Senate committee probes N.J.'s revenue shortfall
The state's lackluster revenue picture was the topic today as the Senate Budget and Appropriations Committee held its first meeting of the year.
The committee heard testimony from David Rosen, the budget and finance officer at the Office of Legislative Services. The committee did not, however, hear from Treasurer Andrew Sidamon-Eristoff, who declined an invitation to speak before the committee. Committee Chairman Paul Sarlo (D-Wood-Ridge) said he sent the treasurer's office four additional dates in hopes of scheduling hearing on the matter for later this month.
In a press release prior to the hearing, Sarlo said the budget problem was bad before Hurricane Sandy struck, but became urgent in the storm's wake.
"The administration needs to acknowledge the severity of the problem, and propose real solutions to the Legislature and the residents of New Jersey," Sarlo said.
The state's budget for fiscal 2013 factored in revenue growth of 7.2 percent, a rate Democrats called overly optimistic. As of October, the state was nearly $264 million behind its revenue target, but revenue fell sharply in November due to Sandy, and as of Nov. 30, New Jersey is now $451 million short of its goal.
In a statement last month announcing November's revenue numbers, Sidamon-Eristoff expressed optimism that Sandy would have the opposite effect in the coming months, saying "spending on the recovery is expected to create opportunities that should be positive for some types of revenue in the second half of the fiscal year."
Rosen told the committee the state's revenue problem is broad. He said sales and income taxes are both below targets, the former is not only behind its target, but are also behind fiscal 2012 levels. Income taxes are in better shape, he said, but still below projections.
"It is likely that Hurricane Sandy has, and will have, some adverse impact on revenue collections, at least in the short run," Rosen said. "However, so far it would appear that the impact is minor, except in the case of casino revenues. Collection patterns, except for casino revenue, post-Sandy are very similar to those pre-Sandy."
Rosen said Sandy's rebuilding could create a revenue bump in the coming months. He said an increase in federal tax rates just passed by Congress also had the effect of causing some high-income individuals to move income into 2012 to avoid the higher 2013 tax rates.
Still, Rosen said those revenues may not be enough.
"While we anticipate that these two factors will have a positive impact on revenues, they're unlikely to fully overcome the broader revenue issues we face this year," he said.
As is, Rosen said revenue would need to grow by 11.9 percent the rest of the year to meet targets.
The revenue picture has dimmed hopes for the 10 percent income tax cut Christie proposed in his State of the State address last year. The Democrat-controlled Legislature set aside $183 million in the 2013 budget for tax cuts, but said the cuts would only go into effect if revenues came in on target.