New Jersey is half-way through fiscal year 2019 and according to information released by the state Treasury Thursday, though revenues are up $493.8 million over the same period last year, at this point in time the figure falls short of the 7.5 percent revenue growth called for by the current budget.
The present 3 percent revenue gains will leave the state to bridge the gap between its projections and the actual year-to-date collections. Just how that will play out is expected to be discussed during Gov. Phil Murphy’s budget address on March 5.
Also behind for fiscal year 2019: Gross Income Tax receipts, which are down 6 percent year-to-date for a deficit of $503.4 million.
“An avalanche of data has emerged that high tax states are experiencing a significant out-migration of high-income taxpayers,” Garden State Initiative President Regina Egea said in a prepared statement.
The Department of the Treasury said the drop is likely due to tax law changes prompted by the Federal Tax Cut and Jobs Act, such as the $10,000 cap on the State and Local Tax (SALT) deduction.
With no incentive for high-income taxpayers to make payments in December to take advantage of an unlimited SALT deduction, the department speculates people are waiting longer to reconcile tax liabilities. According to the nonprofit, public policy group Garden State Initiative, this dip follows a 35.2 percent decline in receipts in December 2018.
The General Fund’s largest source of revenue, the Sales and Use Tax, was up 3.0 percent year-to-date for a total of $5.116 billion in revenue. Adjusting for the sales tax reduction that went into effect on Jan. 1 of last year the department said the “underlying growth in sales tax through January is 4.8 percent.”
The Corporate Business Tax, the second largest General Fund revenue source, was up 74.5 percent, for year-to-date revenues of $1.810 billion dollars. The Treasury said it anticipates these revenues will grow even more in fiscal year 2019 due to state and federal policy changes and the timing of some payments.
Still in review with final allocations forthcoming, the state’s Tax Amnesty program, which concluded on Jan. 15, collected $282 million in payments surpassing its target of $200 million.
Rounding out the Treasury’s report were casino revenues, at $142.5 million which the department said were 20.6 percent up from last year, though the end of January. Sports betting made up $5.7 million of that figure and contributed an additional $4.4 million to the general fund, although through January.