Tax Vow May Trap Christie as N.J. Revenue Comes Up Short

New Jersey Governor Chris Christie
Chris Christie, governor of New Jersey. Photographer: Scott Eells/Bloomberg

Governor Chris Christie, a Republican who has spent the past four months promising New Jersey income-tax cuts, now confronts the challenge of selling his plan’s feasibility against a backdrop of continuing revenue shortfalls.

April receipts fell 5.3 percent short of budget forecasts, after March collections missed by 2.5 percent, according to statements from Treasurer Andrew Sidamon-Eristoff. So far for the fiscal year that ends in June, the state has brought in $230.3 million, or 1.2 percent, less than projected.

Christie, 49, refused to abandon his plan and called on lawmakers to pass a tax cut before the legislative session ends in June, at a town-hall meeting today in East Hanover. He has been barnstorming the state to pitch the three-year, 10 percent tax cut in public forums, saying it is key to sustaining what he calls the “Jersey Comeback.”

“To back off now would smell of political weakness,” Brigid Harrison, who teaches law and politics at Montclair State University, said yesterday by telephone.

Christie’s $32.1 billion spending plan for fiscal 2013 counts on a 7.3 percent revenue gain, the most since before the recession that began in December 2007. Should revenue miss budgeted amounts for the current year, the state would start the next with less cash than forecast.

Trailing Revenue Estimates

New Jersey collected $3.26 billion last month, less than the $3.44 billion projected. Income taxes trailed estimates by 2.8 percent and corporate levies fell 22 percent under budget, Sidamon-Eristoff said in a statement.

In East Hanover, Christie said cuts are needed to revive the economy following the recession and to mitigate the 115 tax and fee increases over eight years of Democratic control before he took office. Democrats hold majorities in both chambers of the Legislature.

“The people of New Jersey haven’t had a tax cut in over a decade,” Christie said today at the meeting. “There will be some good Democrats who are willing to stand up and say that we’ll put party behind policy.”

Sidamon-Eristoff is scheduled to testify before the Assembly Budget Committee on May 23, his spokesman, Andy Pratt, said today by e-mail.

Rising Revenue

So far in fiscal 2012, revenue has risen $500 million, or 2.7 percent, compared with the first 10 months of the previous year, reflecting economic growth, according to Kevin Roberts, a Christie spokesman.

Christie is counting on a revenue gain to fund the tax rollback, and has prodded Democratic lawmakers to pass it. Lawmakers have made counterproposals that would give middle-income residents property-tax credits on their tax returns.

“With revenue projections coming in much lower and the governor’s revenue estimates being ridiculously unreachable, it would be irresponsible at this time to support any type of tax cut,” Senator Raymond Lesniak, an Elizabeth Democrat, said by telephone yesterday, before the April numbers were released. “I know that other members I’ve spoken to agree.”

Gordon MacInnes, president of New Jersey Policy Perspective, a Trenton nonprofit research group that focuses on social and political issues, said this is no time to cut taxes.

Low-Rated State

“New Jersey already has the third-lowest credit rating in the country, greatly increasing our borrowing costs,” MacInnes, a former Democratic state senator and assemblyman from Morristown, said in a statement. “Our leaders should concentrate first on putting the state’s fiscal house in order, not on politically appealing, but reckless, proposals to cut taxes. This is exactly how we got into this mess.”

Christie has “very forcibly” outlined his plan, and Democrats have followed suit, said Patrick Murray, director of the Monmouth University Polling Institute in West Long Branch.

“Politically, you can’t go back on a tax-cut promise,” Murray said by telephone. “We’re going to see, probably, a return to some of the one-shot gimmicks to fill budget holes.”

“This doesn’t look like the time that we should be giving out a tax cut for the state, but the governor has backed himself into a corner,” Murray said. “Everybody’s backed themselves into a corner.”

Christie’s spending plan for fiscal 2013 relies on “optimistic” economic projections, Standard & Poor’s analysts led by John Sugden in New York said in February.

Missing Revenue Targets

Revenue for this fiscal year and next may trail Christie’s targets as taxes on income and casinos fall short, David Rosen, chief budget analyst for the Legislative Services Office, said in March. Revenue from gaming taxes trailed forecasts by 11 percent for the first 10 months of fiscal 2012.

Senate President Stephen Sweeney, a West Deptford Democrat, told reporters in Camden yesterday that the April revenue drop won’t derail talks with the governor on a tax-cut compromise.

Both parties have raised expectations, and it’s difficult to predict how they can deliver a balanced budget as well as tax relief, said David Redlawsk, who teaches politics at Rutgers University in New Brunswick and directs the school’s Eagleton Center for Public Interest Polling.

“The one thing both sides have going for them is this is not an election year in New Jersey for state-level” positions, Redlawsk said by telephone. “It gives them a little bit of wiggle room.”

New Jersey isn’t the only state where revenue has missed forecasts.

In California, Governor Jerry Brown, 74, has said he overestimated tax receipts in the spending plan he released in January, contributing to a $6.5 billion increase in a projected deficit, to $15.7 billion. The Democrat has proposed spending cuts and shortening the workweek for state employees.

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