New Jersey revenue lags projections, official says

Posted: September 20, 2012

TRENTON - State revenues continued to miss the mark in July and August, meaning New Jersey's tax collections might have to increase by more than 8.2 percent in the coming months to meet budget goals, according to the Legislature's top financial officer.

That would be more than double the rate of last year's revenue growth and outpace Gov. Christie's forecast of a 7.2 percent revenue hike, which credit agencies have criticized as overly optimistic.

New Jersey has not seen that kind of revenue boost since 2000, the final year of a stock-market boom, said David Rosen, budget analyst for the nonpartisan Office of Legislative Services. That year, revenue grew 9.29 percent. Although revenue growth exceeded 8 percent in several subsequent years, those budgets included major tax increases, he said in an interview.

Revenues for the first two months of fiscal 2013 were 4.9 percent below expectations, the state Treasury Department announced Wednesday. Christie, a Republican, is relying on robust revenue growth to convince the Democratically controlled Legislature that the state can afford to cut taxes.

The $31.7 billion budget, which Christie signed into law July 1, is based on 7.2 percent revenue growth. Moody's and Fitch, Wall Street credit-rating agencies, have said the state is unlikely to meet that goal, and Standard and Poor's this week changed the state's economic outlook to negative from stable, citing overly rosy revenue projections and a structurally unbalanced budget.

Despite Christie's continued assertion that New Jersey is experiencing a comeback from the recession, his administration last week indicated to potential bond buyers that the projected $648 million budget surplus may be reduced by a "significant" amount if revenues continue to lag expectations, according to bond-offering statements.

At an Assembly Budget Committee hearing Wednesday, Rosen agreed that it would be "aggressive" to expect revenue growth of 8.2 percent, especially since revenue missed the mark in the final months of the previous fiscal year. Rosen reported that revenues came up $254 million short in fiscal 2012, which ended June 30.

Rosen said he did not have all the numbers yet, noting that there could be adjustments to the fiscal 2012 budget before it is presented in a final report later this year.

Neither the Treasury Department nor Christie's press office responded to requests for comment.

In an interview with New Jersey 101.5 Radio earlier Wednesday, Christie called the hearing "a joke," saying he had eliminated more than $900 million in spending from the fiscal 2012 budget. Democrats had planned to pay for the spending with a millionaires' tax, which Christie also vetoed.

"These are the guys who are claiming fiscal responsibility and that they're watching over your money," Christie said. "This year I had to line item-veto another $355 million out of their budget."

State Treasurer Andrew Sidamon-Eristoff declined the committee's request to testify. Christie said in the interview that he left the decision up to Sidamon-Eristoff, but added, "It sounds like to me that he's going to have a lot more important things to do today."

Assembly Budget Committee Chairman Vincent Prieto (D., Hudson) called Christie's comments "insulting."

"This body as a Legislature is a branch of government that is supposed to [provide] checks and balances to the administrative branch, so it is our duty to make sure that it's here," Prieto said. "I think it's an insult to every New Jerseyan."

Assemblyman Declan O'Scanlon, the ranking Republican member of the committee, said Prieto and the Democratic majority were playing politics by anguishing over monthly revenue reports. The numbers will continue to fluctuate until all expenditures and revenues are counted and finalized in a report expected in December or January, he said.

"I'm all for transparency . . . but this is more show than substance," the Monmouth County lawmaker said.

Christie signed an executive order in 2010 requiring the Treasury Department to produce monthly revenue reports to help lawmakers and state officials keep tabs on the state's fiscal health. But the Treasury has missed its deadline in producing the report for the last two months, Rosen said. The report for August was due Sept. 10, he said.


Contact Joelle Farrell at 856-779-3237 or jfarrell@phillynews.com, or follow on Twitter at @joellefarrell.

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