"Zero-Based Budget Act;" requires State Treasurer to develop and integrate certain zero-based budgeting practices and procedures in preparation and submission of Governor's annual budget message.

A1497

ASSEMBLY, No. 1497

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman ROY FREIMAN

District 16 (Hunterdon, Mercer, Middlesex and Somerset)

Assemblyman ALEX SAUICKIE

District 12 (Burlington, Middlesex, Monmouth and Ocean)

SYNOPSIS

���� "Zero-Based Budget Act;" requires State
Treasurer to develop and integrate certain zero-based budgeting practices and
procedures in preparation and submission of Governor's annual budget message.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
requiring the State Treasurer to develop and integrate
certain zero-based budgeting practices and procedures in the preparation and
submission of the Governor�s annual budget message, supplementing chapter 18A
of Title 52 of the Revised Statutes and amending P.L.1944, c.112.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� (New section) This act
shall be known and may be cited as the �Zero-Based Budget Act.��

���� 2.��� (New section)� The
Legislature finds that there is public need to reform the State budget
process.� Economic uncertainty combined with declines in the amount of
resources available to deliver critical goods and services has compelled the
State to reassess what is essential and to reevaluate the way in which public
tax dollars are proposed and allocated for State spending.�

���� Under the current budget
process a reassessment and reevaluation of this size and scope is impractical
if not impossible.� Requests for appropriations and permissions to spend are
evaluated based on spending requests above and beyond amounts allocated during
the previous fiscal year. The base of past spending is not fully vetted, and
the efficiency and effectiveness of current programs and activities is not
scrutinized with the detail adequate to prioritize the needs of one department
or agency over the needs of another.

���� The development and
integration of zero-based budgeting within the existing budgetary framework
would provide the Executive, the Legislature, and ultimately the people of the
State of New Jersey with the capacity to evaluate, scrutinize, and prioritize annual
State appropriations.� Moreover, it would allow the State to construct an
annual budget from the ground up, justifying the need for and use of each tax
dollar allocated for appropriation.� The Legislature, declares, therefore, that
it is in the public interest to require the State Treasurer to design and
develop a State budget process that utilizes the practices of zero-based
budgeting, and to ensure that these procedures are integrated in the
preparation and submission of the Governor�s annual budget message.

���� 3.��� (New section)� For
purposes of this act, the following terms shall have the following meanings:

���� �Director of the Division of
Budget and Accounting� or �director� means the Director of the Division of
Budget and Accounting in the Department of the Treasury.

���� �Spending agency� means those entities deemed a
�spending agency� as that term is used in subsection a. of section 5 of article
3 of P.L.1944, c.112
(C.52:27B-14)
.

���� �State agency� means any of the principal
departments in the Executive Branch of State Government, and any division,
board, bureau, office, commission, or other instrumentality within or created
by such principal department; the Legislature of the State and any office,
board, bureau, or commission within or created by the Legislative Branch of
State Government; the Judiciary of the State and any office, board, bureau, or
commission within or created by the Judicial Branch of State Government; and
any independent State authority, commission, instrumentality, or agency.

���� �Zero-based budget� means an approach to
developing and evaluating
requests for appropriations or
permissions to spend based on the cost-effective achievement of the tasks,
goals, and objectives of a particular spending agency without regard to prior
appropriations or spending permissions, adjusted for inflation or otherwise.

���� �Zero-based budget process� means a process of
budgeting in which a spending agency�s request for appropriation or permission
to spend is evaluated and justified, in whole or in part, based upon the
cost-effective achievement of the tasks, goals, and objectives of a particular
spending agency without regard to prior appropriations or spending permissions,
adjusted for inflation or otherwise.

���� 4.��� (New section)� a.� T
he State Treasurer, in
consultation with the Director of the Division of Budget and Accounting, shall,
on or before July 1, 2019, design and develop, or cause to be designed and
developed, a State budget process for State fiscal years commencing on and after
July 1, 2020, which requires each spending agency required to file a request
for appropriation or permission to spend, in accordance with section 5 of
article 3 of P.L.1944, c.112 (C.52:27B-14), to justify their request, in whole
or in part, utilizing the practices and procedures of a zero-based budget.

���� b.��� At a minimum, the
zero-based budget process developed in accordance with subsection a. of this
section shall require spending agencies to justify their request, in whole or
in part, by submitting:

���� (1)�� a statement outlining
the goals and objectives intended to be accomplished as a result of the
spending agency�s request;

���� (2)�� a statement delineating
each of the various activities, programs, and services to be performed as a
result of the request;

���� (3)�� a compilation
enumerating the statutory and regulatory provisions which comprise the spending
agency�s legal authority, if any, to perform each activity, program, or
service;

���� (4)�� a description of the
methodology and approach used to carry out each activity, program, or service;

���� (5)�� an itemized estimate of
spending required to maintain each activity, program, or service at its current
level of performance, together with an evaluation of the quality and quantity
of services provided;

���� (6)�� a projected estimate of
spending required to maintain each activity, program, or service at the minimum
level of service required by statutory or regulatory authority, together with
an evaluation of the quality and quantity of services required at that level;

���� (7)�� a statement identifying
each group, stakeholder, or community affected or intended to be affected by
each activity, program, or service, and a quantitative estimate of any
potential consequences that may result if the spending agency�s activities,
programs, and services are eliminated;

���� (8)�� a statement detailing
any other State, federal, or local units of government which administer a
similar activity, program, or service and an outline describing the
interaction, if any, among such departments and agencies;

���� (9)�� a statement prioritizing
by numerical ranking, the activities, programs, or services carried-out by a
spending agency with respect to each activity�s, program�s, or service�s
capacity to fulfill the spending agency�s stated goals and objectives during the
current and ensuing fiscal years; and

���� (10) any additional data or
information deemed necessary or appropriate by the State Treasurer or the
Director of the Division of Budget and Accounting to justify a spending
agency�s request for appropriation or permission to spend.�

�

���� 5.��� (New section)� a.� The
State Treasurer, in consultation with the Director of the Division of Budget
and Accounting, shall, on or after July 1, 2019 but before July 1, 2020,
implement the zero-based budget process designed and developed in accordance
with section 4 of P.L.��� , c.�� (C.������ ) (pending before the Legislature as
this bill), and shall, for State fiscal years commencing on or after July 1,
2020, require each
spending
agency required to file a request for appropriation or permission to spend in
accordance with section 5 of article 3 of P.L.1944, c.112 (C.52:27B-14), to
file their request utilizing the practices and procedures of the zero-based
budget designed and developed in accordance with

section 4 of
P.L. , c. (C. )
(pending before the Legislature as this bill)
.

����
b.
���
The State Treasurer

shall
take such anticipatory steps as may be appropriate to integrate the zero-based
budget process within the existing budgetary framework, and shall adopt,
pursuant to the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.), rules and regulations necessary to
effectuate the purposes of this act.

���� c.���� Spending agencies are
directed to cooperate with the State Treasurer and the Director of the Division
of Budget and Accounting in compiling data and information necessary to
implement and integrate the zero-based budget process designed and developed in
accordance with section 4 of P.L.��� , c.�� (C.������ ) (pending before the
Legislature as this bill).�

���� d.��� The State Treasurer and
the Director of the Division of Budget and Accounting shall be entitled to call
to their assistance, and avail themselves of the services of, the employees of
any State agency as may be required and as may be available to design and develop,
implement and integrate the zero-based budget process in accordance with this
act.

���� 6.��� (New section) The State
Treasurer shall, on or before December 1, 2020 and on or before that date each
year thereafter, prepare and transmit to the Governor and, pursuant to section
2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a report:
outlining the steps
undertaken to comply

with section 4 of
P.L. , c. (C. )
(pending before the Legislature as this bill);

describing any shortcomings
associated with the implementation or integration� of the zero-based budget
process as required pursuant to

section 5 of P.L.��� , c.��
(C.������ ) (pending before the Legislature as this bill)
;
and recommending additional steps or modifications to improve or expand
upon the zero-based budget process.
�

���� 7
.��� Section 1 of Article 1 of P.L.1944, c.112
(C.52:27B-1) is amended to read as follows:

���� 1.��� As used in this act, unless the context
clearly indicates otherwise:

���� "Department" means the
[
State
]
Department of
[
Taxation and Finance herein established
]

the Treasury
.

���� "Commissioner" means the
[
commissioner and head of the
]
State
[
Department of� Taxation and
Finance
]

Treasurer
.

���� "Director" means the director of an
indicated division
[
, herein established,
]
in the
[
State
]
Department of
[
Taxation and Finance
]

the Treasury
.

���� "Request Officer" means the principal
officer of a department or board in the Executive Branch of the State
Government.

����
�Zero-based budget process� means a process
of budgeting in which a spending agency�s request for appropriation or
permission to spend is evaluated and justified, in whole or in part, based upon
the cost-effective achievement of the tasks, goals, and objectives of a
particular spending agency without regard to prior appropriations or spending
permissions, adjusted for inflation or otherwise.�

(cf: P.L.1944, c.112, art.1, s.1)

���� 8.��� Section 5 of Article 3
of P.L.1944, c.112 (C.52:27B-14) is amended to read as follows:�

���� 5.���
[
On
]

a.� For
State fiscal years commencing on or before July 1, 2019, on
or before
October first in each year each department of the State Government, board,
commission, officer or other State agency, hereinafter in this article called
"spending agency," shall file with the
[
commissioner
]

State
Treasurer
a request for appropriation or permission to spend
[
, as the case
may be
]
,
which shall specify all expenditures proposed to be made by such spending
agency during the next ensuing fiscal year.

����
b.��� For the State fiscal
year commencing on July 1, 2020 and for each State fiscal year commencing
thereafter, on or before October first in each year each spending agency shall
file with the State Treasurer a request for appropriation or permission to
spend, which shall specify all expenditures proposed to be made by a spending
agency during the next ensuing fiscal year utilizing the zero-based budget
process developed in accordance with section 4 of
P.L. c. (C. )
(pending before the Legislature as this bill).

(cf: P.L.1944, c.112, art.3, s.5)

���� 9.��� Section 6 of Article 3
of P.L.1944, c.112 (C.52:27B-15) is amended to read as follows:�

���� 6.��� A request provided in
subsection
a. or b. of
section
[
five
]

5 of
article 3 of P.L.1944, c.112 (C.52:27B-14)
shall be made by the request
officer.� In the case of the Supreme and Superior Courts, the request officer
shall be the administrative director of the courts under the direction of the
Chief Justice of the Supreme Court and, in the case of the Legislature, the
request officer shall be the
[
secretary
of the Senate and the clerk of the General Assembly, respectively
]

Executive
Director of the Senate Majority Office, the Executive Director of the Assembly
Majority Office, and the Executive Director of the Office of Legislative
Services
.

(cf: P.L.1953, c.49, s.51)�

���� 10.� Section 7 of Article 3 of
P.L.1944, c.112 (C.52:27B-16) is amended to read as follows:�

���� 7.���
[
Said
]

a.� A

request
filed pursuant to subsection a. or b. of section 5 of article 3 of
P.L.1944, c.112 (C.52:27B-14)
shall be made on forms
[
to be
]
furnished by
the
[
commissioner
]

State
Treasurer
and subject to such rules and regulations as
[
he
]

the State
Treasurer
shall prescribe
[
from
time to time
]

and shall show in detail:

����
[
a.
]

(1)
� A statement
exhibiting for the next ensuing fiscal year all estimated revenues; the
estimate of revenues for the current fiscal year and the actual revenues for
the past completed fiscal year;

����
[
b.� The
]

(2)� A statement identifying
and providing justification for each of the
several purposes and itemized
amounts for which appropriations or permissions to spend are requested, without
deductions for estimated revenues allocated to such spending agency
;
provided however, that a request filed pursuant to subsection b. of section 5
of article 3 of P.L.1944, c.112 shall provide justification for a spending
agency�s request for appropriation or permission to spend utilizing data and
information collected and submitted as required by the State Treasurer to
comply with the zero-based budget process developed in accordance with section
4 of P.L.��� c.�� (C.������ )(pending before the Legislature as this bill)
;

����
[
c.
]

(3)
� A statement
exhibiting for the last preceding fiscal year the amounts of the annual and
supplemental appropriations, transfers of appropriations, allotments from the
emergency fund, dedicated receipts, if any, and of all expenditures made
thereunder and the unexpended balance, if any, and the extent to which the same
is obligated or encumbered;
and

����
[
d.
]

(4)
� A statement
indicating how much of the requested appropriation will be spent in each
quarter of the fiscal year.

����
b.
��� In case an
appropriation is requested
, pursuant to subsection a. or b. of section 5 of
article 3 of P.L.1944, c.112,
for a project which cannot be completed
within the next ensuing fiscal year, the request shall set forth in detail a
complete description of the whole project and the estimated and detailed cost
thereof, and shall show separately the part of the project which has been
completed, if any, and the actual cost thereof;� the part remaining to� be
completed and the estimated cost thereof, and the part proposed to be completed
within the ensuing fiscal year and the estimated cost thereof.

(cf: P.L.1944, c.112, art.3, s.7)

���� 11.� Section 11 of Article 3
of P.L.1944, c.112 (C.52:27B-20) is amended to read as follows:�

���� 11.� The Governor shall
examine and consider all requests for appropriations, together with the
findings and recommendations of the Director of the Division of Budget and
Accounting
in the Department of the Treasury
, and shall formulate the
Governor's budget recommendations, which shall be presented as a budget message
by the Governor during an appearance before a joint session of the Legislature
which shall be convened at 12 noon on a date on or before the fourth Tuesday in
February in each year.

���� The budget message shall
include the proposed complete financial program of the State Government for the
next ensuing fiscal year, and shall set forth in columnar
, graphic, or
narrative
form
, as the case may be,
detailed as to each source of
anticipated revenue and the
several
purposes
and itemized amounts

to which the recommended appropriations and permissions to spend shall apply
for each spending agency in substantially the following form:

���� A.�� Revenues for the General
Fund, other budgeted State revenues, all other dedicated funds, Federal aid
funds, and trust funds:

���� (1)�� An estimate of all
balances to be on hand on the first of July next ensuing which are to be
available for appropriations, supported by the calculations used in arriving at
the estimated figures;
and

���� (2)�� An estimate of the
anticipated revenues from all sources applicable to the budget period, together
with the actual amount earned from each source during the last completed fiscal
year, and the estimate of revenues expected to be earned from each source for
the current fiscal year.

���� B.��� (Deleted by amendment,
P.L.2003, c.275).

���� C.��� Appropriations. The
total of the appropriations recommended for the ensuing fiscal year in
substantially the following form:

���� Detailed Budget:

���� (1)�� An itemized statement of
all appropriation requests and requests for permission to spend from the
General State Fund, other budgeted State revenues, other dedicated funds and
Federal aid and trust funds;

���� (2)�� An itemized statement of
the amounts recommended by the Governor with respect to item "1"
above;

���� (3)�� An itemized statement of
all amounts appropriated and permissions granted for the current fiscal year
with respect to item "1" above;

���� (4)�� An itemized statement of
all amounts appropriated and permissions granted for the last preceding fiscal
year with respect to item "1" above detailed as to annual and
supplemental appropriations, transfers of appropriations, State Emergency Fund
allotments, and permission to spend, as the case may be, and showing also total
expenditures, reserves, lapses and unencumbered balances;

����
(5)�� For State fiscal
years commencing on July 1, 2020 and for each State fiscal year commencing
thereafter, a statement exhibiting all data and information, submitted in
accordance with paragraph (2) of subsection a. of section 7 of article 3 of
P.L.1944, c.112 (C.52:27B-16), used to justify each spending agency�s
request for appropriation or permission to spend in accordance with the
zero-based budget process developed pursuant to section 4 of P.L.��� c.��
(C.������ )(pending before the Legislature as this bill)
;
and�

����
[
(5)
]

(6)
� In addition, such
other statistical information as may
[
more
fully
]

be appropriate to
show comparisons and costs of the several departments.

(cf: P.L.2003, c.275, s.1)

���� 12.� Section 13 of Article 3
of P.L.1944, c.112 (C.52:27B-22) is amended to read as follows:�

���� 13.� All applications for
supplemental appropriations not included in the budget message shall be
[
made
]

filed
,
in the first instance,
[
to
]

with

the
[
commissioner
]

State
Treasurer
in
[
substantially
]
the same form
as is required
, pursuant to subsection a. or b. of section 5 of article 3 of
P.L.1944, c.112,
for regular requests, setting forth how much of the amount
requested will be expended in each quarter of the fiscal year.� The
[
commissioner
]

State
Treasurer
shall certify and transmit forthwith such application to the
Governor, together with his findings, comments and recommendations� thereon.�
The Governor shall transmit to the
[
chairman
of the joint appropriations committee
]

chairperson of the Joint Budget Oversight Committee or its successor

such applications as he shall approve in whole or in part with his
recommendations thereon, but the Governor shall not approve and recommend any
appropriation in excess of the total anticipated funds available for
disbursement during the fiscal year to which such recommendations are
applicable.

(cf: P.L.1944, c.112, art.3, s.13)

���� 13.� Section 21 of Article 3
of P.L.1944, c.112 (C.52:27B-30) is amended to read as follows:�

���� 21.�
[
In order
effectually to discharge and execute his duties in relation to the� quarterly
allotment system, the commissioner
]

The State Treasurer
, or a member of the department designated by
[
him
]

the State
Treasurer
, shall make continuous studies of all departmental requirements
including personnel
and shall, for State fiscal years commencing on July 1,
2020 and for each State fiscal year commencing thereafter, make continuous
studies of the zero-based budget process developed in accordance with section 4
of P.L.��� c.�� (C.������ )(pending before the Legislature as this bill)
.�
All requests for additional personnel made by
request officers to the civil service agency in the State Government shall
first be approved by the
[
commissioner
]

State
Treasurer
.

(cf: P.L.1944, c.112, art.3, s.21)

���� 14.� This act shall take
effect immediately.

STATEMENT

���� The �Zero-Based Budget Act�
requires the State Treasurer to develop and integrate certain zero-based
budgeting practices and procedures in the preparation and submission of the
Governor�s annual budget message.�

���� Under the provisions of the
bill, the State Treasurer, in consultation with the Director of the Division of
Budget and Accounting, is required to design and develop
a zero-based budget

process on or before July 1,
2019 for State fiscal years commencing on and after July 1, 2020.� While the
bill grants the Treasurer considerable latitude in creating a budget process
tailored to meet the individual needs of various departments and divisions,
bureaus and agencies within each branch of State government, the budget process
developed in accordance with this bill requires State spending agencies to
justify their request for appropriation or permission to spend, in whole or in
part, utilizing the practices and procedures of a zero-based budget.

���� As defined by the bill, a zero based-budget
process is a process of budgeting in which a spending agency�s request for
appropriation or permission to spend is evaluated and justified, in whole or in
part, based upon the cost-effective achievement of the tasks, goals, and
objectives of a particular spending agency without regard to prior
appropriations or spending permissions, adjusted for inflation or otherwise.�

���� To facilitate the evaluation and justification
of each spending request, the bill stipulates that, at a minimum, State
spending agencies must submit to the State Treasurer and the Director of the
Division of Budget and Accounting:
�
(1) a statement outlining the
goals and objectives intended to be accomplished as a result of the spending
agency�s request; (2) a statement delineating each of the various activities,
programs, and services to be performed as a result of the request; (3) a
compilation of the statutory and regulatory provisions which comprise the
spending agency�s legal authority, if any, to perform each activity, program,
or service; (4) a description of the methodology and approach used to carry out
each activity, program, or service; (5) an itemized estimate of spending
required to maintain each activity, program, or service at its current level of
performance, together with an evaluation of the quality and quantity of
services provided; (6) a projected estimate of spending required to maintain
each activity, program, or service at the minimum level of service required by
statutory or regulatory authority, together with an evaluation of the quality
and quantity of services required at that level; (7) a statement identifying
each group, stakeholder, or community affected or intended to be affected by
each activity, program, or service, and a quantitative estimate of any
potential consequences that may result if the spending agency�s activities,
programs, and services are eliminated;

(8) a statement detailing any other
State, federal, or local units of government which administer a similar
activity, program, or service and an outline describing the interaction, if
any, among such departments and agencies; (9) a statement prioritizing by
numerical ranking, the activities, programs, or services carried-out by a
spending agency with respect to each activity�s, program�s, or service�s
capacity to fulfill the spending agency�s stated goals and objectives during
the current and ensuing fiscal years; and (10) any additional data or
information deemed necessary or appropriate by the State Treasurer or the
Director of the Division of Budget and Accounting to justify a spending
agency�s request for appropriation or permission to spend.�

���� Under the bill, any zero-based budget data and
information submitted as part of a spending agency�s request for appropriations
or permissions to spend is required to be incorporated into the final request
transmitted to the Governor and submitted to the Legislature as part of the
Governor annual budget message.� As part of the budget message, the zero-based
budget data and information would become part of the public document and would
be available to assist the Legislature and ultimately the residents of the
State of New Jersey in reviewing and scrutinizing the Governor�s spending plan
for the ensuing fiscal year.