Even After Plugging $800 Million Budget Gap, New Jersey May Need to Do Even More to Balance This Year’s Spending Plan
Just two months after the administration plugged a current-year budget gap of nearly $800 million, New Jersey may now be facing an additional budget shortfall of up to $300 million.
As of March, major revenue collections are already $145 million below the projections that were just adjusted downward by nearly $200 million in February as year-to-date collections have grown by 4.5 percent rather than the 5.9 percent target, according to the administration’s latest monthly revenue report. This additional collection data reflects that the Office of Legislative Services (OLS) projection that current year revenue may be $217 million less than the revised administration estimates may be accurate.
Approximately half ($75 million) of the administration’s acknowledged shortfall is the result of lower-than-projected income tax collections, which are growing at less than half (3.1 percent) the rate assumed in the revised budget (6.8 percent).
But when it comes to tax collections, April is the big month, and income tax collections could still catch up to projections. So far, though, more of the early tax returns are resulting in refunds than in additional payments.
Elsewhere, internet gambling revenue is increasing, but not enough to hit the administration’s latest targets. Internet gambling revenue for the year is just $6 million and unlikely to hit the $34 million goal (a revised projection from the initial $160 million target), though the final tax take could exceed the OLS estimate of $12 million.
Meanwhile, the estimated cost of this winter’s snow removal is now $25 million higher than in February, while it looks less likely the state will receive the $60 million it expects from legal settlements, according to a new bond offering statement.
Add all the bad news up and New Jersey could end up $250 million to $300 million short by the end of June. The state has already resorted to questionable fiscal measures like retroactively reducing the contribution to the pension system and selling off future tobacco settlement dollars. If the state is to maintain the anticipated $300 million surplus additional actions will be needed to offset whatever the shortfall is for the year. But with only three months left, the state’s options are limited. And, of course, if the surplus is less than the $300 million, it starts next year’s budget off on a bad foot. (In addition, the lower collections for the current year should also result in a similar reduction in the revenue estimates for the upcoming year.)
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