From the Asbury Park Press:
Proposed budget could face a $653M shortfall
The no-new-taxes state budget proposed by Gov. Corzine could face a $653 million shortfall, the nonpartisan Office of Legislative Services estimated Monday.
Most of the gap predicted by the OLS, the Legislature’s research arm, results from more pessimistic expectations for income tax collections than Corzine is counting on. The shortfall is based on the OLS’ revenue predictions for the rest of the current budget and the full budget year beginning July 1. If the OLS’ estimates prove accurate, the state would have to either cut spending or raise more revenue, possibly through higher taxes or fees, to balance the $33.3 billion budget.
The OLS Budget and Finance Officer David Rosen cautioned that predictions on income tax collections are very difficult, especially before most returns have come in. The final tax collections, and therefore any resulting budget gap, could be far smaller or far larger than first projected.
“At this point, we are posting the watch flags and hoping they prove unnecessary,” Rosen told the Assembly Budget Committee at a morning hearing.
Treasurer Bradley Abelow agreed that tax predictions are difficult and said he expects a clearer picture of state revenues after April’s income tax collections. He noted that a $653 million gap equals roughly 1 percent of the combined spending in the current budget and the one beginning July 1.
“Any difference of this magnitude is of some concern, and you heard that expressed today, but I think viewed in an appropriate context, given where we are, it’s a 1 percent difference in estimation,” Abelow told reporters after a hearing on the initial budget plans before the Assembly Budget Committee.
Assemblyman Louis Greenwald, D-Camden, the committee’s chairman, said he would continue to monitor tax collections but also played down the gap. He said there is broad agreement between the Legislature and governor’s office on Corzine’s spending plan. He promised an open-budget process that includes more public hearing than in the past, more time to review the final spending plan and accountability for any line-item changes.