State revenues through the end of fiscal 2013 will fall more than a half-billion dollars below the projections included in Gov. Chris Christie‘s budget plans, according to a new report.
The nonpartisan Office of Legislative Services today said revenues for the 2012 and 2013 fiscal years are expected to total $29.6 billion and $31.5 billion, respectively. That’s $537 million short of Christie’s expectations, though a significant chunk of that shortfall can be tied to lower income tax revenues. Christie has proposed trimming income tax rates by 10 percent over three years.
The office expects income tax receipts to fall $152 million short of projections in fiscal 2012 and $307.7 million short in 2013, with the latter number assuming the enactment of Christie’s tax cut plan. The first phase of that plan would cut income tax revenue by $183.3 million, according to the report, representing more than a third of the total 15-month shortfall.
In testimony before the Senate Budget and Appropriations Committee today, David J. Rosen, chief budget officer for OLS, said the overall picture is good, because state revenue is projected to continue its upward trajectory after declining from 2008 to 2010.
“Despite a scare or two, there is growing evidence that the national economic recovery is taking hold, and New Jersey is participating in the upturn,” Rosen said.
Elsewhere, Rosen’s office projects sales tax collections to outpace Christie’s projections in 2012 and 2013.
Corporate business taxes are expected to be in line with Christie’s 2012 estimate of $2.3 billion, but Rosen said his office takes a “slightly more cautious” approach to 2013, estimating revenues of $2.49 billion, rather than Christie’s $2.57 billion plan.
If Christie’s projections were met, the state would have a $300 million (0.9 percent) surplus at the end of fiscal 2013. OLS believes the state is actually in line to have a $236.9 million deficit.
Though much of Rosen’s testimony was positive, he said the surplus/deficit line was worth watching.
“A budget that anticipates a surplus of less than 1 percent, while relying on revenue forecasts that fall at the high end of the likely range, might raise concern,” he said.