New Jersey’s revenue fell about $807 million short of Governor Chris Christie’s projections, a development that may force him to make cuts in the state budget with just eight weeks left in the fiscal year.
Income-tax collections in the current fiscal year led the drop at $700 million under Christie’s targets, according to a statement from the state’s Treasury Department. The decline came as high-income residents moved up payments to avoid higher federal taxes, the agency said.
Collections of business, sales and income taxes for the first nine months of the fiscal year were approximately $600 million below revised budget expectations, the agency said. New Jersey captures about 40 percent of all income taxes from the richest 1 percent of earners.
“The State will take any and all actions necessary to offset the reductions in anticipated revenues,” Treasurer Andrew Sidamon-Eristoff said in the statement. That may include “the identification of additional lapses and savings opportunities, as well as the exercise of the full range and scope of executive authority, including, but not limited to, reserving and/or impounding budgeted appropriations.”
Sidamon-Eristoff said the Christie administration will make sure any mid-year budget cuts ensure that the ending balance for the current year will be the same as what the governor envisioned in his proposed record-large $34.4 billion budget. The fiscal year ends June 30.
Assemblyman Declan O’Scanlon Jr., a Republican from Little Silver who serves as his party’s budget officer, said the gap shows the state is too reliant on high-earners for income taxes.
“This illustrates the volatility you can have when you disproportionately rely on high income earners for our budget,” he said in an interview. “It’s a big deal and I’ve said all along we have to keep an eye on it. I’m confident the people in the governor’s office are going to be able to deal with it.”
Senator Paul Sarlo, a Democrat from Wood-Ridge who is chairman of the budget committee, said that in 12 years on the panel, he’d never seen such a shortfall so late in the year.
“Next year’s proposed budget now is going to be more than $1 billion off,” he said by telephone. “It’s not good news for the fiscal health of the state.”