Democratic budget committee leaders seized on the latest bad news for Christie, who based his budget and a promise to cut taxes on a robust economic rebound he called “the New Jersey Comeback.”
“This isn’t a comeback, this is a major setback,” Assembly Budget Chairman Vincent Prieto (D., Hudson) said in a statement. “Gov. Christie needs to, once and for all, give up his mantra of tax cuts for the mega-rich and begin joining us in our fight for the middle class, poor, and seniors.”
Christie spokesman Kevin Roberts dismissed the memo from the nonpartisan Office of Legislative Services (OLS), saying the agency had “a long history of being all over the map when it comes to revenue projections.”
“You simply can’t rely on [the agency’s] wildly fluctuating projections when one year they’re overestimating and the next they’re underestimating,” Roberts said. Last year, the office predicted that New Jersey would take in $800 million in additional revenue that Christie did not include in his budget. The governor’s number ended up being closer to reality.
The OLS will offer further details on its revenue projections at a hearing before the Assembly Budget and Appropriations Committee Wednesday morning. The state Treasury Department, which has defended the proposed budget, will offer testimony before the same panel in the afternoon.
OLS budget analyst David Rosen said in March that Christie’s proposed budget for 2013 relied on overly rosy revenue growth of 7.3 percent, the highest predicted growth in the nation. At the time, Rosen predicted a budget shortfall of $537 million.
The news got worse last week. In April — when the state reaps the majority of its income-tax revenue — collections were 5.3 percent below Christie’s expectations, the Treasury Department reported. That will leave the state $230 million behind in projected revenue in the final months of fiscal 2012, which ends June 30.
There is also a “significant shortfall” in energy taxes for the last months of the tax year, Rosen said in his memo. Those receipts came up $121 million short.
The rating agency Moody’s on Monday predicted a slower economic recovery for New Jersey than for the rest of the nation, noting that the state’s economy grew less than 3 percent in each of the last two fiscal years. In February, Standard & Poor’s cast doubt on Christie’s tax-collection estimates.
Christie, a Republican, has campaigned across the state, touting a proposed 10 percent income-tax cut that would cost $1.83 million in the first year of a three-year rollout, and would grow more expensive in subsequent years.
Democrats, who control both chambers in Trenton, suggested their own tax-cut plans.
The Assembly proposed a 20 percent property-tax rebate that would be paid for by a new millionaires’ tax, a plan Christie called dead on arrival. The governor has twice vetoed measures that would raise taxes on those who make $1 million or more.
Senate President Stephen Sweeney (D., Gloucester) reportedly reached a deal with Christie last week that would give those making up to $400,000 an income-tax credit equivalent to a 10 percent property-tax rebate. Renters are expected to get a break, too: Sweeney’s original plan called for a $200 tax credit for renters once it was fully phased in over three years.
In addition, the Sweeney-Christie compromise would restore the Earned Income Tax Credit, which helps the lowest-income workers keep more of their wages, by July 1.
A news conference to announce the agreement — which would be more expensive than Christie’s tax cut — was canceled because Sweeney felt ill after a minor medical procedure. Sources confirmed that some Senate Democrats also were upset that Sweeney had not fully informed them of the proposal.
Sweeney spokesman Derek Roseman said Tuesday that Sweeney would not comment on the latest revenue news.
The Senate Budget and Appropriations Committee will hear revenue updates Thursday, and Democrats will hold a caucus meeting to discuss tax-cut plans, according to Democratic sources.
Senate Budget Committee Chairman Paul Sarlo (D., Bergen) has said he would back a tax cut only if state revenues looked strong enough.
“The game has changed,” Sarlo said in a statement Tuesday. “We no longer have to just work to balance the next state budget, but to rebalance this one, as well.”
Sarlo said he was “committed to working in partnership” with the Christie administration. “But we all must approach this task with a greater sense of reality and responsibility.”
Contact Joelle Farrell at 856-779-3237 or firstname.lastname@example.org, or follow on Twitter at @joellefarrell.