Tuesday, May 15, 2012

New Jersey Revenues Coming In $300 Million Below Projections

The New Jersey Department of Treasury announced that revenues were coming in about $300 million below projections, which isn't nearly as bad as the Office of Legislative Services estimates, but it still puts a crimp on Gov. Chris Christie's plans for tax relief.
He’s also banking on a huge economic upswing during the budget year that begins on July 1, using that growth to support his “Jersey Comeback” budget and its signature income tax cut.

But if the current trend holds through the end of June, Christie will have to cut spending, dip into surplus or do something else to meet the state constitution's requirement for a balanced budget. The trend could also make it more difficult for the governor, a Republican, to pitch the first phase of his income tax cut proposal or convince Democrats who control the Legislature to enact some other form of a cut – something many expected to occur on Monday.

Instead, an expected deal between the governor and Senate President Steve Sweeney, D-Gloucester, was shelved, and Treasury officials delayed a planned release of the revenue information from Monday until this morning.

That new information on New Jersey revenue shows that tax collections fell short of budget projections by a full 5 percent in April, which is typically a make or break month for state finances every year after annual income tax returns are filed.

The poor April performance leaves New Jersey with $19.3 billion in revenue heading into the last two months of the budget year, according to the data released by Treasury. Christie had projected state tax collections of nearly $19.6 billion.
He's going to have to come up with some kind of compromise plan to achieve tax relief and maintaining a level of services that legislative Democrats will go along with. There have been rumblings of a compromise deal that would provide tax relief, but a presser for yesterday was cancelled - presumably over the fact that the Treasury didn't announce its own figures on which the politicians could work from.

I'm not quite sure why the Record indicates that there's a $230 million gap, when the body of the article indicates that there's $19.3 billion in revenue versus projections of nearly $19.6 billion - that's closer to a gap of $300 million than $230 million. Either way, Trenton has to come up with the difference and balance the budget.

The Department's press release indicates the $230 million shortfall, which the Record parroted, despite the discrepancies with the numbers they used to describe the budget figures.

The figures also show that there is some strength in the state's economy. Sales tax revenues are up somewhat, but the casino revenue is down significantly (probably due to the vastly expanded competition in both New York and Pennsylvania that are siphoning off gamblers).

The tax revenues from corporate banks and financial institutions is also way off the FY 2011 figures.

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