NJ hoping to raise $200M from stepped-up tax enforcement
TRENTON — State officials are counting on stepped-up enforcement and better responsiveness from its Taxation Division to bring in a few hundred million dollars extra in the budget that Gov. Chris Christie will hand off to his successor.
At a budget hearing Wednesday, state Treasurer Ford Scudder lowered projections of how much in revenue the state will collect over the next 14 months by $336 million. It would have been about $200 million greater if not for the efforts to “modernize” the state Division of Taxation.
Scudder said the state will issue tax bills earlier with follow-up reminders about overdue bills similar to those used by credit card companies, plus make its website easier to use and understand.
And it will do more to hunt for people and companies who aren’t paying taxes and be more strategic about deciding who gets audited.
“Our strategic aim is to serve as the ultimate help desk for taxpayers and be one of the top state taxing authorities nationwide within three years,” Scudder said.
The budget book the Christie administration published in March included some details on the plans to increase its staff of auditors by around 12 percent, partially reversing a nearly 30 percent cut in the number of Treasury auditors since 2009.
At that time, Scudder couldn’t attach a specific financial impact to the increase in the auditors.
“Making it easier for those who want to comply will free up more time and more resources to go after the people who are not in voluntary compliance,” Scudder said.
State revenue forecasts were reduced for the current and upcoming budgets after collections missed expectations last month. Scudder said the reduction for the current year approaches $527 million. The 2018 revenues were revised $191 million higher, including $200 million extra from tax enforcement.
“Total revenues in New Jersey continue to grow. That growth is simply less than previously projected,” Scudder said.
Legislative analysts are slightly less optimistic about future revenues, even after accounting for the estimated $200 million boost from tax enforcement. Catherine Brennan, who heads the revenue section of the Office of Legislative Services, told lawmakers nothing has changed since her office cautioned six weeks ago about missing targets.
“Like many other states around the country, including California, Massachusetts, Connecticut and Pennsylvania, New Jersey experienced a lackluster April tax filing season,” Brennan said.
The state will adjust in the short-term in large part by delaying a $307 million payment to towns, representing how much they’re to be reimbursed for property tax credits for local residents. The change doesn’t affect individual taxpayers but means towns will be paid in July rather than May.
“While this is a step that we would prefer not to take, we view this two-month delay as a vastly superior option than reducing the pension payment or reducing other programmatic spending in the last two months of the year,” Scudder said.