The state Legislature and Murphy administration are off by $1.4 billion on how much tax revenue the state should expect to see by the middle of next year, and a top Senate budget lawmaker said the administration needs to “reconcile” those numbers.

“I implore Treasury to go back and take a closer look at their assumptions to see if we can close this gap at all,” Senate Budget Chair Paul Sarlo, D-36th District, said during an hour-long budget hearing on Gov. Phil Murphy’s $32.4 billion spending plan Tuesday, which will cover expenses for just nine months to account for the COVID-19 pandemic.

The massive gap – the largest ever – sets up a political showdown as Murphy tries to make the case for more than $1 billion in new taxes and other sources of revenue, and $4 billion of spending. With higher tax revenue meaning fewer programs that would see funding gutted.

Republicans are fervently opposed, and Democratic legislative leaders remain cautious.

Getting to the bottom of those differences, Sarlo argued, is vital to gauging just how much the state actually needs to borrow, and what new taxes are actually necessary.

And he wants the administration to scrutinize why there are such gaping differences between the state treasury and the Office of Legislative Services, which put out the Tuesday numbers.

“We need to reconcile revenue projections right now,” the Senate budget chair told reporters following the hearing.

The OLS figures predict the state will come in at $37.8 billion between June 2020 and July 2021, a more optimistic projection than the $36.4 billion the state treasury is estimating.

“I hope they’re right,” the governor said when asked about the OLS projections during a COVID-19 press briefing in Trenton.

Since Murphy’s original budget address in February, the COVID-19 pandemic shattered the state economy, shuttering tens of thousands of businesses, forcing 1.5 million New Jerseyans out of work, and evaporating the sales, corporate business and income tax revenues on which the state relies.

Still, this new spending plan and the three-month budget that covers expenses through Sept. 30, means the state will spend a record-high $40.1 billion during a 12-month window.

Murphy’s budget calls for higher taxes on millionaires, an extension of the increased tax on the state’s highest-earning businesses, and taxes on cigarettes.

The plan the governor proposed also relies on roughly $5 billion in one-time revenues, which Frank Haines, the OLS’ legislative and budget finance officer warned, could make balancing future budgets far more difficult.

“That means that if this budget is adopted as proposed … you’re going to go into fiscal year 2022 with a significant structural deficit,” he told lawmakers. “The larger you make that structural deficit, the more difficult it’s going to be to craft the next budget without disruptions.”

David Drescher, who heads the revenue, finance and appropriations section of OLS, told lawmakers on Tuesday that the differences are “the largest … our two agencies have ever had.”

“A second wave of infections that forces new economic restrictions would almost certainly prove us wrong. Change in federal policy from the Federal Reserve, Congress, or the White House could either assist or derail the recovery,” he added.