>> Major funding is provided by rwj barnabas health, let's be healthy together.

Rowan University, educating New Jersey leaders and partnering with New Jersey businesses and transforming New Jersey's future.

Promotional support provided by New Jersey business magazine, the magazine of the New Jersey business and industry Association.

Reporting to executive leaders in all 21 counties of the Garden State since 1954.

And by the Politico New Jersey playbook.

Online at Politico.

♪ David:/ Just days to go until the governor's big speech.

It is "Reporters Roundtable."

Our panel today includes a reporter for Politico.

A budget and finance writer.

And an education reporter for the record.

We will hear from the panel in just a few minutes.

We begin today just a few days away from the governors annual budget address.

There are indications that this could be a tough budget year.

What does that mean for you?

Here to question -- answer that and that -- a few other tough questions is the speaker.

>> How are you?

David: I am doing OK. At the close of last session, I was speaking to the Senate budget committee chairman and he said about the budget session, what a lot of people seem to be saying.

Let me play that for you and then we will talk about it.

>> I think the budget process will be a little tight next year.

We are confident about the revenues, confident that post interest rate increases should be OK.

If there is a transportation trust fund renewal.

Some titles that need to be done.

The affordable housing component that is important to the speaker.

Ttf renewal.

We start all over again.

David: We heard your name in there.

We will break down some of those.

Do you agree with those who are predicting a tough budget season?

>> Every indication we have is that revenue has tightened up a little bit.

What I understand is, and we have not got a budget briefing yet, is that revenues will probably be around where they were.

But that spending and costs have increased.

As the budget chair indicated, inflation has had its impact just as it has two everyone in New Jersey.

That will probably make for a tougher budget than we have had in the last couple of years.

We always keep an eye on revenues for the future.

We have done a number of good things to put New Jersey in a very sound place to weather any challenges we have had.

We have had budget surpluses that will serve us well.

We have a fund that will allow us to continue to pay down debt.

Why I suspect that there will be a number of issues for us to work through and revenue has not been as strong as it has in the past, it has been anticipated.

We will have some work to do.

I think the budget chair is right.

This will be tougher than usual.

But it is kind of what we have come used to.

It is not that unusual.

I have been inherent to 4:00 in the morning on budget nights.

I think we have gotten used to that.

We have had federal funds that came as part of the pandemic relief which we have.

That has been spent down.

David: Let me get the question out of the way here, your friend's think tank put out a report last week that suggested programs might not be viable in the future.

I know it is not set to take in yet, but you are putting some money into that program this year in the budget.

Is the center off-base?

>> We are putting $200 million in it this year.

I think what really matters most is what your priorities are.

We have made affordability a top priority here in the state of New Jersey.

That is why the anchor plant was put -- plan was put in place.

And why we came up with the stay nj which is designed to help seniors.

When we talk about where we are going with our money, we have shown that when we put our minds to it, we will be able to get done the things we have committed to doing.

One example is school funding.

The highest school funding in the history of the state.

The other one is the fact that we made full pension payments.

People did not think we would be able to make that.

You probably remember talks about how the pension plan would never be sustainable.

The truth of the matter is we decided to do something that was pretty simple.

By doing that, we have put that pension plan into better shape.

When we talk about getting things done, let's talk about priorities.

Stay nj is a top priority.

David: Let's talk a little bit about revenue.

I should say right up front that I am not the budget and finance guy.

That said, I know enough to know that our tax dollars are what the state uses as revenue.

We keep hearing about proposed increases in said taxes.

I will name some of them to you and if you can tell me quickly what to expect.

Sales tax?

Going up?

>> When we are talking about, there have been any number of conversations around what we would need to go about raising.

Sales taxes one.

Cbt comes up.

That is a corporate business tax.

David: I will ask you about that.

>> I think those things will come up in conversation.

There are things that I think are we will end up talking around.

David: Sales tax is one of them that has been brought up?

>> I do not like to sales tax.

If there are conversations around other kinds of revenue raisers we would have to take that in context.

Why would we do this and where were the funds go?

Making New Jersey more affordable is at the very top of my list.

Stay nj is something we will have to get done.

We have enacted 20 tax cuts over the time that I have in in this seat as the speaker.

I think our record on working hard to control taxes is pretty strong.

David: You mentions the corporate business tax surcharge.

Just this week, progressives have been calling on lawmakers as this budget process gets set to begin to reinstate the corporate business tax surcharge.

I know the governor said promises made, promises cap.

-- kept.

Is there room in your mind for reinstating the corporate business tax surcharge?

>> As I said before when we were talking about the list of things , the truth of the matter is I suspect that will come up over the course of the next several months as we go through this budget process.

The truth of the matter is we always look at proposals like come along.

But you need to look at them in context.

Where are we at in real numbers?

We can speculate about it and talk about it generally in terms of revenue being a little softer.

How soft is that?

What about next year?

Where we will be -- will we be?

What we do with the surplus we have?

How will we manage all of those things?

You cannot just say yes or no.

It is not nearly that simple.

David: So it is a process is what you are saying?

And the process has not yet even begun.

I have literally 20 seconds and a couple of questions so quick answers.

Have you endorsed in the Senate primary at?

>> I am working on it.

David: You will endorse someone?

>> Yes.

David: Are you going to run for governor or what?

>> To you want me to?

[LAUGHTER] David: As I said to several candidates this week, the more the merrier.

>> I will say this, I admire, the short answer is I have not made that decision.

But I do admire everybody who puts their hand up and says I want to serve the people of New Jersey and I think having a number of candidates who will offer different views and solutions to challenges that we have is good and healthy for our democracy.

I have yet to make the final decision.

David: All right, good to see you, thanks for coming on with us.

>> Be well.

David: All right, panel, good to see you.

Welcome.

I feel like this is budget preseason right now.

Did you glean anything from what the speaker had to say?

>> I think he is responding to or reacting to what we have seen so far.

He has been around for a while.

He knows no budget in New Jersey is made or broken we get to April.

The collections up to the end of January were behind last year's pace at this time in the fiscal year.

But not so far behind that it is out of the ballpark to continue the baseball analogy.

When we get through April we will know more.

The challenge is that last year when we were getting to the end of June for the deadline for the budget, the forecasts for the current fiscal year were downgraded by about a billion dollars.

What Coughlin and other lawmakers did was not lowering their own spending.

They added about a billion in new spending.

When we were talking this time last year about the potential for a $10 billion surplus and spending $2 million to pay down bonding debt, that got reduced to an $8 billion surplus and a couple hundred million dollars being put aside for paying down debt on a pay-as-you-go basis.

You can only do those kinds of things so many times and then you use of those types of resources.

You are supposed to have your annual revenues allied with your Avenue -- annual spending.

David: We saw a report that you wrote about that suggested maybe programs like they -- stay nj should not be planned for.

Anything we know about that?

John: I want to be clear on that, they did not necessarily opine as a group on any individual program.

They looked long-range at whatever trajectory is, what our current spending expenditure projections are and how they line up with our current revenue projection.

They went out five fiscal years from now.

There is misalignment.

Under our current forecast for revenues, we were in a few years recently where we were seeing a lot of year-over-year growth.

We are no longer in that atmosphere.

But we have things like school funding, general inflation, programs you spend more each year without adding anything new to the budget.

That is where the long-term projection start to misalign.

You had the speaker and the Senate President out there with his ambition -- ambitious senior property tax initiative that will end up costing a lot of money in a few years.

That will only add to the misalignment unless you make other adjustments.

That is what always happens.

New Jersey cannot run at a deficit.

There will be other adjustments, we just do not see them yet.

David: Everybody breaks this process, even in years when the state is flush.

What can we expect when the money gets tight?

Will the BNI fight over stay nj over Christmas tree items?

>> I think Christmas tree items are the easiest politically to let go.

I cannot get as technical on that.

I am not as an expert in the budget process.

I can give you a vibes based assessment.

This year it is possible that taxes and collections are not that bad.

They may be able to avoid a major tax hike.

But by the time Murphy leaves office, something will have to give.

Based on reading between the lines with what Coughlin and Murphy have said, when you raise the sales tax and the cbd, they say they don't like the idea of doing the sales tax because that hits everyone.

When you look at it and you look at the governor's words, he is still technically committed to not raising the corporate business tax.

Politically that is probably the easiest to do.

The business community will not like it, but reading between the lines, that one is a lot more likely to go up than the sales tax.

I often wonder if the sales taxes floated out there as a more painful alternative to raising the corporate business tax.

That is my assessment.

You want to listen to John over there.

I have no problem with nerds.

[LAUGHTER] He actually knows what he is talking about.

David: Company policy now prohibits most of our traditional hazing.

We will just say welcome to the show.

>> Thank you.

David: Lots to talk about.

About education funding and what that will look like in this budget.

The Senate education committee chair says the school funding formula needs to be blown up in order to be made more fair.

Let's hear from him and then we will talk about it.

>> A lot of things have changed since the school funding formula came into law in 2008.

We have seen over the last six years that the funding formula cannot be based on enrollment and property values.

We have mental health costs, transportation costs, special education costs.

This is the last year of the school funding formula when you have winners and losers and it means a whole revamping.

David: What is the status of the funding formula and do we know what kind of changes people are talking about?

>> With the school funding formula, it was created in 2008-2009.

I think the senator was referring to an adjustment to that.

That is a seven year kind of change that in -- ends this academic year.

Advocates everywhere and the senator and legislators want to review it.

It is really important that they do.

When this formula was created and when the law that change that was created in 2018, there were many costs that were not taken into consideration.

Like he said, that includes special education, post-pandemic costs, facilities.

Not just in the urban districts but even in the suburban districts, the schools need to be rebuilt.

Paul those costs have to be taken into consideration and that is what they really want to focus on which is reviewing very thoroughly this funding.

David: Is this just representative of the chairman's ambitions to blow up the school funding formula?

Or is there interest in doing something substantive with it right now?

Mary Ann: there is interest in doing something substantive.

They have talked about it for the past two years.

The education Law Center, which is a major advocate, they asked the Senators to put $1 million into an appropriation to review the formula last year.

They said they will do it again.

They want outside experts to come in and really rehash it.

It is very important and it is also very opaque to the school districts and to the public.

There is some interest in making it more transparent.

David: There is a bill out there to let towns exceed the 2% local tax cap if their schools lose funding.

I thought everybody was exceeding the cap anyway.

What is the status of that?

John: You can exceed the cap right now already under certain exceptions that are allowed for things like health care and benefits.

There are already some exceptions.

You can exceed the cap if you want to give voter approval to do so.

You can just simply, if you want to increase taxes for your local schools, go to your voters, make a case for that, and see how it goes at the polls.

The legislation being discussed right would allow districts that see these kind of cuts under what is considered s2 but it is going back to the original intention of the school funding formula, I happened to be around when they passed that one.

The idea would be that you could give these districts a little bit of relief by not making them go to the voters to increase taxes by more than 2% year after year and just let them do it automatically.

I guess that would take away some of the pressure that they might face.

David: Big news out of the Democratic Senate primary.

Tammy Murphy's campaign manager 's out one month after being announced.

Visit a crisis yet -- is it a crisis yet?

Matt: Are they calling it a crisis?

Of course not.

It is not a look of a campaign that is going well.

Talking to people in the campaign, they tell me basically it was more of a personal style thing.

It was not about how it is going necessarily or strategy.

My thought is, or strategy is her strategy.

She has to depend on the political boss system and all of her connections to the New Jersey Democratic machine and of course her relationship with her husband.

That cannot change because that is what she is running on.

I think the campaign, if it is not in a crisis yet, is already close.

There are couple of conventions coming up or she is probably the underdog.

In Hunterdon and Burlington County.

It has been one bad thing after another in the campaign.

I think she severely misjudged the mood of the Democratic electorate especially after Menendez, somebody who put his son in Congress and got the Democratic machine to go along with it.

I think there is a big reaction on the left, especially in the suburban, left-leaning voters who have really come to dominate Democratic primaries, Tammy Murphy's is depending on the machine and the urban bosses.

It has kind of shifted a bit.

I think she misjudged it when she got in and expected to bulldoze her way through.

Andy Kim played it so smart getting in early like that and getting people excited about his candidacy.

They can argue that this is just online versus real people on the ground.

Once you get into the mom mouth convention, her home county, once you get into that and the boots on the ground, the -- those on the low-level go for Andy Kim by a large margin.

David: Take us out.

We have 30 seconds for an update on the school segregation lawsuit.

Where does that stand?

Mary Ann: the school segregation lawsuit, the parties are in mediation right now.

They were asked to go to mediation in December.

Apparently it is going well according to a report that the main attorney for the plaintiffs filed with the courts.

He has asked for an extension and the time they have for mediation.

They are expected to go until April.

According to the report, they are making progress.

That is a good thing because nobody wants to go into a years long trial.

People do want to resolve this very complicated issue very quickly.

As quickly as possible.

David: Time for our only in Jersey moment.

Headlines and nodes that are quintessentially Jersey.

Matt: This is a tale of how a very politically collected diner project in Patterson, it was run by a big community activist so it means a lot to some people.

The former business administrator is involved.

The Patterson press reported that they went and saw that they do not have permits.

They did not get any kind of explanation from the business owner.

He said, I do not think you want this Niner to open.

I have known a lot of New Jersey reporters over the years and I don't know any who do not appreciate a good jersey diner.

It is a very unlikely thing.

I do not personally know this reporter but I will guess that that is incorrect.

David: Shoot the messenger.

Mine comes from Newark.

The mayor made his announcement for governor.

The next day he made what was the first stumble of the campaign.

Here's what he said.

>> Fruit loops and Apple jacks may look different but they taste the same.

David: I get where he is coming from and I appreciate the metaphor.

But it raised a minor ruckus on social media, with many suggesting that Froot Loops taste nothing like Apple jacks.

One contentious columnist called it the first live of his campaign -- lie of his campaign.

Others called it blasphemy and screamed, this will not stand.

I have always been a Kyrgios man -- cheerios man myself.

He never expected this would come -- become the first pork roll versus Taylor ham.

Or did he?

Good to see you all.

Thank you to Speaker Coughlin for joining us.

You can follow the show on x and find more full episodes when you scan the QR code right there on your screen.

For all of the crew here in downtown Newark, thank you for watching, and we will see you next week.

>> Major funding is provided by rwj Barnabas health.

Let's be healthy together.

Rowan University, educating New Jersey leaders, partnering with New Jersey businesses, transforming New Jersey's future.

Promotional support provided by New Jersey business magazine, the magazine of the New Jersey business and industry Association, reporting to executive and legislative leaders in all 21 counties of the Garden State since 1954.

And by the Politico New Jersey playbook.

A topical newsletter on Garden State politics.

Online at Politico.com.

♪