New Jersey is Doing Fine!
N.J. revenue shortfall increases at least another $50M in May
TRENTON — Once again, the latest revenue numbers are pushing hard against Gov. Chris Christie’s claims of a "Jersey Comeback."
Tax collections failed to meet expectations in May, continuing a months-long trend that is cranking up the pressure on New Jersey’s finances just as Christie and Democratic lawmakers are racing to strike a tax-cut deal by the end of this month.
Revenues were $50 million to $100 million under target last month, according to a memo sent to lawmakers by David Rosen, the budget chief of the nonpartisan Office of Legislative Services.
Meanwhile, the Christie administration said the shortfall was closer to $28.9 million in May and questioned Rosen’s credibility as a budget analyst.
The OLS and the state Treasury have produced wildly divergent revenue estimates as state officials enter the home stretch of the budget season. OLS officials now project a budget gap of up to $1.4 billion through the end of fiscal year 2013, up from $1.3 billion last month. But Rosen cautioned that the new figures were preliminary and that a fuller report would be released around June 14.
On the other side of the Statehouse, Treasury officials say the total budget gap will be only half as large. Factoring in their new numbers for May, they expect tax collections will fall behind by $704.9 million through the end of fiscal year 2013, up from $676 month forecast last month.
"While Rosen has already assumed the worst for the next two months, the actual May figures still manage to keep us on track to meet expectations for fiscal year 2012 and fiscal year 2013," said Christie spokesman Kevin Roberts.
Assemblyman Vincent Prieto (D-Hudson), chairman of the budget committee, said Christie is defying reality if he keeps pushing for a 10 percent income tax cut for all residents as revenue collections continue to fall short.
"These revenue numbers are getting worse by the second," Prieto said. "This is not the time for national ambitions and tax cuts that benefit the rich."
Democratic lawmakers have offered competing plans that would create new property tax credits, applied against residents’ income taxes. Senate President Stephen Sweeney (D-Gloucester) has a plan to cut property taxes by 10 percent; Assembly Democrats would cut them by 20 percent and pay for it with a higher tax on the state’s millionaires.
Roberts said today that Assembly Democrats were "rooting for New Jersey’s failure so they can justify their obsession with raising taxes."
"It’s not shocking that Assemblyman Prieto and his Democratic colleagues in the Assembly are still jumping for joy at OLS’ consistently off the mark projections," Roberts said. "Why would they let reality stand in the way of raising taxes when they have a partisan office backing them up along the way?"
Christie last month attacked Rosen, calling him a Democratic pawn and branding him the "Dr. Kevorkian of the numbers." But an OLS analysis found that since 2000, they have done modestly better than the executive branch forecasting revenues.
The governor has stood by his tax-cut plan — a top priority and a key component of his $32.1 billion budget proposal — despite a series of missed revenue targets this year, and despite reports from Moody’s and Standard & Poor’s in the last few months that found New Jersey on shaky fiscal ground.
To plug the budget hole, the Christie administration announced last month that it would cut salary increases for non-union workers and borrow an extra $260 million for transportation projects — instead of using cash, as promised.
Sweeney and Christie have been trying to strike a compromise based on the Senate plan before the budget deadline on June 30. Sweeney spokesman Derek Roseman said today that senators "will wait for Dr. Rosen’s formal report in two weeks, so that we can see everything in proper perspective."