The budget debate in Trenton took another unexpected turn Monday, as representatives from the state Office of Legislative Services revealed unprecedented tax revenue figures.
“We saw an unprecedented April surge over its already elevated historical base,” said David Drescher, chief of OLS’ revenue, finance, and appropriations section. “Accordingly, we’ve increased our GIT forecast by $3.6 billion over the two years. This will leave the state considerably better positioned than we originally envisioned, some $6.9 billion or 7.7% over the executive’s forecast of just a few months ago.”
Drescher said to call this surge a surprise would be an understatement. The best explanation he could offer for it was related to the boom of financial markets and an overheated economy over the past 12 months.
“In light of the dive in stock markets that started beginning this calendar year, we do not expect this behavior to continue,” Drescher said. “The major question is to what extent is the tremendous revenue growth we’ve witnessed over the past two years sustainable into the future?”
Senate Budget & Appropriations Chairman Paul Sarlo, D-36th District, also emphasized the magnitude of the figure:
Unprecedented, quite frankly, I think, in the history of the state of New Jersey.
Not surprisingly, there are different ideas of how to allocate these funds and what to prioritize.
Gov. Phil Murphy has proposed an ANCHOR Property Tax Program that his administration says would distribute $900 million in property tax relief to nearly 1.8 million homeowners and renters. But, Republicans call the plan underwhelming and have instead proposed their own “Give It Back” tax rebates that they said would combine to return $4.5 billion of direct tax relief to New Jersey families.
“Tax collection reports make it clear that the Murphy administration must acknowledge that his tax policies are taking at least $5 billion more out of the pockets of taxpayers than the governor projected in March, and possibly billions more,” said Senate Republican Leader Steven Oroho, R-24th District, “When New Jersey families are struggling with soaring prices and inflation, we believe Gov. Murphy must commit to giving back these overcollections immediately to families that are suffering today. We plan on expanding the ‘Give It Back’ rebates that Senate Republicans have already proposed.”
“My Republican colleagues and I have proposed putting $1,500 of direct relief into the pockets of New Jersey families to help combat the pain caused by soaring gas prices and inflation,” said Senate Republican Budget Officer Declan O’Scanlon, R-13th District. “As we learn that the Murphy administration has collected billions more in taxes than he previously acknowledged, it becomes harder and harder for the governor to not ‘Give It Back’ to taxpayers as Republicans have proposed. In fact, we believe there is room to expand our tax relief plan even more in the final budget.”
Meanwhile, Assembly Speaker Craig Coughlin, D-19th District, in a statement following the update on revenue surges, said it is welcome news.
“We have additional money this year, and New Jersey needs tax relief now. In this year’s budget, I will insist on the largest tax relief program in state history,” Coughlin said. “I look forward to working with legislative leadership and the governor over the coming weeks to craft this proposal and deliver on that promise for the people of New Jersey. With reasons to be cautious on the horizon, we will also make sure to leverage our surplus so we are ready to weather any storm coming our way.”
“With revenue being so far above what any projections could have been, don’t you think this is a really good time to maybe ease up on, let’s say, CBT (corporate business tax), or income tax,” asked state Sen. Michael Testa, R-1st District. “And isn’t this the time now that our residents, our citizens of the state of New Jersey need relief?”
While lawmakers have different ideas of how to spend the windfall, which will be hashed out over the coming weeks, one thing is certain: New Jersey’s financial health appears relatively stable, especially emerging from the pandemic.
“The state has plenty of resources that will help to weather whatever future disruption might be on the horizon,” Drescher said.