From the NJ Monitor:
State ‘well prepared’ to handle $2B dip in tax revenue, treasurer says
New Jersey will collect roughly $2 billion less in taxes in the current and coming fiscal years, but the years of booming revenue will let the state weather the shortfall without much trouble, state budget experts told lawmakers Wednesday.
Despite the looming shortfalls, officials said New Jersey is well prepared to meet the funding shortfall, which could do little more than cut the state’s surplus from a healthy $10 billion to a still healthy $8 billion.
“We are well prepared to handle this April surprise,” Treasurer Liz Muoio told the Assembly Budget Committee Wednesday.
The declines are driven mostly by worse-than-expected gross income tax collections in the month of April, when business owners and others who do not pay taxes through regular withholdings typically settle their tax bills with the state.
Muoio attributed the expected drop in income tax collections to poor stock market performance and a significant reduction in state capital gains taxes. That revenue declined by at least 55% — only slightly less than the drops seen after the Great Recession and the burst of the dot-com bubble.
Still, most of the state’s other revenue sources continued to perform at or above expectations, and state revenue in the fiscal year that ends June 30 is still expected to exceed last year’s forecasts.
“This is not the cataclysmic event that it would have been 10 or 20 years ago,” said Thomas Koenig, budget and finance officer with the nonpartisan Office of Legislative Services.
Officials now expect the state to collect roughly $52.8 billion in tax revenue in fiscal year 2023 and fiscal year 2024, which begins July 1.