TRENTON, N.J. (AP) — New Jersey has collected $451 million less in taxes and fees than it anticipated through November, jeopardizing Gov. Chris Christie's tax cut proposal and increasing the likelihood of midyear budget cuts, a legislative budget analyst said Thursday.
The state's major revenue streams are anemic five months into the fiscal year and the sales tax is particularly lethargic, accounting for $179 million of the shortfall, David Rosen told the Senate Budget Committee. If the essentially flat growth rate seen since July 1 continues through June, more than $2 billion in late-year budget cuts would be needed.
But Rosen said the state is likely to rebound somewhat in coming months, in part because of increased construction in the wake of Superstorm Sandy. However, he said, he wouldn't be surprised if the state finishes the fiscal year about where it is now, $700 million shy of the administration's target. (The state carried over from the prior fiscal year about $250 million less than anticipated, which comes on top of the current year-to-date shortage.)
"As a result of the revenue underperformance to date, the state would need a spectacular revenue acceleration to hit the executive's budget targets," Rosen testified. "Where revenues have grown at .2 percent for the first five months, they would need to grow by 11.9 percent over the remaining seven months."
The Christie administration immediately questioned Rosen's analysis, and one Republican on the budget panel claimed that politics, not fiscal policy, was at play.
"David Rosen has been persistently negative and persistently wrong about the state's revenues, and his analysis today is no exception," Christie spokesman Michael Drewniak said. "There are far too many unknowns as our state begins to recover (from Sandy) to jump to any conclusions that the sky is tumbling down on us or engage the Democrats' desire in making this a partisan game."
But Rosen said the superstorm has so far only minimally affected revenues. Casino revenues, already lackluster, missed its November target by $33 million, after Sandy badly damaged the shore.
Republican Sen. Joe Pennacchio of Morris County went a step further, saying the hearing "was really the Trenton Democrats' attempt to kick off their 2013 gubernatorial campaign against" Christie.
Taxes and fees form the underpinnings of New Jersey's $31.7 billion budget, which by law is required to remain in balance.
The gloomy revenue numbers could doom Christie's 10 percent tax cut, which Democrats agreed to re-examine in January based on the state's fiscal condition. Democrats said they would agree to release $183 million to fund the first phase of the cut only if revenue collections matched the administration's targets of more than 7 percent growth.
Asked Thursday about the fate of the tax cut plan, Sen. Paul Sarlo, the budget committee chairman, said, "Does the math work for you? I don't see where the math works."
Treasurer Andrew Eristoff did not attend the session. However, Sarlo said Eristoff has been offered three alternate dates to appear before the panel.
"We will need from treasury sooner rather than later a plan to rebalance this budget," said Sarlo, a Bergen County Democrat.
Christie is unlikely to agree to any tax increases, and Sarlo said foregoing the annual payment into the pension system is not an option. The state, which for years skipped the pension payment resulting in a multibillion-dollar unfunded liability, became legally bound to make the payment when legislation was enacted forcing higher payments by government workers.