NJCPA Supports Consensus Revenue Forecasting Bill
Statement by Ralph Albert Thomas, CPA (DC), CGMA, CEO and Executive Director, NJCPA
The New Jersey Society of Certified Public Accountants (NJCPA) strongly supports Senate President Stephen Sweeney’s legislation (NJ A442) that would create a three-person commission tasked with reaching a consensus on revenue projections for the state’s annual budget. Sweeney’s collaborative approach is designed to ensure a more efficient budget process.
In a 2018 NJCPA survey, almost 80 percent of the 321 respondents said New Jersey should adopt consensus forecasting for future state budget negotiations.
The survey is a telling sign that state businesses and residents want a more fair and competitive approach to determining state budgets instead of it lying solely in the hands of the Governor. The annual battles between the Legislature and the Governor over revenue projections must come to an end. The process has become politicized and lacks fiscal objectivity. It distracts from the important goal of writing sound budgets.
Government groups and rating agencies alike support consensus revenue projections. The Volcker Alliance, an organization that promotes sustainable budgeting practices, has given New Jersey low marks for its budget forecasting, in part because it has not adopted consensus forecasting. The credit ratings agency Moody’s Investors Service lists consensus revenue forecasting as a top financial best practice and agrees it would take politics out of the forecasting process. Consensus revenue forecasting is already used by 30 states.