Wednesday, April 07, 2010

NJ Sales Tax Revenues Projected Below Even Christie's Estimates

A bad situation is projected to be even worse as the Office of Legislative Services found that sales tax revenues are going to be below estimates for the current fiscal year, and may be even worse next year:
Sales tax collections are projected to remain weak for the next 15 months, contributing to a continued fiscal malaise in debt-burdened New Jersey, according to a nonpartisan budget analysis to be made public Wednesday.

The Office of Legislative Services tax and revenue outlook, which was obtained Tuesday by The Associated Press, shows tax revenues could be $82 million shy of projections for the final three months of this fiscal year. Revenues could be down about $168 million from the governor's office projections for the fiscal year that begins July 1, the analysis shows.

The projections show much of the revenue shortfall coming from continued weak sales-tax collections.

Legislative budget officer David Rosen is scheduled to present the updated revenue forecast to the Assembly Budget Committee on Wednesday.

The panel will also hear from Treasurer Andrew Eristoff. He is expected to be questioned about what Democrats are calling hidden tax increases in the proposed budget, including a higher deductible for senior citizens for prescription drugs, a change in the income tax credit for the poor and the lifting of caps on a hospital bed tax and ambulatory care facility tax.

The difference between projections from the Office of Legislative Services and the governor's office represent a fraction of Gov. Chris Christie's proposed $29.3 billion budget. However, additional budget cuts of $250 million would have to be made if the projections hold to keep the budget in balance as required by law.

Despite the state's fiscal situation, Christie said Tuesday he remained confident he and the Legislature would agree on a balanced budget by the June 30 deadline to avoid a government shutdown. Democrats who control the Legislature have said they would only vote for a budget that reinstates an income tax surcharge on residents earning more than $400,000. Christie has said he would veto any budget that contained the surcharge, setting the stage for a possible budget showdown.
As readers of this blog should remember, Gov. Corzine increased the sales and use tax one point to provide for "property tax relief" and then promptly cut back the program because it simply didn't have the money. Well, the sales tax revenues are going to be down again, meaning that property tax relief is going to be hit again, and all state consumers will still see the increased sales tax, even as the economy continues slogging along.

Democrats are busy complaining about everything in Christie's budget except that they are unwilling to talk about reducing spending in any meaningful and measurable fashion - the reason that the state is in the mess that is is in. Reducing taxes like the sales tax would spur people to spend more - both in-state residents and those from neighboring states that have higher tax rates who come to New Jersey to buy at a discount.

They're also pushing to reinstate a temporary surtax on high income wage earners, even though the measure was meant to be temporary- it just goes to show that once taxes are imposed, they are incredibly difficult to get rid of because Democrats in New Jersey are addicted to taxes for the state to spend (and continue to spend even if the state lacks the revenues to support current levels).

No comments: