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Office of Management and Budget

The State Budget Process

Budget Planning
  • Review of Governor's Program Priorities
  • Economic Forecasts
  • Demand Assumptions
  • Program Analysis
  • Preliminary Revenue Estimates
  • Provide Preliminary Budget to Departments
Planning Documents
  • Ability to Provide Services Within Budget
  • Priorities for Reductions
  • Prioritize List of Expansions of Current Programs or New Programs
  • Review Planning Documents with OMB
Finalize Recommendations
  • Review/Analyze Agency Budget Requests
  • Formulate and Review Budget Recommendations
  • Governor makes Final Decisions
  • Governor's Budget Message to Legislature
Prepare Appropriations Act
  • Review/Analyze Budget
  • Review Analyze/Revise Revenue Estimates
  • Appropriations Act Enacted by Legislature
Appropriations Act
  • Review/Analyze Impact of Budget Changes in Appropriations Act
  • Governor may veto specific appropriations and must "certify" revenue levels
  • Governor signs Final Appropriations Act into Law

The State Budget Process is designed to result in budget decisions that are informed by performance, with a focus on furthering agency core missions.  Implementation of the budget process usually begins during the month of August, some 11 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 September.  Among other things, this enables the agencies to determine how to best allocate available resources to meet their core missions in the coming budget year. The ensuing planning process includes reviews of the Governor’s program priorities, as well as economic forecasts, demand assumptions, and analyses of selective program areas.  OMB provides general guidance to each State agency in September, including establishing preliminary budgets.

Agencies prepare planning documents that describe: (1) their ability to achieve their core missions at the preliminary budget level (including projections of mandatory growth); (2) the agencies’ priorities for reduction of current services if requested, and the impact of such reductions on their core mission areas; 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 usually culminates in February with the submission of the Governor’s Budget Message, representing the Governor’s recommendations for allocating available resources, to the Legislature.  The Budget Message is delivered to the Legislature on or before the fourth Tuesday in February (unless superseded 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, analyzes the capital requests, and recommends projects to the Governor.  The Governor, in turn, selects projects to be recommended in the annual Budget Message.

The Legislature, through a series of hearings conducted by its appropriations committees, reviews the Governor’s Budget 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 bill is sent to the Governor. The Governor may sign it, conditionally veto it (returning it for changes) or veto it absolutely.  The Governor also 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 the Office 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.

Last Updated: Tuesday, 02/22/22