Rosen told lawmakers last month that the state could end up with a $1.3 billion deficit by July 2013 if they approved Christie’s proposed budget for the coming fiscal year, which begins July 1.
The news was another blow to Christie, who last month compared Rosen to Jack Kevorkian — the late physician known for helping the terminally ill commit suicide — after Rosen warned lawmakers of a yawning budget gap far greater than the administration forecast. Christie, a Republican, called Rosen a tool of a Democratic-controlled Legislature determined to kill his plan for a tax cut.
New Jersey isn’t taking in as much money as expected. Christie’s administration last month estimated there would be about a $676 million shortfall by the end of fiscal 2013. The Treasury Department proposed adjusting the fiscal 2012 budget and Christie’s $31.6 billion spending plan for fiscal 2013 with several one-shot revenue sources — including cash taken from a clean-energy fund and a federal mortgage foreclosure settlement — and by reneging on a plan to put up $260 million in cash for transportation projects. Christie instead plans to borrow to provide the transportation money.
Christie has campaigned across the state this year touting "the New Jersey comeback," arguing that the state is in good enough financial shape to cut income taxes by 10 percent, a three-year plan that would cost $183 million in the first year.
Democrats are skeptical, especially in light of national trends that show the economy may not be growing as fast as expected.
"I guess he’s going to have to amend his banner about the New Jersey comeback," said Senate Majority Leader Loretta Weinberg (D., Bergen). "I think David Rosen can make a pretty good estimate of what we have between now and July 1. It looks rather bleak."
Christie spokesman Kevin Roberts said Rosen was predicting a worst-case scenario.
"Projections are slightly off for May by a manageable $28.9 million across the big three revenue categories," Roberts said, meaning corporate business tax, sales tax, and gross income tax receipts. "This isn’t quite the speculative and panicked $50 million to $100 million range that David Rosen is suggesting for the entire [2012 fiscal] year. …
“The actual May figures still manage to keep us on track to meet expectations for fiscal year 2012 and fiscal year 2013," he said in a statement.
The Treasury Department, which has access to more data than the OLS, will issue a report on May revenues on June 14, said spokesman Andrew Pratt. "We’ll comment when we have all the numbers," he said.
Christie’s budget assumes strong revenue growth of 8.6 percent in the coming fiscal year. The Wall Street rating agencies Moody’s and Standard & Poor’s both have said that Christie is expecting too much. Rosen last month predicted that state revenue growth would be 7.6 percent, calling the projection "a half-notch below aggressive," given current global economic uncertainties.
In Rosen’s memo to lawmakers Tuesday, he noted that sales tax revenue last month was 2.3 percent below that of May 2011. So far in fiscal 2012, sales tax revenue has grown 2.4 percent, he said; collections would have to grow by 8.3 percent in June to meet Christie’s revenue target for the current budget year.
Corporate business tax revenue has grown 1.8 percent in fiscal 2012, and those collections would have to increase by 15 percent in June in order to meet the administration’s goals, according to Rosen.
"These revenue numbers are getting worse by the second," Assembly Budget Chairman Vincent Prieto (D., Hudson) said in response to Rosen’s memo. "We have a serious budget problem on our hands, and it’s time for the governor to put the slogans away and begin working together with us to responsibly fix it."
Democrats have their own plans for tax cuts. They favor a property-tax rebate that would give larger benefits to lower-income earners; the Republicans’ income-tax cut would provide greater benefits to high earners. Lawmakers have been meeting behind closed doors to hash out a compromise. A source familiar with the negotiations said last week that the deal was "not soup yet."
Tuesday’s news could complicate negotiations, but a tax cut is still be possible. Lawmakers may also adjust the budget after Christie certifies the state’s revenue, which he is required to do by July 1, Weinberg said.
"We will wait and see," Weinberg said. "If the revenues are not there, we will have to have another revenue source to fund such a property-tax cut."
Contact Joelle Farrell at 856-779-3237 or firstname.lastname@example.org or on Twitter at @joellefarrell.