriation language segments, some of which may have been added by the Legislature as a result of its review.  The line-item veto allows the Governor to reshape the final Budget and ensure that appropriations do not exceed the certified level of revenues.  (As part of the final Appropriations Act, the Governor must  “certify” the level of revenues in order to meet the constitutional requirement of a balanced budget.)  The final approved Budget, which includes the Governor’s line-item vetoes and certification of revenues, is the Appropriations Act.  Once the budget is enacted, it becomes an effective tool for fiscal control and for monitoring program effectiveness. 

Throughout the course of the fiscal year, the Legislature has the authority to pass legislation that provides funding for programs and projects above and beyond those provided for in the Appropriations Act. The additional amounts of funding provided by these acts of the Legislature are referred to as  “supplemental appropriations.”  The Director of Management and Budget also has statutory authority to authorize supplemental appropriations at any time during the fiscal year by virtue of authorizing budget language contained in the Appropriations Act.  This is accomplished and documented by the issuance of Directory Letters by OMB.