New Jersey’s May Tax Revenue Missed Analyst’s Projections
New Jersey collected less tax revenue during May than projected by the Legislature’s chief fiscal analyst, according to a memo sent to lawmakers.
Revenue for fiscal 2012, which ends June 30, will now probably be $50 million to $100 million below an earlier forecast, David Rosen of the nonpartisan Office of Legislative Services said in the note obtained by Bloomberg News. Rosen declined to comment when reached by telephone.
The May shortfall means revenue through June 2013 may lag behind Governor Chris Christie’s initial projections by as much as $1.4 billion, compared with Rosen’s $1.3 billion estimate two weeks ago. Christie, 49, a first-term Republican, has traveled the state to promote his “Jersey Comeback,” a turnaround he has said will let the state raise spending while cutting income taxes 10 percent over three years.
“In the absence of mitigating circumstances, the May collection data would suggest a modest downward adjustment,” Rosen wrote in the memo.
Treasurer Andrew Sidamon-Eristoff told lawmakers on May 23 that the two-year shortfall will be $676 million. He and Rosen were $628 million apart on the projections they gave last month. They are now as much as $728 million apart.
The state’s major sources of tax revenue in May came in below expectations, Rosen said in the memo. He didn’t give specifics on the shortfall. Sales taxes were 2.3 percent less than May 2011’s collections, the biggest surprise, Rosen said.
The $32.1 billion budget for fiscal 2013 that Christie proposed in February called for a 7.3 percent revenue gain, the largest since before the recession that began in December 2007. Standard & Poor’s said in February that the spending plan is “structurally unbalanced” because it is built on “optimistic” revenue assumptions.
The governor and lawmakers face a July 1 deadline to pass a balanced budget for the next fiscal year. Democrats control both houses of the Legislature.
“There may not be a sustainable revenue stream to support” Christie’s tax cut, Assembly Budget Committee Chairman Vincent Prieto, a Democrat from Secaucus, said in a telephone interview today. “This just says we need to get away from the catchy slogans and national sound bites.”
‘Off the Mark’
Kevin Roberts, a spokesman for Christie, said in an e-mail that Prieto and other Democrats are “jumping for joy” at the projected revenue hole. Roberts said in an e-mail to reporters that the administrations’s current estimate is that revenue in May fell $28.9 million short of previous estimates.
“They’re too concerned with rooting for New Jersey’s failure so they can justify their obsession with raising taxes on hard-working families,” 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?”
The governor has said he wouldn’t abandon his tax cut because of lower-than-expected collections. Christie has said revenue growth alone will be enough to fund it and that he’ll veto any tax increases.
Democrats have made counterproposals that would give middle-class residents property-tax credits on income-tax returns. The Senate plan would give a 10 percent credit. Assembly Democrats want to give 20 percent credits and fund them partly through a tax increase on those making $1 million or more.
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