State revenues for the first half of this fiscal year are 3% below Governor Chris Christie's budget estimates.

That might not seem like a lot, but it means the state is over $325 million in the hole. Christie says it could be worse, a lot worse.

"What I'm really happy about is we didn't do what the Democrats wanted us to do," says Christie. "We'd be in an even deeper hole. Thank God I line-item vetoed $1 billion worth of spending or we would be looking to cut school aid right now……..Now we're 3% below our revenue projections let alone the ridiculous revenue projections made by the partisan Office of Legislative Services."

The Governor insists that he'll continue to be fiscally responsible and he's not going to create huge deficits through higher spending. He hopes the state's economy is "robust" as the Federal Reserve Bank of New York recently suggested and the state will catch up to his estimates and possibly go beyond them.

Asked if the shortfall might jeopardize his proposal to slash income taxes for everyone by 10% over three years, Christie says, "I don't suspect it will, but we'll have to take a look at it. Like with everything else, I'm going to act in a responsible manner. That's why I'm phasing in the income tax (cut) over three years…….We'll make an evaluation of this. We've pared back on proposals before that we've wanted when the numbers haven't worked and we'll do the same again if we have to, but I don't think we're going to have to."

"I do think the growth you're starting to see in the state is going to translate into increased revenues in the state," says Christie. "When that happens we're going to have some good choices to make and the income tax cut is at the top of that list."

State Senator Paul Sarlo, a Democrat who chairs the Budget committee in the Upper House, says a fairer proposal is to cut property taxes, which are the highest in the country.