NJ Faces Deepening Budget Gap [AUDIO]
New Jersey tax collections for Fiscal Year 2012 are up from the same period last year, but April results are $60 million below Governor Chris Christie's expectations. This leaves State revenues $230.3 million behind February's revised forecasts for the first 10 months of the fiscal year.
The Office of Legislative Services (OLS), the non-partisan research arm of the legislature estimates revenues are increasing at about half the rate necessary to hit Christie growth projection of 4.8%. The obvious concern is that if revenues don't pick up the Governor would be forced to make mid-year budget cuts.
"While April's revenues were somewhat below expectations, reliable indicators show that New Jersey's economy continues to grow," says Dr. Charles Steindel, Treasury chief economist. "Economic growth has brought in more revenue for the state in Fiscal Year 2012 than in 2011, which is a good sign for the future."
April income tax collections were $1.73 billion compared to $1.75 billion in Fiscal Year 2011. Sales taxes were $732.8 million, up from $705.8 million. Corporation business taxes were $463 million, down from $547.1 million.
The shortfall could also put three competing tax cut plans in jeopardy. Christie proposes a 10% income tax cut for every New Jerseyan. Senate Democrats propose a 10% tax cut based on property taxes up to the first $10,000 for those earning less than $250,000. Assembly Democrats want a 20% cut with the saving realized through the similar Senate plan with the additional 10% reduction being funded by an income tax increase on millionaires. Christie says Greenwald's plan is dead.
Sources tell us a tax cut deal between Christie and Senate President Steve Sweeney that was to be announced Monday had to be put on hold because some members of Sweeney's own caucus aren't happy and Assembly Democrats are holding firm to their call for the millionaires tax increase. The official reason for the cancellation of the press conference was that Sweeney had undergone a minor medical procedure. Insiders say the balked at deal would've have used the senate democrats proposal as a template but raise the tax cut threshold to those earning up $400,000 a year.
Last month, before April tax collections were tallied, Christie was confident in his revenue projections. He said, "Bet on us. Our projections will be right again. I think we're going to do just fine. So, don't worry about projections. I think we'll be okay as we have been throughout this administration. What we predict usually is what comes out."
An emailed press release from the Governor's office yesterday provided some context from the administration's point of view.
Here's the text of that email:
While April's numbers are somewhat below expectations, Fiscal Year 2012 collections through the first 10 months remain up by $500 million over last year. When it comes to the end of the current fiscal year, the fact that there are two months left of revenue and three months of sales to report cannot be ignored. Meaning the urge to hastily generalize a single month's report over the remainder of the year would paint an incomplete picture at best. It should be noted that, just as we did last year, the Administration will provide the public a full revenue picture through the Treasurer's testimony and full fiscal report on May 23rd. In addition, broader economic indicators continue to point to an upward trend in long-term economic activity and growth for New Jersey, including strong wage figures. The Philadelphia and New York Feds reported earlier this month that their indexes of New Jersey activity actually rose in March - two reports that take into account longer-term trends in the state's economy.