State Revenues Come up Short
David Rosen’s revised projection was sent to lawmakers as the state closes its books on the 2012 fiscal year. But the Christie administration’s official accounting of revenue collections for the year won’t be available for several months.
Treasurer Andrew Eristoff shaved $514 million off original estimates in May, as sluggish tax collections continued through the busy spring months.
The updated revenue projections, if they hold true, will eat into this year’s surplus and further jeopardize Gov. Chris Christie’s proposed tax cut from being implemented.
Democrats set money for the cut aside, but they won’t release it unless the state can afford to cut taxes.
TEXT OF DAVID ROSEN’S MEMO
While Fiscal Year 2012 ended last Saturday, the final collection and allocation of revenues continue into the new fiscal year. For some revenues, such as the sales tax, a full month of collections remain to be received as June sales tax collections are remitted to the Stateon July 20. For others, such as the corporation business tax, sizable transfers and adjustments are made even though no further payments are due.
Assuming that the transfers and accruals follow the pattern of recent years and assuming the remaining cash collections match recent months, FY 2012 revenue collections are likely to fall $150-200 million below the FY 2012 targets announced by Treasury in May. Of course, if these assumptions prove incorrect collections could be higher or lower.
The closing balance for FY 2012, which becomes the opening balance for FY 2013, will not be known until the release of the Comprehensive Annual Financial Report (CAFR) which usually occurs around December. That balance will be determined by the actual revenue collections and the actual expenditures. While we should have a good handle on the collections from the major taxes by August, the final amount of spending (or the value of lapses from FY 2012 appropriations) and the yield from miscellaneous revenues will not be known by OLS until the CAFR. It should be noted that the Governor’s revenue certification on June 29 increased the assumed FY 2012 lapses by $46 million above the level assumed on May 23.
Turning to FY 2013 revenue collections, it is unlikely that significant information will be available during the summer. July and August are not important months for the gross income tax or corporation business tax and the allocation of collections between the old and new fiscal years often makes it difficult to discern patterns.
We will of course keep the committees informed of any significant revenue developments.
David J. Rosen
Legislative Budget and Finance Officer
New Jersey Office of Legislative Services
Tel (609) 847-3105
fax (609) 777-2442
(Copyright 2012 by The Associated Press. All Rights Reserved.)