♪♪ >> From NJ PBS Studios, this is "NJ Spotlight News" with Brianna Vannozzi.

>> Hello, and thanks for joining us tonight.

I'm Joanna Gagas.

Brianna Vannozzi is off.

Coming up, a new poll puts New Jersey in last place for business friendliness.

We'll talk with one business leader sounding the alarm on what the state needs to do to change that ranking.

Plus, the state's crisis hotline, 988, is expanding, but its funding is not.

We look at the impact of the state budget on mental health services.

But first, continuing our analysis of the final budget, we take a look at the surplus and whether it's enough to cover a rainy day here in New Jersey.

That's next.

Major funding for NJ Spotlight News is provided in part by NJM Insurance Group, serving the insurance needs of residents and businesses for more than 100 years.

One measure of the state's fiscal health is the budget surplus.

It's essentially a savings account that the state can dip into in an emergency like a nationwide recession or a global pandemic.

Early estimates from Governor Mikey Sherrill's final budget calculate a surplus that's higher than expected, but the state remains in a structural deficit.

Here to break down those numbers is our budget and finance writer, John Reitmeyer.

John, great to see you.

We've talked a whole lot about what's in New Jersey's budget for fiscal year 27.

You recently looked closer at the state's surplus account, which came in at a higher number right than what was expected.

Can you tell us what the numbers are and what changed?

That's right, Joanna, and it's great to be with you today.

So the surplus is sort of like state government savings account.

It's the money that is kept on the side for a rainy day or when things are not going so well and you need cash if you're losing revenue.

And earlier this year, the Sherrill administration had been projecting the surplus would be around $7.25 billion, which sounds like a lot of money, and it is, but the final numbers that we just got from the budget that was signed into law two weeks ago showed that the surplus had actually risen to almost 7.7 billion by the time that last fiscal year closed at the end of June.

So that's a nice little boost that the state received as tax collections came in a little bit better than was originally forecast.

So it just leaves the state with a little bigger savings account as we're just getting a new fiscal year underway.

But John put that number in perspective in terms of how much that is of the what percentage that is of the overall budget.

Well, and that's where this starts to become a bigger conversation, because the state's budget is growing and in recent years has been growing pretty, pretty dramatically, and is now almost $61 billion.

And as part of the new budget enacted by Governor Sherrill and lawmakers, there's a plan to spend down some of this surplus, more than a billion, because they want to spend more money on an annual basis than the state will take in from taxes and other resources.

So this, the spend down will drop the surplus projected at the end of this fiscal year to just over $6 billion, which is about 10% of total spending.

Yeah, $6 billion of $60.7 billion as our total state budget.

When we heard from Governor Sherrill, I believe it was in March, maybe a little before March, she came out and said, "Look, we are in a structural deficit.

The state is in bad fiscal shape."

And she talked about how she would try to change that with her budget.

At that time, we were looking at about a $3 billion structural deficit.

With the final budget numbers in hand, how did she change that?

Right.

And that's a good question because this governor is not the first one to advocate for spending more than the state takes in.

And so what that creates is a gap or an imbalance between the amount of recurring revenue the state collects and the amount of spending the state does on an annual basis.

Because a lot of costs are increasing, if you just have to look at inflation in your household budget to know that, the same effect is happening to state government, whether it's employee health care or other rising costs.

At the beginning of the year, the Sherrill administration was forecasting expenditures were going to be about $3 billion more than tax collection.

So that's that structural imbalance that you're talking about.

Due to some things that they did to enact this new budget, there are some business tax changes that are increasing revenue.

There are some cutbacks that are reducing some of that planned projected spending.

That narrowed the gap to a little less than 1.4 billion.

So still managing a structural imbalance, but less than what was originally forecast earlier this year.

On average, how does New Jersey compare to other states in terms of how much it has in its rainy day fund?

That's another good question.

And so there are, there's some academic research in this area.

And at the end of the 2025 fiscal year, so looking back a little bit, New Jersey had a surplus at the time that was about $8 billion and was spending less than the current budget.

And back then, New Jersey was still behind the median for all 50 states in terms of what was in the surplus relative to total spending.

So it's all a relative exercise.

One state might have less money than New Jersey, but might spend a lot less than New Jersey.

And so as a percentage of spending, that's a bigger surplus, actually.

The other thing that the fiscal policy experts will tell you is it depends on how volatile your revenues are.

And in New Jersey, the income tax tends to rise and fall with the economy and the income tax covers about 30% of total spending.

So you have to look at the surplus in the context of what could happen to your revenue stream if an economic recession or downturn were to occur.

And so that's another factor to keep in mind as we talk about this.

And of course, those are all factors that the bond rating agencies take into account as they determine our state's credit rating.

I'm not asking you to guess what they're going to do, but do you have a sense of how this budget and the current surplus with the structural deficit, what position does that put us in for perhaps a credit upgrade or downgrade?

It's a good question.

I think it's a mixed bag in the sense that there was some progress on the structural deficit last year at this time.

We were actually looking at a bigger structural deficit, so they've made some progress on that.

Although the surplus last year was projected to be bigger and spending was less, but it's still projected to come in around that 10% mark, and I think that's a floor that you sometimes hear from the rating agencies.

And although some people might think this is sort of just an academic discussion, those rating agencies play a big role in determining how much the state, how much borrowing costs will be when the state has to borrow money, which ostensibly doesn't, you know, for a lot of things that can't be funded out of the annual budget.

And those costs are ultimately covered by taxpayers.

So we do have to pay close attention to what the bond rating agencies are thinking about New Jersey's credit worthiness, even if it seems sort of esoteric.

Yeah, it's I think about and I know you and I have talked about this a lot like having your credit card and that interest rate go up impacts whatever balance you have, right?

It's a lot like a credit score.

And so when you have a high credit score, you get more favorable terms when you want to borrow money.

Whereas when you have a poor credit score, unfortunately, you can get charged higher interest.

And even with some upgrades that New Jersey's enjoyed in recent years, New Jersey still has one of the worst credit ratings among U.S.

states.

And so it's still an area where progress is needed if we want to see lower borrowing costs.

When I spoke to the governor earlier this year, she said that she wanted to take on the state's fiscal health.

I asked her why not get to a budget that has a zero structural deficit.

She said, look, this is a two-year plan and she wants to get there, but it would take more than one year.

Do you see anything in this budget with not a lot of time left that indicates that in two years the state will be at a zero dollar deficit, structural deficit?

I think getting to zero even in two years might be a little ambitious.

However, the governor and lawmakers held the line on spending relative to inflation and even what the governor proposed as total spending in March.

Whereas in previous years we've seen hundreds of millions added to the budget in late June.

And that really didn't occur to the current fiscal year budget this year.

So that's maybe one sign of hope for those who are looking to see progress in this area.

Alright, great analysis as always.

John Reitmeyer, our budget and finance writer, thanks so much.

Always great talking to you.

-You're welcome.

Likewise.

-Continuing our coverage of the state budget, Governor Sherrill promised not to raise individual taxes in this budget, and she held to that, but she did change tax policy for business, which is expected to bring in more revenue for the state.

While business leaders are pushing back, saying the state needs to do more, especially to support small business.

We're citing a recent CNBC poll that ranked New Jersey dead last for business friendliness and 31st overall for its business climate.

I recently spoke with Tom Bracken, President and CEO of the New Jersey Chamber of Commerce, about these issues to get his perspective as part of our Under the Dome series.

Tom, it's great to have you on the show.

Obviously business is important every day, but today seems especially poignant given the CNBC poll that came out.

What do you make of the rankings of New Jersey 31st overall and dead last in business friendliness?

31st overall is very disturbing considering the array of assets that we have in our state, the location we have.

We're not utilizing all that obviously.

So to be ranked 31st is very disturbing, but probably more disturbing to me is to be ranked dead last in business friendliness.

That speaks volumes to how businesses have been treated in New Jersey for many many years.

We've been talking about that ad nauseum.

The business community needs much more attention and it has not happened and now it has manifested itself in a rock bottom rank of 50.

I mean that is very very embarrassing.

It should be to every legislator in the state of New Jersey because their lack of attention is one of the contributing factors there.

You recently wrote an op-ed before this poll came out that was released on ROI, and you talked about the need for the state to really look forward now and to put a focus on small business.

Clearly, we could talk about big business, small business, and both and probably be here an hour or more, but what is it that the state needs to do?

What types of policies do you believe encourage private investment, encourage growth, encourage job growth?

Well, there's two segments to that, Joanna.

One is we need to have our regulatory environment relaxed dramatically.

I know Kelly Doucette, who is engaged in that, is doing a very good job of addressing that.

That needs to be accelerated dramatically to get rid of all the regulations and the cause delays in permitting and things of that nature.

That needs to be one attack point.

And the other attack point is that we need to have more attention paid to businesses on helping get access to capital to start companies, to provide tax credits to the small business community, to allow them to engage in expansion, and also possibly grant money to help companies who have financing gaps that they can't fill with loans to provide the capital to expand their company or maybe even survive.

So there's many, many things that need to be done.

And I will throw out a compliment to Evan Weiss at the Economic Development Authority, who is addressing a lot of that.

And I think I'm very optimistic that he will provide a lot more attention to those issues.

Well, you raise a good point, because I want to ask you how you already so far assess the Sherrill administration's approach to business.

She on the campaign trail talked about reducing regulation.

You talked about the regulatory reality for so many businesses.

She did make changes to the state's licensing and permitting.

She's investing in minority and women-owned business.

Is that enough?

Do you see this administration focused enough on small business or where would you like to see more?

It is not enough, but it is a start.

You know, we needed to start.

We've needed to start for many, many years.

That is a start.

Also the outreach that the Governor, Kelly Doucette, our Lieutenant Governor especially, have done to go out and visit businesses to say that they are going to support businesses more than it has been in the past.

That has been a very, very key factor in helping the businesses have some optimism.

But you know, the time is over for the visits and the time is over for the discussion.

The time is now for getting action done.

And I will give kudos to the Lieutenant Governor who's been out there promoting business, advocating for business growth, talking about things he'd like to see done.

And the EDA is changing the way they're going to be doing business and supporting businesses.

There's a lot of very positive things going on in the current Sherrill administration.

But talking about them and doing them are two different things.

And I think it's time now for the not to stop the discussion that needs to always happen.

But to put things in place to get some action to make things available that will really assist the businesses in the state of New Jersey.

Realize that they're a valuable commodity.

They are supported by the administration and they and we want them to stay here and grow here.

Tommy say the time is now.

Some folks might say the time was before this new budget was put in place when a lot of policies were being considered.

Can you point to another state Ohio?

I know rank number one.

Can you point to something that Ohio is doing that New Jersey should emulate and should be included as part of the next budgeting process?

Ohio has an initiative called Jobs Ohio, which was started I believe maybe 12 or 13 years ago, which has a dedicated funding source to provide money for the business community to allow the businesses to get grants, to get tax credits for a workforce development, to help find locations for companies, to have a marketing initiative to attract companies to the business community.

Attract companies to the state of Ohio.

They have, the Jobs Ohio initiative is a very strong model that I'd love to see happen in New Jersey.

It's gonna take a lot of work and effort to get there.

And something like that is a combination of work between the government and the business sector and their legislature to get something done that's really enabled them to receive that number one ranking.

There always seems to be this conflict point between the idea of generating business versus business paying its quote fair share.

How do you increase your tax revenue when you bring and attract business to the state.

Well, if you bring and attract business to the state, you're going to create jobs.

Those companies are going to generate profits that are taxed.

The employees will be taxed.

It's it's revenue.

It's organic revenue that we need that we haven't been able to generate for many, many years.

We've been preaching for a long time that the only way to get the revenue needed to sustain the growing expenses of our state is to do it through organic, ongoing, reliable revenue.

The only way, Joanne, I know to do that is to provide resources to the business community, to our current businesses, stay here, they want to expand here, and we attract new businesses to the state.

That revenue is what we need and which would spur on our economy.

Our economy right now is I think in deep peril because there's no identified source for expanding the revenue we need.

What I just outlined is a very viable way to get that revenue.

All right.

I'm sure you will continue to have those conversations as we point out again that New Jersey is ranked dead last in business friendliness.

Tom Bracken, President and CEO of the New Jersey Chamber of Commerce.

Thank you so much for your time today.

- Thank you, Joanna.

- "Under the Dome" is made possible in part by the Corporation for Public Broadcasting, a private corporation funded by the American people.

(upbeat music) - 988 is the number to call if you're in crisis and need support.

It's a national hotline that's run individually by states.

Here in New Jersey, the 988 response efforts have been growing, but funding for the program and this year's budget did not grow.

I recently sat down with the Deputy Commissioner for Health Services, Valerie Melke, from New Jersey's Department of Human Services to talk about the hotline and where it's headed in the coming years.

Deputy Commissioner, thank you so much for taking some time to talk to us.

Can you explain to us what the 988 hotline is and how it all works?

Yes, thank you so much for having me here today.

So the 988 is a system, is actually a system of care.

It's a system that is utilized for individuals who are experiencing a crisis, whether it be a crisis related to their mental illness or a crisis that's related to substance use.

And so with 988, individuals can call 24 hours a day, seven days a week, reach someone here in New Jersey who is trained to respond to whatever is the concerns that are facing them at that moment in time.

In addition to our call centers, though, the 988 system is also comprised of someone to come to you, and so those are mobile crisis outreach response teams.

And then the third leg of the 988 system of care is Somewhere to Go, which are crisis receiving stabilization centers.

Yeah, thank you for breaking it down into those three components there.

I think it's easy to understand that way.

What does, what could a response look like if someone needs to come out, let's say?

Yeah, so when someone calls 988 and they want additional support other than the telephonic support, they agree to have someone come out to their home.

That is a team of two individuals.

One member of the team are individuals who have experienced mental health or substance use crises in their lives, and they are trained to provide, to be a part of this team to be, to provide response.

And then secondarily, there is a master's or a bachelor's level person who is also trained in acute care response that will come to individuals in their homes.

And so they're going to be in the hospital, sometimes they're meeting in coffee shops, in the park, wherever it's comfortable for that individual.

And then there's a third member of that team, which is a licensed clinician.

That person does not respond physically to the individual, but rather they're available on call 24 hours a day.

And so if the team has some questions, wants to consult with a clinician, they can do so live while they're meeting with the person.

So just for a little history here, in July 2020, the FCC officially adopted 988 as the three-digit number nationally, and then in 2022, New Jersey launched 988 as part of its national suicide, as part of the National Suicide Prevention Lifeline.

Since then, it's been expanding nationally and here in New Jersey, but I want to talk about the budget, because we saw in Governor Sherrill's most recent budget that funding for 988 stayed flat.

What does that mean right now for the expansion of the program?

So what it means is that we continue to operate the call centers.

We continue to support and operate the mobile crisis outreach response teams.

We received just in June alone, we answered over 10,000, 10,900 calls to our call centers, to our 988 call centers.

Over the course of the last year, we have in the mobile outreach teams, we have responded to over 1,300 individuals in just a year alone.

And so the funding that we currently have in our state's budget supports those initiatives.

But in addition to that, though, Joanna, one of the things that we don't talk about in terms of crisis response and resources here in New Jersey is that we have many other resources that aren't formally a part of the 988 system, but yet supports individuals when they're in crisis.

So we have early intervention support services.

They're available in every county .

>> How do people access those supports?

>> So they can walk into the EISS program in their county.

>> EISS stands for?

And it's like an urgent care center for behavioral health.

And so if someone is experiencing a crisis related to their mental health, they can go to one of these centers.

They're open six or seven days a week.

They're open six or seven days a week.

And then during the daytime and into some of the evening hours.

And so that's the reason.

- Let me ask you this.

We only have a little bit of time left and I wanna get to this.

I know the state's been working on these five regional stabilization centers.

Is the fact that the funding has stayed flat going to impact the development or opening of those centers?

Are they all functioning?

Can you just explain where you are in that process?

Yes, absolutely.

And so we are currently, we really are committed to the crisis receiving and stabilization centers and then becoming fully operational.

And so we continue to actively explore additional funding opportunities to support the launching and operations of the crisis receiving and stabilization centers.

So there's $28.8 million allocated.

Seems that there's more funding needed to get these off the ground.

I appreciate you coming on to talk about this with us, a really important topic and really, really terrific work that you all are doing on the ground for those in need.

Valerie Melke, Deputy Commissioner for Health Services at the New Jersey Department of Human Services.

Thank you.

Appreciate it.

Thank you very much, Noanna.

That's going to do it for us tonight.

I'm Joanna Gagas for the entire team here at NJ Spotlight News.

Thanks for being with us.

Have a great night and we'll see you right back here tomorrow.

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