Is Next Year’s Potential Revenue Shortfall Now $1.2 Billion?
A detail in the Moody’s report on its New Jersey credit downgrade suggests that next year’s budget shortfall could now be 50 percent higher than the amount assumed by observers after the administration acknowledged this year’s budget gap in late April.
The report refers to “$1.2 billion of potential revenue shortfalls” for the budget that begins July 1, far more than the $600 to 800 million shortfall already assumed. Of course, as we noted last week, the gap could grow if the solutions for plugging this year’s $807 million hole include deferrals to next year.
Moody’s estimates that New Jersey’s total “structural gap” in next year’s spending plan will be “up to $3 billion” – nearly 9 percent of the budget. This figure includes $1 billion of one-time actions already assumed when the governor first unveiled the budget in February, the potential $1.2 billion in potential revenue shortfall and any additional shortfall for the upcoming year caused by balancing the current budget.
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