That could signal that the governor's $32.1 billion budget for fiscal year 2013, which includes a 10 percent income tax cut for all residents, was drawn up with overly rosy assumptions about the pace of the state's economic recovery, said Joseph Seneca, an economics professor at Rutgers University in New Brunswick.
"This is a cautionary yellow light, but it's a relatively small shortfall on a big base," Seneca said. "The uncertainty is whether the growth in revenues continues to be modest."
David Rousseau, state treasurer under Democratic Gov. Jon S. Corzine, said Christie overshot when he based his budget on a robust growth of 7.3 percent in tax collections. Without adjustments to the budget, the state could run out of money before the end of fiscal year 2013, which begins July 1.
"I think the shortfall is somewhere between $500 million on the low side and approaching a billion on the high side," said Rousseau, a budget analyst for the nonprofit New Jersey Policy Perspective. "Any tax cut is good, but this isn't the time. . . . They would be better off making sure the fiscal house is sound."
Christie's press office urged reporters not to "hastily generalize" the budget based on one month of revenue collections, saying other factors, including "strong wage figures," show the state is recovering from the recession. The Treasury's chief economist, Charles Steindel, echoed that sentiment, arguing that "reliable indicators show New Jersey's economic recovery continues to grow."
Senate President Stephen Sweeney (D., Gloucester), who also wants to cut taxes based on Christie's revenue forecast, also sounded optimistic Tuesday.
"I honestly feel the people of New Jersey need their taxes cut," Sweeney told reporters at an event in Camden. "When we see [May] numbers, we'll have a clearer picture."
But Democratic Assembly Majority Leader Louis Greenwald (D., Camden) said the state could not afford the governor's tax cut plan, which would provide the biggest benefits to higher-income earners.
"The numbers don't lie," Greenwald said.
The Treasury and the nonpartisan Office of Legislative Services will revise their economic forecasts based on the new numbers and report to the Senate Budget and Appropriations Committee on May 23.
The Treasury report comes one day after Christie, a Republican, and Sweeney scheduled, then abruptly canceled, a news conference to announce a compromise between their competing tax-cut plans. Sweeney felt ill after a minor medical procedure, a spokesman said, and could not attend. But the cancellation may also have stemmed from reported disagreements among Sweeney and his caucus members in the Democratic-controlled Senate.
On Tuesday, Sweeney would not discuss his talks with the governor, but said he wanted to reach a compromise with the Assembly, also ruled by Democrats, which has proposed using a so-called millionaires' tax to fund tax relief.
Christie has campaigned hard, traveling the state to tout his tax cut as part of "the New Jersey Comeback." Meanwhile, Sweeney has suggested a 10 percent property-tax rebate for those making $250,000 or less annually, a cut that would benefit the lower end of the income scale.
Both plans depend on strong revenue gains. The Office of Legislative Services in March predicted 6.5 percent revenue growth in fiscal year 2013, which would leave the state with a $537 million shortfall if Christie's budget were approved as proposed.
Now, even that growth estimate seems high, Rousseau said.
Since the tax cuts would be phased in over three years, with the first year costing $183 million, the Christie administration could argue that revenue will grow fast enough to justify the higher costs in the second and third years, Rousseau said.
Either way, he said, he does not expect Christie to dump the tax-cut plan now.
"I think that train has gone past the station," he said.
Greenwald has pushed a third tax-cut plan: a 20 percent property tax rebate for those making $250,000 or less paid for by increasing taxes on those making $1 million or more.
Christie has vetoed the millionaires' tax twice and vowed to do so again. Unlike the other two plans, Greenwald's would nearly pay for itself, economists said. Including the millionaires' tax also means people would have more money in their hands in the first year of the three-year plan.
Greenwald said Sweeney told him that he wanted the two chambers to find a "reliable and sustainable" plan.
Seneca said there was time to adjust the budget, even if revenue continues to miss Christie's mark. The tax cut could be reduced or it could be phased in over a longer period.
"The national economy faces a whole variety of headwinds, but the national economy is still growing," he said. In New Jersey, "the revenues are still up 2.6 percent over last year; the economy's still growing."
Contact Joelle Farrell at 856-779-3237 or firstname.lastname@example.org or on Twitter at @joellefarrell.