Legislative budget officer David Rosen said he anticipated robust economic growth in New Jersey in the year ahead - after two years of steep declines - but his economic forecast was not as enthusiastic as the 7.3 percent growth on which Christie based his fiscal year 2013 budget. Rosen's estimate of the amount of taxes and fees New Jersey will take in is about 1 percent less than the administration's projection.
Christie dismissed the OLS forecast when asked about the estimate after an event Tuesday in Atlantic City.
"There are two things OLS has proven in this area: one is being wrong, and two is following whatever the agenda is of the majority of the Legislature," Christie said. "Last year when the Legislature wanted to spend more, they said we didn't have enough money. They turned out to be wrong about that. Now this year when I want to cut taxes, they say we don't have enough money."
The biggest difference between the two revenue estimates is in the amount of gross income tax that will be collected. OLS believes the amount will be $157 million less than the administration's projection this fiscal year and $308 million less next year.
Treasurer Andrew Sidamon-Eristoff, who was questioned by the Democratic-led panel for about three hours, said the state's gross income tax collections would rise more than those of other states as the economic recovery gains strength because of the unique way in which the tax is structured.
Overall, Sidamon-Eristoff said, the governor's budget proposal reflects an economically stronger state than the last two budgets.
"Although we are by no means 'out of the woods,' the governor's budget proposal for fiscal year 2013 reflects the fact that, together, we have begun to stabilize our finances," Sidamon-Eristoff said.
Christie's budget would restore more than $200 million in aid to public schools, increase grants to poor college students, and put more than $1 billion into the public worker pension system.
However, Sen. Paul Sarlo (D., Bergen), who chairs the budget panel, said New Jerseyans are still living with the results of Christie's first two budgets - layoffs of police and firefighters forced by cuts in municipal aid, less aid to schools, and less for the poor.
"The funding in this budget does help," Sarlo said, "but it doesn't make up for the harm that's already been done."
Sarlo became irate when questioning Sidamon-Eristoff about the administration's use of nonrecurring revenue, derisively called one-shots, to balance the budget. It's not considered sound budgeting practice to build a budget based on revenue sources that cannot be counted on year after year.
Christie's proposed budget would divert $200 million from a clean energy fund and $200 million from an affordable housing fund into the general fund. In all, $1.6 billion, or about 5 percent of the budget, is made up of so-called one-shots.
"This governor made it clear that the days of one-shot gimmicks are over," Sarlo said. "Why today am I sitting here two years later looking at $1.6 billion in one-shots?"
Sidamon-Eristoff said the administration had cut the percentage of one-shots significantly - to 4 percent of the current budget and 5 percent in the proposed budget - while Christie's predecessor, Democratic Gov. Jon S. Corzine, relied on nonrecurring revenues to fund 13 percent of his final budget.
The Democrats led by Sarlo summed up their concerns with the governor's proposal this way: Is proposed spending relying too heavily on one-shots, and are the administration's revenue projections too rosy?
There are also differences between the parties over how best to provide tax relief to New Jerseyans starting with next year's budget. Christie has proposed a 10 percent income tax cut, phased in over three years. Senate President Steve Sweeney, a Democrat, has proposed a 10 percent tax credit - through state income tax returns - to homeowners who earn up to $250,000. The credit, also phased in over three years, would be on a maximum of $10,000 in property taxes paid. The only way to get the credit is through income tax returns, but it's based on how much people pay in property taxes.