The Assembly Budget Committee heard testimony today from the top finance officers of the Legislature and Gov. Chris Christie’s cabinet.
David Rosen, legislative budget and finance officer for the Office of Legislative Services, spoke during the morning session, while Treasurer Andrew Simon-Eristoff testified before the committee in the afternoon.
In his opening testimony, Sidamon-Eristoff praised the administration’s $32.9 billion fiscal year 2014 budget as an example of fiscal responsibility.
“Indeed, the governor’s budget restrains spending growth to just 2.3 percent over fiscal 2013’s adjusted appropriation,” he said, “which is remarkable in light of the fact that the projected $646 million increase in payments to our defined contribution pension plans accounts for about 85 percent of the year-over-year growth.”
During the morning session, Rosen began his testimony by recalling his testimony from a year ago. Back then, he said he agreed with Gov. Chris Christie that revenues would grow in fiscal 2013, but he said Christie’s projection of 7 percent growth was too optimistic.
“Our message is much the same this year,” Rosen said of the 2014 budget. “The economy is improving, with signs of broadening recovery. Our revenues will continue to grow and the two largest tax sources are likely to exceed their pre-recession levels. The administration, however, anticipates even more robust improvement, particularly over the next few months.”
Christie revised downward his revenue projection for the current year at his Feb. 26 budget address, but Rosen said even with the lower number, the state would still need 9.8 percent growth for the rest of the year. Rosen said OLS believes 7.2 percent growth is more likely.
Christie’s 2014 budget calls for revenue growth of 4.9 percent.
As for the reasons for the growth, Rosen said the lion’s share was due to growth in income tax revenue. And while private-sector job growth was a bright spot last year, Rosen said that’s not what’s fueling income tax receipts.
“As we’ve discussed before, the explanation for GIT (gross income tax) growth is the stock market and high-income individuals,” he said.
He said most of the new jobs created have been in the lower income brackets, consistent with national trends. But most of the income tax growth has come from individuals making more than $100,000 annually.
Rosen also took issue with the governor’s projections for online gaming revenue. Christie’s budget includes $180 million in online gaming tax revenues, which, given the 15 percent tax rate, would require a casino take of $1.2 billion.
Rosen said they asked experts and consulted literature, but “we’ve seen nothing that supports that number.”
But the treasurer also made a point to address gaming revenue, and specifically the new revenue generated from online gaming. He argued quick implementation will enable he state to realize the maximum revenue.
“Simply put, we believe that Atlantic City’s prospects are improving, and that the recent legislative approval of Atlantic City-based Internet gaming will lead to a significant increase in revenues next year,” he said.
Sidamon-Eristoff said he estimates Hurricane Sandy cost the state about $100 million in revenues, but he expects to recoup most of that by the end of the current fiscal year.
The committee also is expected to take up Assemblyman Albert Coutinho’s (D-Newark) much-anticipated Economic Opportunity Act of 2013. The bill would revamp the state’s incentive package, combining the current five programs into two. If released by the committee, it would head to the full Assembly.
David Brogan, first vice president of the New Jersey Business and Industry Association, said the bill is critical in a highly competitive business landscape.
“As long as we have to compete for jobs and investment in regional, national and world markets, New Jersey needs every tool in its arsenal to be successful,” Brogan said, in a press release. “This bill accomplishes that goal by establishing truly competitive incentive programs that are based on sound fiscal policy.”