From the Star Ledger:
New Jersey’s state budget is really feeling the effects of the federal tax reform hangover now.
Last month, Gov. Phil Murphy’s administration warned tax revenues were falling behind because taxpayers were altering their behavior in response to federal tax changes. An updated report released Thursday shows the state’s growing risk of running a shortfall that could force mid-year cutbacks.
In total, the state’s major tax revenues were forecasted to increase by 7.5 percent over the last fiscal year, but growth has slowed to just 3 percent.
Thursday’s report would look worse if it weren’t for a tax amnesty program that brought in $282 million in delinquent tax payments. That winter amnesty program well exceeded its $200 million goal as taxpayers settled up with the state in exchange for waived penalties and reduced interest.
Without the amnesty bump, growth would have clocked in at just 1.3 percent.
The gross income tax — New Jersey’s largest source of tax revenue — is a big source of the trouble. Income tax collections for the first seven months of the fiscal year are down about $500 million compared to this same period last year. That’s a 6 percent decrease year-over-year, when the budget forecasts gross income tax collections are supposed to increase by 5.4 percent.