May 10 (Bloomberg) -- Governor Chris Christie, a Republican whose budget hinges on the biggest revenue gain since before the recession, may need to scale back a spending increase or abandon his tax-cut plan as New Jersey revenue comes up short.
Preliminary reports show receipts from income and corporate taxes trailed Christie’s targets last month and may come in lower than April 2011 collections, according to a memo sent to lawmakers by the nonpartisan Legislative Services Office. The note, obtained by Bloomberg News, said complete figures will be available May 14.
Any drop in revenue this year may “spill over” into fiscal 2013, which begins in July, and that may lead lawmakers and Christie to retool their fiscal plans, said Assemblyman John Burzichelli, a Democrat who serves on the budget panel. He said it’s premature to conclude cutbacks are warranted. Christie has proposed a 10 percent across-the-board cut in income taxes.
“I’m an optimistic person and I would like very much for the governor’s projections to be achieved, but the recovery is fragile,” Burzichelli, who is also the mayor of Paulsboro, said yesterday by telephone. “Everything’s in play.”
Christie, 49, has traveled the Garden State to tout the beginning of a “Jersey Comeback.” His budget forecast April receipts to rise compared with the same month last year. His proposed fiscal 2013 spending plan counts on a 7.3 percent increase in revenue, which would help fund tax cuts.
Dozens of Surpluses
If April collections trail expectations, New Jersey would join a minority of U.S. states, including Connecticut, California and New York that have reported revenue missing forecasts, according to a survey by the Denver-based National Conference of State Legislatures. New Jersey, joining Indiana, Arizona and more than two dozen others, has projected ending the year with more cash than budgeted, the group said May 3.
The $32.1 billion fiscal roadmap Christie proposed in February would boost spending by $2.4 billion in fiscal 2013. It includes $8.8 billion for education, $213 million more than under the current plan, and a record $1.07 billion in payments to pensions. Treasurer Andrew Sidamon-Eristoff declined to disclose April revenue data, saying his office will release the figures early next week. New Jersey’s budget year ends in June.
“We are currently reviewing and analyzing April state revenues in the context of the complete year-to-date fiscal picture,” said Michael Drewniak, a Christie spokesman. “With two months left of revenue collections and potential revisions before the end of the fiscal year, we need to look at the total revenue picture before drawing broad conclusions.”
New Jersey’s jobless rate has hovered at 9 percent or more since June 2009, the last month of the longest recession since the Depression. The national average fell to 8.1 percent in April.
Nongovernment employers in New Jersey have added 60,600 jobs since touching a February 2010 low, a month after Christie took office, according to the state Labor Department. The governor has said the additions show the economy is moving in the right direction.
Christie has pitched his case for the across-the-board rollback in personal income levies in public meetings statewide, while leading legislative Democrats have countered with proposed property tax-based credits. The debate over the dueling measures shows the state recovery is stirring, Christie said yesterday during a town meeting at a National Guard armory in Freehold.
Going Right Way
“It isn’t happening fast enough,” he said. “We still have too many people out of work, but it’s getting there and we’re making progress and moving in the right direction.”
Assemblyman Vincent Prieto, a Secaucus Democrat, said he wasn’t satisfied with Sidamon-Eristoff’s pledge to provide April revenue data next week. The department gets daily figures and should release its most-recent April numbers, he said.
“The ‘Jersey Comeback’ is basically just a myth at this point in time and we need to get past those sound bites,” Assembly Budget Committee Chairman Vincent Prieto, a Secaucus Democrat, said yesterday in an interview.
“Is it a substantial number? I don’t know,” he said. “We need to see the whole big picture.”
A drop has the potential to force lawmakers to reconsider every spending item in Christie’s budget, Prieto said.
April typically produces the largest monthly income-tax collections because it includes the annual payment deadline for most filers. Sidamon-Eristoff, in an April 16 statement, said revenue for the month would be “key in helping the administration maintain this positive momentum.”
The fiscal 2012 spending plan calls for a year-end balance of $580 million on June 30, Prieto said. Any drop in revenue may lower the state’s 2013 starting balance and make Christie’s tax cuts difficult, he said.
Among Democrats, Senate President Stephen Sweeney has proposed giving residents a credit for 10 percent of their property levies. Assembly leaders would raise that to 20 percent, funded partly with an increased tax rate on incomes of $1 million or more. Christie has said revenue growth alone will cover his cut and that he’ll veto a so-called millionaire tax.
The governor’s 2013 spending plan relies on “optimistic” revenue assumptions, Standard & Poor’s credit analysts said in a February report. David Rosen, the Legislature’s chief budget analyst, said in March that receipts may trail forecasts for 2012 and next year as income and casino levies fall short.
March collections missed estimates by $46.4 million, or 2.5 percent, according to the treasury, driven by income-tax revenue that trailed by 6.4 percent. Receipts for the nine months through March were 0.3 percent less than forecast.
“My gut feeling is that the numbers aren’t so bad that we’ll have to make any cuts” to the current budget, said Assemblyman Declan O’Scanlon of Red Bank, the ranking Republican on the budget panel. “We’ll just have to wait and see.”
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