In local budgeting having a surplus is often a good thing providing a cushion against unexpected downturns. For example in the 2016 Union County budget it was reported:
Faella said the county’s surplus increased from $31 million last year to $55 million this year, which has maintained the county’s bond rating.
New Jersey also has developed a surplus account (though they define it as ‘pension contribution’) and it looks like they may need to tap it again.
It was just reported:
Acting state Treasurer Ford M. Scudder and financial analysts from the Office of Legislative Services are scheduled to testify before the Assembly Budget Committee on Wednesday about Christie’s $34.8 billion budget proposal for the coming fiscal year. Experts are also expected to provide lawmakers with an update of New Jersey tax collections in recent months and of broader economic trends.
In total, the OLS is now forecasting that the state will collect $1.1 billion less in taxes than Christie is assuming for the budget that ends in June and for the one now being considered by lawmakers.
In the current fiscal year, OLS forecasts a shortfall of $487 million for the $34 billion budget. That shortfall would have to be balanced with either cuts or more revenue before June 30.
Lawmakers must approve a new, balanced budget before July 1. The proposed $34.8 billion plan Christie proposed earlier this year is off by $622 million, according to the OLS revenue estimates.
So how will this shortfall be handled? The article ends with this paragraph:
For the current fiscal year, Christie has proposed a $1.3 billion contribution to the pension funds. For fiscal 2017, Christie has announced plans to contribute $1.86 billion. Reducing those payments could trigger more downgrades from Wall Street credit-rating agencies, which shifted New Jersey’s investment rating to historically low levels after Christie’s past pension maneuvers.