State revenue drops in April, missing expectations, as tax cut talk looms large
State tax collections in April fell short of budget expectations and declined versus April 2011, leaving New Jersey's revenues $230.3 million behind February's revised forecasts for the first 10 months of the fiscal year.
The state took in $3.26 billion last month, down from $3.32 billion last year and 5 percent lower than the $3.44 billion forecast listed in the governor's revised fiscal 2012 budget.
For the first 10 months of the fiscal year, revenue was $19.3 billion, a half-billion-dollar increase over the $18.8 billion brought in by this point last year.
In a press release, Treasury's chief economist, Charles Steindel, emphasized the positive numbers, saying "reliable indicators" suggest the state's economy continues to grow.
"Economic growth has brought in more revenue for the state in fiscal year 2012 than in 2011," he said, "which is a good sign for the future."
Corporate business taxes fell to $463 million in April 2012, down from $547.1 million last year. Income taxes also fell year-over-year in April, totaling $1.73 million in 2012 versus $1.75 million in April 2011. Sales taxes, however, rose to $732.8 million last month, up from $705.8 million last year.
The slumping revenue figures come at a time when Gov. Chris Christie wants to phase in a 10 percent income tax cut, and legislative Democrats are offering a counter-proposal that would emphasize property tax cuts. The governor was reportedly set to announce a tax cut deal with Senate President Stephen Sweeney (D-West Deptford) on Monday, but a joint press conference was canceled at the last minute.
Michael Egenton, senior vice president at the New Jersey Chamber of Commerce, said despite the lackluster revenue numbers, he’s optimistic about the prospects of a tax cut.
“I don’t think we should lose the focus and strategic vision of what the benefit of the income tax will mean, particularly to growth in the small, middle-market (sector),” he said.
Egenton said an income tax cut would help chamber members large and small hire more employees and reinforce the idea that New Jersey is a good place to grow and maintain a business.
And regardless of what comes out of the tax cut negotiations currently taking place, Egenton said he’s happy to both parties working together now instead of waiting until the last minute next month.
“We commend the fact that those discussions are going on,” he said.
But Assembly Majority Leader Lou Greenwald was quick to tout the revenue numbers as evidence the governor "built his plan on a shaky foundation."
Greenwald (D-Voorhees) argued Christie's income tax cut disproportionately benefits millionaires while giving "crumbs" to the middle class. He said the Democrats' plan would ask the wealthy to give up tax breaks.
"As a result, our plan delivers real property tax relief to 95 percent of homeowners, not just a town hall slogan built on a house of cards," Greenwald said.