Is Last Year’s Revenue Coming in $150 Million Above or $150 Million Below Projections?
Both the State Treasurer and the Office of Legislative Services (OLS) have released their monthly reports on New Jersey’s June tax collections. Their interpretations of the same numbers may leave readers scratching their heads.
First, the treasurer reports that revenue collections through June are $143 million ahead of estimates that were last revised in May, with only partial collections for July still to be accounted for. Collections from the income tax continue to offset shortfalls in many of the other taxes. It is important to note that the administration is comparing the actual collections to projections that have been reduced by nearly $550 million from the amount first certified for the FY 2013 budget.
Conversely, OLS reports that revenue collections through June have grown by 6.6 percent, short of the estimated growth rate of 7.2 percent. Applying the 0.6 percent difference to $25 billion in major tax revenue would produce a shortfall of $150 million.
The revenue collections are still clouded by the delay in the payment of income tax refunds from this past April’s tax filings.
The story should be less confusing by early September when the administration and the state auditor clean up the details like receipts in July that belong in FY 2013, and OLS reports on the actual collection levels for the major taxes.
If the conclusion that can be drawn from the OLS report is correct, last year’s major revenue collections will be off by $150 million and, absent positive adjustments in minor revenues or spending levels, this year’s projected $300 million surplus will be cut in half. This will be the first “known” impact on the FY 2014 budget. All the other risks we have outlined would still be in play.
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