Sept. 19 (Bloomberg) -- New Jersey Governor Chris Christie needs revenue to rise 8.2 percent to balance his fiscal 2013 budget to make up for a tax shortfall in the year ended June 30, the legislature’s chief budget officer said.
The governor, a first-term Republican, had forecast a revenue gain of 7.2 percent, the second-most optimistic projection after California, according to the New Jersey treasurer’s office. That growth rate would leave Christie’s budget $258 million short, according to David Rosen of the nonpartisan Office of Legislative Services.
An 8.2 percent increase in revenue is “considerably more optimistic than what we’ve said,” Rosen said today in an interview after appearing before the Assembly budget committee. That rate is more than double the state’s 10-year average, said Assemblyman Gary Schaer, a Democrat from Passaic.
“If revenue comes in short, there will have to be adjustments somewhere in the budget,” Rosen told lawmakers.
Christie, 50, has traveled the state touting a “Jersey comeback,” an economic-recovery plan that includes a tax cut. His revenue forecasts have been challenged by Democrats, who control both houses of the Legislature, and by Standard & Poor’s, which revised its outlook on the state’s debt yesterday to negative from stable.
New Jersey’s tax collections in the first two months of the year trailed Christie’s projections by about $100 million, as income taxes and sales levies fell 4.9 percent below budget estimates, the Treasury Department said today. Collections were down 0.3 percent from the same period a year earlier. The biggest drop, 6.2 percent, was in sales taxes due to weak retail trade, according to the Treasury.
When Schaer, a member of the budget committee, asked Rosen if Christie’s revenue projections were “aggressive” in the current economy, the budget officer said: “I think that’s not an unreasonable term to use.” In March, his agency projected annual growth of 6.5 percent.
Lawmakers need to begin planning for mid-year budget cuts, Schaer said.
Treasurer Andrew Sidamon-Eristoff, who was also asked to testify at the hearing, declined to appear. The treasurer cited a “blackout period” that prevents him from speaking about the state’s finances ahead of this week’s bond sale, according to a letter he sent to Assemblyman Vincent Prieto, a Secaucus Democrat who is chairman of the budget committee.
Prieto scheduled the hearing after Rosen reported to lawmakers on Sept. 10 that tax collections for fiscal 2012 fell $254 million short of Christie’s budget forecast. Rosen said that while some revenue still hasn’t been counted, the figures in his report represent about 88 percent of all receipts.
Christie’s plan had projected a fiscal 2013 surplus of more than $600 million. In a Sept. 12 offering statement for this week’s sale of $400 million of school-construction and refunding debt, the administration said the state may face a “significant” reduction in its surplus for fiscal 2012, and this year’s ending balance may be lower because of additional spending or less-than-anticipated revenue.
Such wording is typical of disclosure language, according to Bill Quinn, a spokesman for Sidamon-Eristoff, and Michael Drewniak, a spokesman for Christie.
“This is nothing more than the standard disclosure that indicates the fund balance is only an estimate at fiscal year-end and always subject to adjustment in the audit, and that there are always uncertainties in the budget that have to be managed,” Drewniak said Sept. 13 by e-mail.
That bond offering statement was a “clear acknowledgment” from the administration that New Jersey’s surplus will be less than budgeted, Rosen told lawmakers today.
Christie’s office has criticized Rosen for estimating 2012’s shortfall, saying figures aren’t official until an annual financial report is released this year. Rosen said today that Christie’s administration “ought to have a clear indication” of whether revenue met their forecast in the year ended June 30.
The governor has criticized Rosen over earlier projections. In May, he called the budget officer “The Dr. Kevorkian of the numbers,” a reference to the late physician who assisted suicides.
Christie telephoned a talk show on WKXW-FM radio in Ewing before today’s hearing, which he called a “political show.”
“This is a long summer vacation for the Assembly and they decide to come back today to put on a show when they know that we have nothing new to add,” Christie said. “We won’t have any new numbers to add until we do the audit, which isn’t done until December.”
Democrats have set aside $183 million in the current budget for the cost of the proposed tax relief, and have refused to release it until they see whether the state meets Christie’s revenue goals.
Assemblyman Declan O’Scanlon, a Republican from Little Silver who sits on the budget panel, said the hearing was a politically motivated attempt to smear Christie a year before the 2013 gubernatorial election.
“The governor’s growth figures are based on historical trends out of recovery,” he said. “We all want it to be better than it is. Is it completely unattainable? No. Is it outrageous? Not at all. It’s in line with previous recoveries.”
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