New Jersey’s major taxes produced $254 million less in FY 2012 than the amount the administration projected just 11 weeks ago at the budget signing for FY 2013, according to a new report by the Office of Legislative Services (OLS).
The final FY 2012 revenue for the 14 major taxes reported monthly was $25.377, not the $25.63 billion anticipated by the administration. Assuming that the administration’s projections for remaining miscellaneous revenues and spending in FY 2012 are on target, this quarter-billion shortfall takes away nearly half of the $570 million surplus the administration hoped to carry into FY 2013.
These numbers mean that total resources for FY 2013 revenues will likely be at least $500 million lower than expected, since the shortfall also creates an equal-sized reduction in base FY 2013 revenue.
The overall growth rate for these 14 taxes in FY 2012 was just 2.9 percent, according to OLS but the administration expects revenues to grow by 7.5 percent in the current fiscal year. Such robust increases in tax collections might be possible in an economy that is snapping back, but are unlikely in New Jersey’s staggering crawl out of the recession. (Even if the FY 2013 estimates are reduced by the $254 million, the state would still need growth of 6.5 percent, still more than double the FY 2012 rate.)
If these numbers hold and total resources for FY 2013 are off by at least $500 million, the projected unrestricted $465 million surplus would be exhausted and a portion of the $183 million reserved for a potential tax cut would be eliminated.
Let’s trust that the latest in a long line of missed revenue targets eliminate, once and for all, talk of a tax cut this year. It’s increasingly clear New Jersey can’t afford to go down that path. And no fiscal conservative would suggest borrowing the funds for a tax cut from our kids and grandkids, as the administration proposed.
Help us help New Jersey's working families. Make a tax-deductible donation today.