From the Record:
New Jersey’s state budget could face a revenue shortage of $1.1 billion over two fiscal years, the state Legislature’s nonpartisan budget office said Tuesday, a dire assessment that came after lackluster income tax collections in the key month of April.
The revenue gap could lead to budget cutbacks or further reductions in the payments Governor Christie has been making in recent years to the state’s financially stressed pension funds for public workers.
Acting state Treasurer Ford M. Scudder and financial analysts from the Office of Legislative Services are scheduled to testify before the Assembly Budget Committee on Wednesday about Christie’s $34.8 billion budget proposal for the coming fiscal year. Experts are also expected to provide lawmakers with an update of New Jersey tax collections in recent months and of broader economic trends.
In total, the OLS is now forecasting that the state will collect $1.1 billion less in taxes than Christie is assuming for the budget that ends in June and for the one now being considered by lawmakers.
In the current fiscal year, OLS forecasts a shortfall of $487 million for the $34 billion budget. That shortfall would have to be balanced with either cuts or more revenue before June 30.
Lawmakers must approve a new, balanced budget before July 1. The proposed $34.8 billion plan Christie proposed earlier this year is off by $622 million, according to the OLS revenue estimates.
The $1.1 billion hole could intensify New Jersey’s budget problems, since Christie would have to find ways to balance the budget for both fiscal years — likely by scaling back some services or further slashing his proposed payments to New Jersey’s troubled pension system.
The revenue shortage could also complicate plans to phase out the estate tax and lower other rates as part of a deal between Democrats and Republicans to raise the gas tax to fund road construction and maintenance projects. The estate tax generates around $400 million for the state budget every year.
Lawmakers received an advance summary of the OLS budget testimony on Tuesday. In the memo, a copy of which was obtained by The Record, a budget analyst wrote that OLS had lowered its two-year revenue estimate by $943 million for the current fiscal year and fiscal year 2017, which begins in July, after measuring tax collections for “the important spring filing season.”
Of that $943 million revision, “Almost all (93 percent) … can be ascribed to the recent performance of the gross income tax,” wrote Catherine Brennan, an OLS analyst. The total revenue difference between Christie and the OLS is now at $1.1 billion, she added.