When Liz Muoio reflects on her eight years as New Jersey’s state treasurer, she doesn’t
begin with the moment that impacted the department like no other in history: The
pandemic.
She doesn’t talk about those frantic weeks in March 2020, when the state’s newly
introduced budget became obsolete almost overnight. She doesn’t point to the scramble
to move 3,000 treasury employees to remote work. She doesn’t detail the
unprecedented decision to break the budget year into two parts, just to buy time to
understand collapsing revenues.
She talks about credit upgrades. All nine of them.
How New Jersey got through the most disruptive fiscal crisis in a century will be studied
for generations. But for Muoio, the credit upgrades represent something deeper than
surviving that incredible crisis — they represent proof that the long‑term fiscal trajectory
of New Jersey finally has changed.
“When we got that first upgrade in 2022, it was the first for New Jersey since 2005,” she
said. “And before that, the last one was in 1977. That tells you everything about where
we stood.”
The upgrades, she argues, validate the administration’s insistence on making full
pension payments — even during the pandemic, even when it would have been
politically easy to pause. They validate the push to rebuild the state surplus from
roughly $400 million to nearly $7 billion. And they validate the slow, grinding work of
shrinking a structural deficit that once exceeded $10 billion under the prior
administration.
Today, that deficit is closer to $1.5 billion — still a challenge, but a fraction of what she
inherited, she said.
Muoio acknowledges that none of this was glamorous.
“No one is out on State Street picketing for a higher surplus,” she joked.
But she believes the work is what positions the next treasurer — her longtime colleague
Aaron Binder — and the incoming governor to weather what comes next: Federal
unpredictability, rising health‑care costs and the end of pandemic‑era stimulus.
She feels this transition will be smoother than the one she walked into eight years ago.
Then, a change in party meant a change in priorities and a dramatically new agenda.
This time, the party remains the same: The institutional knowledge is deeper, and the
fiscal foundation — reflected in the credit upgrades, she said — is stronger.
Muoio discussed all this and more during an hour-long sit-down with BINJE. Here’s
more of the conversation, edited slightly and condensed for readability.
BINJE: We were surprised to hear the credit upgrades — not the pandemic — define
your legacy. Why do you see it that way?
Liz Muoio: Because the upgrades show we changed the state’s fiscal direction. They
mean the work we did on pensions, surplus and structural balance actually moved the
needle.
People asked, “Why make the payment now?” Because skipping it only makes the
problem worse. Every skipped payment adds roughly another billion dollars to future
budgets. This year alone, if past administrations had paid their full share, we would
have owed about $1 billion. Instead, we paid about $7 billion. That’s $6 billion we
couldn’t spend on property tax relief, school funding or anything else.
You can’t keep kicking that can. Eventually you hit a wall.
BINJE: That all makes sense. But the pandemic response will be far juicer for
historians. Talk about that effort: What stands out the most?
LM: The speed at which everything changed. We had just introduced a budget in late
February 2020 — and within two weeks, it was meaningless. Revenue forecasts
collapsed. The federal government moved the tax deadline. We had to rebuild the entire
budget process remotely, with 3,000 employees suddenly working from home. Treasury
is a very paper‑intensive operation and overnight it had to become fully digital.
We created a three‑month budget followed by a nine‑month budget just to buy time to
understand the revenue picture. It was an enormous challenge, and our career staff
kept the state running under impossible circumstances.
BINJE: The state made it through the pandemic. But, as you would expect, many
questioned how you did it, feeling the states were “propped up” by federal stimulus
money in the years after. How accurate is that?
LM: The stimulus was enormously helpful and enabled New Jersey and all states to
invest in and provide greater support for the people, businesses and programs that
were struggling due the pandemic.
BINJE: Of course, the stimulus money also added to the overall budget. Some critics
will point out that the state budget essentially doubled during your eight years. How do
you explain that to someone who sees the top‑line number and assumes government
simply spent more?
LM: The simplest explanation is that most of the growth wasn’t new programs — it was
paying long‑ignored bills. Roughly 75% of the budget goes right back out to towns,
schools, and local governments. And the biggest driver of the increase was the pension
payment. Meeting this responsibility to state employees has represented the largest
increase in our spending since 2018. Since coming into office, total pension
contributions by the Murphy Administration are on track to exceed $47 billion, and we
are the first administration in a quarter century to make five full payments.
The second biggest increase in spending has been for direct K-12 aid to our public
schools. In the current fiscal year budget, the state is providing $12.1 billion to school
districts, nearly $4 billion more than was provided when the governor took office.
The next largest increase has been for direct property tax relief. The (fiscal year) 2026
budget includes more than $4.3 billion for programs like ANCHOR and Senior Freeze.
This is all part of the cost of decades of underfunding finally coming due.
BINJE: So, when people say, “If my household budget doubled, I’d be living large,”
what’s the real‑world analogy you give them?
LM: I tell them to imagine ignoring a credit card bill for 20 years. When you finally start
paying it — with interest — your household budget would “double,” too. That doesn’t
mean you’re splurging. It means you’re being responsible. The same is true for school
funding, property tax relief and Medicaid — all major drivers of growth. The budget
increased because we stopped kicking costs down the road. And because we did, the
state is in far better fiscal health today than it was eight years ago.
BINJE: The surplus has been a point of pride for the governor, deservedly so. But,
some will still wonder in the face of such a big surplus: Why does the budget have any
structural deficit at all?
LM: Typically, there has been some level of structural imbalance — revenues and
expenditures don’t move in perfect sync. But ours used to be enormous. Under the prior
administration, it was over $10 billion. Today, it’s closer to $1.5 billion. That’s real
progress.
One key is realistic revenue forecasting. Our Office of Revenue and Economic Analysis
and the Office of Legislative Services have been remarkably aligned in recent years,
and rating agencies have praised us for that. But it’s always a balancing act. You match
the best revenue estimates you have with the needs of the state, knowing both will shift.
BINJE: Let’s move to the business community, which always will argue that more
investment in business leads to more revenue for the state. How do you balance that
with social spending needs?
LM: It’s always a balancing act. Businesses are economic drivers — they create jobs,
attract graduates, and fuel growth. But there are enormous needs across the state, and
resources are finite. The EDA has done important work with the business community,
but every budget cycle includes public hearings where people spend all day advocating
for funding for critical programs. You try to balance those needs while positioning the
state for long‑term success.
BINJE: Moving forward, the next treasurer, Aaron Binder, comes from your team. How
does that shape the transition?
LM: It will still be challenging — transitions always are — but it will be smoother than
the one eight years ago. Then, we had a change in party and a change in priorities. This
time, the institutional knowledge is stronger, the fiscal foundation is stronger, and Aaron
knows this department inside and out. Treasury won’t miss a beat.
BINJE: And Governor-elect Mikie Sherrill will bring her own priorities. How does that
affect the first budget?
LM: Every new governor wants their first budget to reflect their goals. You can’t turn the
ship instantly, but you can set the direction. Governor‑elect Sherrill will have that
opportunity. She’ll face challenges — federal uncertainty, health‑care costs, the end of
stimulus — but she’s not starting from the same place we did. The surplus is strong.
The pension payment is stabilized. The school funding formula is fully funded. Those
mountains have now been climbed.
BINJE: Let’s turn to you. After nearly 30 years in public service, what comes next?
LM: No announcements yet. I’m enormously grateful for the opportunity I’ve had, and
I’ve loved serving the people of New Jersey. This spring will look very different for me —
no budget rollout — but I’m not far. I’ll be here for whatever the team needs. Beyond
that, the next chapter is still to be determined.
