New Jersey Has At Least $21.04 Billion In Surpluses of the Taxpayers Money it is not using.

  FY 2003 Report Home Page Flags courtesy of Robesus Inc.



The State of New Jersey at the State-level has approximately $21.04 billion of the taxpayer's money it is not using, i. e. surpluses equal to $2,420 for every man, woman and child in New Jersey or $9,680 for a family of 4. This does not include all the additional surpluses that exist in the school districts, cities, or counties in New Jersey.

The Exhibit A below shows the results of the FY 2003 review.

What are these surpluses we refer to?

Government surpluses, as used in this report, are funds that are not required or needed for the operation of all government operations, funds, accounts, agencies, etc., directly or indirectly, for the year(s) covered by the budget which is usually one year. Theoretically, at the end of every fiscal year, governments should have little or no cash/investments on hand. But what we have found is that most governments have huge amounts of cash and investments on hand at the end of the fiscal year. And somehow these cash and investments are not being recycled back through the budget process the next year, but are being held year-after-year.

A Government Can Have a Budget Deficits/Shortfalls and Financial Surpluses At The Same Time.

This is the most deceiving topic that governments, politicians, and the news media have conveyed to the public about governmental financial matters. In realty, a government can simultaneously have a budget shortfall and a financial surplus of the taxpayers' money.

The problems are focused in four areas:

1. The budget only covers a small portion of the State's financial condition. There are a group of funds not part of the budget process. The complete list of funds and budgetary requirements are found in the Comprehensive Annual Financial Report (CAFR). This report depicts the complete financial status of the State. The budget only covers a portion of the financial resources of the government.

A Little Background:

The CAFR usually has four categories.

Governmental Funds
Proprietary Funds
Fiduciary Funds
Component Units

Governmental Funds involve activities of the government including most basic services such as environmental resources, general government, transportation, education, health and human services, and protection of persons and property. Most of the cost of these activities are financed by taxes, fees , and federal grants.

Proprietary Funds are used when a government charges customers for the services it provides, whether to outside customers or to other agencies with the state. For example, Enterprise Funds, a component of proprietary funds, are for activities that provide goods and services to outside (non-government) customers, which includes the general public. Fees, charges for services or goods, assessments, fines, licenses, etc. are the major revenue sources.

Fiduciary Funds are activities in which the state acts as a trustee or fiduciary to hold resources for the benefit of others. These funds are pension trust funds, investment trusts, and agency funds (which are for assets held for distribution by the government as an agent for other governmental units, other organizations, or individuals).

Component Units reportedly are legally separated organizations for which the government is financially accountable. Usually fees, charges for services or goods, assessments, fines, penalties, licenses, etc. are the major revenue source.

The budget, as commonly known to the public, only involves the Governmental Funds and may not even include all of the governmental-type funds. The remainder of the Funds shown above are not part of the budget and are commonly called "off-budget" items.

2. Next year's budget consists only of next year's estimated revenues and next year's estimated expenditures. Previous years' revenues not used (spent) are normally not considered in the next year's budget, but should be. In other words, the previous years' revenues (as shown in the CAFR) are not recycled back to the budget process.

Historically, a budget consists of three parts: 1) Funds brought forward (funds not previously spent); 2) Next year's estimated revenues; and 3) Next year's estimated expenditures.

But somewhere along the way the funds brought forward category was lost. In accounting, the previous years' revenues are no longer called revenue but have been converted to Cash and Investments. Since they no longer called Revenues governments have forgotten about them to the public. They are there but not considered in the budget process, but should be.

For example, the Special Revenue Funds, most of them part of the budget, had fund balances of $3.72 billion in FY 2002 and $3.88 billion in FY 2003. Under the way the budget is prepared these fund balances will not be considered in the budget. These funds alone account for $447 per capita or $1,786 for a family of 4.

[Note: There is a joke that there are so many Special Revenue Funds in New Jersey that everyone in New Jersey has their own Special Revenue Fund.]

3. The budgeted items and non-budgeted items (off budget) should be budgeted to zero (usually referred to as zero-based budgeting). In addition, the government should be on a pay-as-you-go basis, no reserves for future years. What this means is that you budget to have a zero fund balance. If you plan to spend $100 you budget for $100 with no excess or reserve allowed.

4. Budgeted expenditures should be last year's expenditures (as shown in the CAFR) with an adjustment for increase in requirements (costed out) or reductions in requirements. In most cases the CAFR expenditures are not considered in the next year's budget because the CAFR in many cases is published after next year's budget is considered and sometimes approved.

Running Surpluses is Stealing

Although taxation is legitimate, running a government surplus isn't. It represents a taking by the state, because it exceeds the government's contract with the community. It is no different than if a federal agency were to take a person's land or possessions without just compensation (an activity barred by the Fifth Amendment). Excess taxation isn't what the people bargained for.

In presuming entitlement or authority not ceded by the community, the state abrogates its moral pact with those it governs. Its power is no longer derived from the people, whose rights to liberty and property it boldly denies.

The Governor and the Legislators

The Governor and the legislators should include in the next year's budget the previous years revenues not spent as indicated by the CAFR. These were once a revenue and should still be considered revenue for budgetary purposes.

Also, they should consider a zero-balance budget concept for all budget and non-budgetary items in the CAFR including the College and Universities and the Component Units.

Budgeted expenditures (for the budget) should be last year's expenditures (from the CAFR) adjusted for demonstrated requirement changes in project, program or services. An increase in requirements should include the costs of these additional requirements. Conversely, a decrease in requirements should result in a decrease in costs associated with the decreased requirements.

The Governor and legislators should take into consideration the entire financial condition/status of the State in the budgetary process by including all of the funds in the CAFR as being a part of the budget.

This system is covered in the CAFR Budget System. This system needs to be implemented in all governments.

If the State holds the excesses/surplus, it will earn 4% to 5% on that money. If the State returns the money to the people it will receive 20% in revenue because of the increased economic activity. This is elementary economics.

Laws need to be changed.

Every thing done by governments is by law. There are laws that state this or that regarding the use of some of the funds. Man made the laws, man can change the laws. How much effort would it be to include at the end of every law "...or if considered excess or not needed for the current operation that the funds will be refunded to the taxpayers?" See how easy it is.

At one time every law had its place, but things change. The laws need to be reviewed for change to meet the current needs of the government and the people to release these funds for use/refunded.

If this were accomplished, the State would have a huge surplus to refund (rebate or tax reductions) to the taxpayers. Such a refund would create considerable wealth and jobs, increase wages, increase State and local government revenues, dramatically increase the economy, and create the greatest economic expansion in the history of the State. Everyone wins.

If you want to know the financial condition of your government(s), do not look at the budget. Get the CAFR.

The Synergistic Magic of Economics.

What happens when the government holds the $21.04 billion.

  (In Thousands) Investment Income   Per   Capita Family of 4    
  The government holds and investments the surpluses at 4.5%. 946,953 109 436  

Here is what happens when the $21.04 billion is returned to the taxpayers (the private economy).

  (In Thousands) Surplus
Per   Capita Family of 4    
  The surplus is returned to the taxpayers. 21,043,404 2,420 9,680  
  Wages are increased. 10,521,702 1,210 4,840  
  State government revenues increase. 4,409,519 507 2,028  
Local government revenues increase. 3,527,615 406 1,623  
  Federal government revenues increase. 8,819,038 1,014 4,057  
  Total Benefits...   5,557 22,227  

In FY 2002 there were 255,000 unemployed. If the $21.04 billion was returned to the people, 255,000 jobs would be created. This is why it is disastrous for governments to hold excesses/reserves of the taxpayers money.

Note: The economic impact analysis is further explained at Economic Impact Analysis.

The business community suffers the most.

Before the 9-11 tragedy, President Bush and Congress provided tax rebates which averaged $427 for every American. This was to create an additional $60 billion in consumer (economic) spending, turn the economy around and create jobs for the unemployed. However, 9-11 change that.

As the above economic impact chart shows, if the State returned the $21.04 billion in surpluses to the people the State economy would grow by $5,071 per capita. That is 12 times the amount the Federal government used to stimulate the U.S. economy. Businesses net incomes could double or triple. This is elementary economics.


New Jersey Transit Corporation, a Component Unit and not part of the budget, made a profit of $482 million. It also had reserves (cash and investments) of $2.4 billion.

New Jersey Turnpike Authority, another Component Unit made a profit of $7.7 million. But it also had cash and investment reserves of $2.2 billion.

The University of Medicine and Dentistry of NJ, another Component Unit made a profit of $54 million . It had reserves of $714 million .

These only represent three of the 174 funds shown below that had cash and investment reserves not being used.

What to do?

Unless the budget flaws are corrected and the entire State finances are used in the budget process, the problems that created the surpluses will continue to exist. The budget deficits reported by the Governor and legislatures will be used year after year for the excuses for tax increases and/or to reduce needed services.

Just stopping a tax increase or a reduction in services will not solve the problems. The problems will come back the next year.

I have provided the details of the surpluses and explained the ways the surpluses are accumulated. The data is accurate because it comes directly from the government's own financial statement, the CAFR. You must provide the where-with-all to convince the Governor and legislatures that the surpluses exist and what should be done about it. I live in Arizona. It is not my money that is at stake.

Exhibit A

The 2003 CAFR is located at:

Items not Included

The following items are not included in the amount of surplus shown:

-Buildings, roads, bridges, land (not for sale), and equipment.

-Deferred compensation plans for employees. These are plans in which the employee contributes to his/her retirement over and above the normal employee retirement contribution.

-Any fund that is 100% supported by donations, bequests, gifts, endowments, etc. These are not taxpayers money.

-For Colleges and Universities. All endowment and similar-type funds should not be included as surpluses. Sometimes these funds are combined with other college/university funds. We are interested in surpluses, so in these cases the total amount should not be included.

-Funds in which the revenues/contributions are 100% held for other individuals, organizations or another government.

-Funds that are required by law in which a bank, financial institution, insurance companies, etc. are required to deposit with the government a certain amount for insurance against the entity going bankrupt. These are not taxpayers' money.

-Retirement/Pension Funds - only included are 1/2 of the actuarially determined excesses, the taxpayers portion. The other 1/2 is the government employees portion.

  Review of The State of New Jersey CAFR- FY 2003

CAFR Page List of Investments By Fund Surpluses
  Governmental Funds:  
40    General 1,446,156,791
40    Property Tax Relief  
40    Tobacco Settlement Fund 23,007,946
     Special Revenue:  
116       Alcohol Education, Rehabilitation and Enforcement       Fund 4,985,450
116       Atlantic City Parking Fees Fund 3,006,294
116       Atlantic City Tourism Promotion Fund 256,509
117       Beaches and Harbor Fund 1,391,989
117       Board of Bar Examiners 3,250,625
117       Boarding House Rental Assistance Fund 564,743
117       Body Armor Replacement Fund 6,056,257
118       Capital City Redevelopment Loan and Grant Fund 1,185,482
118       Casino Control Fund 51,000
118       Casino Revenue Fund  
119       Casino Simulcasting Fund 2,141,548
119       Casino Simulcasting Special Fund 2,906,052
119       Catastrophic Illness in Children Relief Fund 9,875,283
119       Clean Communities Account Fund 14,099,930
120       Clean Waters Fund 2,060,173
120       Cultural Centers and Historic Preservation Fund 4,049,959
120       1992 Dam Restoration and Clean Waters Trust Fund 6,444,195
121       1989 Development Potential Bank Transfer Fund 3,363,142
121       Developmental Disabilities Waiting List Reduction Fund 20,597,549
121       Disciplinary Oversight Committee 2,966,875
121       Division of Motor Vehicles Surcharge Fund 6,634,645
122       Dredging and Containment Facility Fund 10,524,479
122       Drinking Water State Revolving Fund 45,973,233
122       1996 Economic Development Site Fund 1,360,497
123       Emergency Flood Control Fund 359,403
123       Emergency Medical Technician Training Fund 9,716,484
123       Emergency Services Fund 11,323,774
123       Enterprise Zone Assistance Fund 166,409,333
124       1996 Environmental Cleanup Fund 518,708
124       1989 Farmland Preservation Fund 196,536
124       1992 Farmland Preservation Fund 378,045
125       1995 Farmland Preservation Fund 9,881,568
125       Fund For Support of Free Public Schools 98,461,821
125       Garden State Farm Preservation Trust Fund 241,552,291
125       Garden State Green Acres Preservation Trust Fund 299,421,428
126       Garden State Historic Preservation Trust Fund 17,404,539
126       Green Trust Fund 10,126,933
126       Gubernatorial Elections Fund  
127       Hazardous Discharge Fund of 1981 187,026
127       Hazardous Discharge Fund of 1986 11,175,033
127       Hazardous Discharge Site Cleanup Fund 71,937,466
127       Health Care Subsidy Fund 30,638,281
128       Higher Education Facility Renovation and Rehabilitation       Fund 278,247
128       1992 Historic Preservation Fund 414,621
128       1995 Historic Preservation Fund 834,033
129       Historic Preservation Revolving Loan Fund 3,535,285
129       Horse Racing Injury Compensation Fund 4,319,383
129       Housing Assistance Fund 4,134,284
129       Jobs, Education and Competitiveness Fund 9,142,073
130       Jobs, Science and Technology Fund 29,568
130       Korean Veterans' Memorial Fund 31,906
130       1996 Lake Restoration Fund 1,344,248
131       Luxury Tax Fund 84,311
131       Medical Education Facilities Fund 524,216
131       Mortgage Assistance Fund 1,795,053
131       Municipal Landfill Closure and Remediation Fund 13,497
131       Mutual Workers' Compensation Security Fund 10,365,064
132       Natural Resources Fund 2,236,542
132       New Home Warranty Security Fund 35,122,547
132       New Jersey Automobile Insurance Guaranty Fund 175,619,401
133       New Jersey Building Authority 127,870,659
133       1995 New Jersey Coastal Blue Acres Trust Fund 174,644
133       New Jersey Cultural Trust Fund 20,288,155
133       1983 New Jersey Green Acres Fund 20,108,673
133       1989 New Jersey Green Acres Fund 5,531,206
134       1992 New Jersey Green Acres Fund 1,789,735
134       1995 New Jersey Green Acres Fund 979,315
134       1989 New Jersey Green Trust Fund 27,934,657
135       1992 New Jersey Green Trust Fund 1,615,094
135       1995 New Jersey Green Trust Fund 2,846,901
135       1995 New Jersey Inland Blue Acres Fund 1,797,218
135       New Jersey Insolvent Health Maintenance Fund 25,890,124
135       New Jersey Lawyers' Assistance Program 488,209
136       New Jersey Lawyers' Fund for Client Protection 14,491,129
136       New Jersey Local Development Financing Fund 19,626,747
136       New Jersey Racing Industry Special Fund 103,369
136       New Jersey Schools Construction Corporation 682,839,024
137       New Jersey Spill Compensation Fund 32,111,335
137       New Jersey Spinal Cord Research Fund 10,510,096
137       New Jersey Transportation Trust Fund Authority 36,024,983
137       New Jersey Workforce Development Partnership Fund 61,580,169
138       Petroleum Overcharge Reimbursement Fund 11,667,990
138       Pinelands Infrastructure Trust Fund 4,282,925
138       Pollution Prevention Fund 3,745,472
139       Real Estate Guaranty Fund 2,082,949
139       Resource Recovery and Solid Waste Disposal Facility       Fund 675,807
139       Safe Drinking Water Fund 6,677,216
139       Sanitary Landfill Facility Contingency Fund 10,840,918
139       Shore Protection Fund 10,464,584
140       State Disability Benefit Fund 102,026,410
140       State Land Acquisition and Development Fund 1,035,321
140       State Recreation and Conservation Land Acquisition       and Development Fund 1,576,523
141       State Recycling Fund 2,743,154
141       Stock Workers' Compensation Security Fund 42,097,773
141       Stormwater Management and Combined Sewer       Overflow Abatement Fund 6,630,573
141       Superior Court of New Jersey Trust Fund 207,823,528
141       Supplemental Workforce Fund for Basic Skills 15,994,466
142       Trial Attorney Certification Program 160,914
142       Unclaimed Child Support Trust Fund 2,138,948
142       Unclaimed Utility Deposits Trust Fund 3,021,689
143       Unemployment Compensation Auxiliary Fund 11,898,510
143       University of Medicine and Dentistry of New Jersey -       Self Insurance Reserve Fund 6,102,742
143       Unsatisfied Claim and Judgement Fund 157,820,876
143       Urban and Rural Centers Unsafe Buildings Demolition       Revolving Loan Fund 12,274,176
143       Vietnam Veterans' Memorial Fund 118,105
144       Volunteer Emergency Service Organizations Loan Fund 1,275,993
144       Wastewater Treatment Fund 360,440,686
144       1992 Wastewater Treatment Fund 4,354,279
145       Water Conservation Fund 957,678
145       Water Supply Fund 53,213,931
145       Water Supply Replacement Trust Fund 70,547
145       Worker and Community Right To Know Fund 1,031,387
114    Debt Service Fund 5,153,058
     Capital Projects Funds:  
176       Correctional Facilities Construction Fund 607,890
176       Correctional Facilities Construction Fund of 1987 3,544,178
176       Energy Conservation Fund 36,324
177       Human Services Facilities Construction Fund 201,930
177       Institutional Construction Fund 6,856
177       Institutions Construction Fund 10,181
177       NJ Bridge Rehabilitation & Improvement Railroad       Right-of-way Preservation Fund 7,113,315
177       New Jersey Bridge Rehabilitation and Improvement       Fund 6,049
178       Public Buildings Construction Fund 4,943
178       Public Purpose Buildings & Community-Based Facilities       Construction Fund 8,467,903
178       Public Purpose Buildings Construction Fund 280,052
179       Special Transportation Fund 99,258,364
179       State Facilities for Handicapped Fund 238,218
179       1999 Statewide Transportation & Local Bridge Fund 68,172,500
179       Transportation Rehabilitation & Improvement Fund 573,359
  Proprietary Funds:  
47    State Lottery 1,193,212,557
47    Unemployment Compensation 9,840,247
184    Health Benefits Local Government Employers Program    Fund 186,212,817
184    Prescription Drug Local Government Employers Program    Fund 6,844,342
  Fiduciary Funds:  
     Pension (1/2 of the actuarially determined excesses as of    June 30, 2002)  
111       Consolidated Police and Firemen's' Pension Fund       (CPFPF)  
111       Judicial Retirement System (JRS)  
111       Police and Firemen'sFiremen's Retirement System (PFRS)  
111       Prison Officers' Pension (POPF) 3,063,359
111       Public Employees' Retirement System (PERS)-State 156,299,742
111       Public Employees' Retirement System (PERS)-Local 786,873,476
111       State Police Retirement System (SPRS) 57,128,219
111       Teachers' Pension and Annuity Fund (TPAF) 827,296
     Private Purpose:  
204       Insurance Annuity Trust Fund  
204       Motor Vehicle Security Responsibility Fund  
205       Unclaimed County Deposits Trust Fund  
205       Unclaimed Insurance Payments on Deposit Accounts       Fund  
188       Alternate Benefit Program Fund  
188       Judiciary Bail Fund  
188       Judiciary Child Support and Paternity Fund  
189       Judiciary Probation Fund 9,228,518
189       Judiciary Special Civil Fund 2,928,933
189       Luxury Tax Development Fund 1,622,440
190       Pension Adjustment Fund  
190       Resource Recovery Investment Tax Fund 490,059
190       Solid Waste Service Tax Fund 9,401,693
191       Tourism Improvement and Development Act 59,329
191       Wage and Hour Trust Fund  
  Component Units:  
56    NJ Transit Corporation 2,385,348,957
56    NJ Turnpike Authority 2,204,807,216
56    Rutgers, The State University of New Jersey 936,164,000
57    University of Medicine and Dentistry of New Jersey 713,587,000
     Nonmajor- Authorities and Commissions  
208       Casino Reinvestment Development Authority 113,558,919
208       Higher Education Student Assistance Authority 605,372,849
209       NJ Commerce and Economic Growth Commission 6,622,211
209       NJ Development Authority for Small Businesses,       Minorities' and Women Enterprise 3,095,744
209       NJ Economic Development Authority 548,094,762
209       NJ Education Facilities Authority 5,410,195
210       NJ Environmental Infrastructure Trust 556,936,799
210       NJ Health Care Facilities Financing Authority 1,974,000
211       NJ Highway Authority 367,005,896
211       NJ Housing and Mortgage Finance Agency 1,415,793,000
211       NJ Meadowlands Commission 123,572,535
211       NJ Redevelopment Authority 45,801,607
212       NJ Sports and Exposition Authority 215,955,000
212       NJ Water Supply Authority 60,001,288
213       South Jersey Port Corporation 57,011,263
213       South Jersey Transportation Authority 92,933,835
213       Tobacco Settlement Financing Corporation 2,009,974,000
     Nonmajor - Colleges and Universities  
220       The College of New Jersey 233,554,000
220       Thomas Edison State College 26,285,133
221       Kean University 46,973,000
221       Montclair State University 125,066,614
221       New Jersey City University 93,464,231
222       New Jersey Institute of Technology 90,398,000
222       The William Paterson University of New Jersey 86,516,756
222       Ramapo College of New Jersey 86,396,000
223       Rowan University 88,966,919
223       The Richard Stockton College of New Jersey 86,782,863
  Total Surpluses... 21,043,403,844
  Per Capita… 2,420
  Family of 4… 9,680

The States of New Jersey and New York have a joint venture called The Port Authority of New York and New Jersey. This authority had net assets in FY 2002 of $5.2 billion and in FY 2003 of $6.0 billion. The amount of cash/investment reserve is not available in the CAFR.


Note: For those familiar with governmental accounting, for surpluses we basically used GFOA Balance Sheet Account Classification Codes 101, 102, 103, 151, 153, and 170.

USAF Image

This report was prepared by:
Gerald R. Klatt
Lieutenant Colonel, USAF, Retired



This report can be copied, reprinted, and/or electronically transmitted to others and/or printed in the news media. This report should not be used for commercial purposes.