May 23 (Bloomberg) -- New Jersey’s revenue may fall below Governor Chris Christie’s projections by as much as $1.3 billion through June 2013, the Legislature’s chief budget analyst said, prompting the state's chief executive to ask, “Why would anyone with a functioning brain believe this guy?"
Collections may lag behind Christie’s targets by $668 million in fiscal 2012 and $635 million in the year that begins July 1, David Rosen of the nonpartisan Office of Legislative Services told the Assembly Budget Committee today.
The shortfall estimated by Rosen is more than double the $537 million over the two-year period that he projected for the budget panels in March. New Jersey revenue is increasing at a pace that is “a good deal more modest than had been anticipated” in Christie’s budget, Rosen said.
“To put it simply, revenues are rising too slowly to achieve the year-end targets,” Rosen said. “And it appears that May collections for the major taxes will not materially improve the situation.”
Treasurer Andrew Sidamon-Eristoff told lawmakers the two-year revenue shortfall is $676 million, about half of what Rosen estimated. Taxes will trail by $314 million in fiscal 2012 and $362 million for the year that begins July 1, he said.
The $32.1 billion budget for fiscal 2013 that Christie proposed in February hinged on a 7.3 percent revenue gain, the most since before the recession that began in December 2007. The 49-year-old 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 by 10 percent.
Christie, speaking to an industry group today in Trenton, called the Legislative Services office a “handmaiden” to the Democratic majority, and Rosen the “Dr. Kevorkian” of the Statehouse, a reference to the late assisted-suicide advocate Jack Kevorkian.
“Why would anyone with a functioning brain believe this guy?” he told the crowd. “Nobody in this state believes David Rosen anymore and nobody should.”
Rosen, 65, holds a doctorate in political science from Rutgers University, has been with the Legislative Services office since 1984 and has worked on budgets since 1991. He declined to comment on Christie’s Kevorkian remark.
The dilemma confronting Christie echoes the situation in California, where Governor Jerry Brown, a Democrat, had to cut deeper into his fiscal 2013 spending plan as tax revenue came up short, swelling a projected deficit to almost $16 billion. Brown is seeking to temporarily raise sales and income taxes while cutting state payrolls and services to the needy.
Christie will seek $20 million in salary savings in the coming year by not giving raises, according to Sidamon-Eristoff’s written testimony. The administration also will seek to cut $260 million in “pay as you go” road funding in fiscal 2013, the treasurer said.
Moody’s Investors Service warned that New Jersey’s missed revenue targets are a “credit negative” after Sidamon-Eristoff said last week that April receipts from income and corporate taxes were $230 million less than projected. Standard & Poor’s said in February that Christie’s budget is “structurally unbalanced” because it’s built on “optimistic” revenue assumptions.
“It’s time to see the reality that things are not going as well as we had hoped they would,” said Assemblyman Vincent Prieto, a Secaucus Democrat who leads the budget committee. “This is something that is real and we’re going to have to deal with it.”
Rosen projected that income-tax collections may lag behind Christie’s estimates by $618 million over two years, while business taxes may be $190 million short.
Christie’s office released a statement today saying that while “Democrats root for failure based on Moody’s uninformed claims, business leaders across the Garden State agree that the New Jersey Comeback has begun.” The statement cited a survey of chief executive officers released yesterday in which respondents said they are more optimistic about the business climate and economic recovery now than a year earlier.
Rosen’s office has been wrong in the past, including an estimate last year that exceeded Christie’s forecast by $800 million, said Kevin Roberts, a spokesman for the governor. Buoyed by those projections, Democrats passed their own budget and Christie cut $1 billion from it, using line-item vetoes.
Legislative Services “has a long history of being all over the map,” Roberts said yesterday by e-mail. “You simply can’t rely on OLS’s wildly fluctuating projections when one year they’re overestimating and the next year they’re underestimating.”
Rosen told committee members that crafting revenue projections is an imprecise process. The median error by his office was 3.2 percent between fiscal 2000 and 2011, while the executive branch’s median error was 3.9 percent, he said.
“The administration’s numbers are within the realm of possibility, but it’s also possible they’ll be substantially below” their projections, he said in an interview after the hearing. “We’re just giving the committee our estimates. That’s what our job is. They can use it or not use it as they will.”
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