Yesterday’s bad news about state tax collections falling short produced some good news: the Senate Budget Committee is postponing its consideration of Senate President Sweeney’s 10 percent property tax credit bill.

Maybe the committee can take up the issue again, say in October when everyone will know how tax collections finished in FY2012 ending in June and in the first quarter of FY2013. Or maybe legislators will want to put off tax cuts until after New Jersey is restored to fiscal health.

High property taxes have been at the center of politics and political promises for four decades. Everyone hates them and everyone promises to do something about them.

Recent Republican governors have adopted the same approach: let’s cut off the revenues to the only fund that is constitutionally dedicated to reducing property taxes. Governor Whitman convinced the legislature to cut the supply by 30 percent slashing of income tax rates. Governor Christie is following suit by pushing a 10 percent reduction.

Funny, all the promises about paying for the tax cut with reductions in state spending fall by the wayside. Instead, governors and legislatures simply fail to pay the bill for pensions and health benefits (the unfunded liability for which now total $91 billion).

Cheers, then, to Senator Sarlo and other leaders who are suggesting that the state may lack the wherewithal to start cutting taxes.

By deferring action until the fall at the earliest the legislature can turn its full attention to producing a balanced budget for next year. And it will give everyone time to consider the consequences of cutting tax revenues in a state that would be bankrupt if it were a corporation.

Axing the tax cut also provides $183 million to help offset the revenue shortfall. That’s right, all this talk about tax cuts applies either to the $12 billion raised by the income tax (1.5%) or the $25 billion raised by the property tax (.7 of 1%).

After the FY 2013 budget is adopted the legislature should hold hearings over the summer to seeking public reaction to the three tax reduction proposals and to consider their longer-term consequences of the proposals. It might decide that any “extra” funds should be invested in those things that are essential for future prosperity like infrastructure, higher education, and better opportunities for working families.

By mid-October, everyone will know the actual revenue collections for FY 2012 and the first quarter of FY 2013. Based on this certain knowledge, the legislature can seek answers to important questions, such as:

What pays off more: helping middle-class families with higher education costs or spreading barely visible tax cuts across all households?

Should the legislature pay for any tax cuts by raising additional revenue – e.g.. the Assembly proposal to increase taxes on income over $1 million?

Today’s announcement is encouraging. Now lets take the next step: to adopt a responsible FY 2013 budget free of gimmicks and tax cuts.

“This is one month’s worth of collections. We still have two months.” – Kevin Roberts, spokesman for Governor Christie, reacting to yesterday’s dreary reports on April revenue collections

The Christie administration is either in denial about the state’s potential revenue shortfall, or it is just trying to bide some time before admitting that the “New Jersey Comeback” isn’t all it’s cracked up to be.

April is to the state taxman what December is to Christmas tree sales. If run by the Christie administration, it would be banking on sales picking up in January.

In order to reach the administration’s estimates for FY 2012, revenues for the remainder of the year would have to grow by 12 percent. Since the growth through April is only 2 percent, it is beyond reality that 12 percent growth can be achieved in May and June.

A look at the numbers:

• The administration estimates $25.838 billion in FY 2012 revenues from the 14 major taxes that are included in the monthly reports.

• Last year, the state collected $5.8 billion from these taxes after April.

• In order to reach the $25.838 billion revenue projection, the state will need to collect $6.5 billion for the remainder of this year. This $700 million difference would represent a 12 percent increase.

From Bloomberg Businessweek, May 16, 2012:

Governor Chris Christie, a Republican who has spent the past four months promising New Jersey income-tax cuts, now confronts the challenge of selling his plan’s feasibility against a backdrop of continuing revenue shortfalls.

NJPP president Gordon MacInnes said this is no time to cut taxes.

“New Jersey already has the third-lowest credit rating in the country, greatly increasing our borrowing costs,” MacInnes said. “Our leaders should concentrate first on putting the state’s fiscal house in order, not on politically appealing, but reckless, proposals to cut taxes. This is exactly how we got into this mess.”

From NJ Spotlight, May 16, 2012:

Yesterday, the Treasury Department’s release of the much-anticipated April revenue figures sent shock waves through the legislature with its acknowledgement that state revenues are running $230.3 million below expectations, with just two months to go in the fiscal year.

Just one day after Christie and Senate President Stephen Sweeney (D-Gloucester) reached apparent agreement on a compromise tax cut proposal, lower-than-expected income and corporate tax collections led legislators to question whether the state should go ahead with any tax cut at all.

NJPP president Gordon MacInnes declared that “today’s revenue numbers document what we’ve been saying all along: This is no time to be cutting taxes.

“New Jersey already has the third-lowest credit rating in the country, greatly increasing our borrowing costs,” MacInnes noted. “Our leaders should concentrate first on putting the state’s fiscal house in order, not on politically appealing, but reckless, proposals to cut taxes. This is exactly how we got into this mess.”

From The Record, May 15, 2012:

Governor Christie’s “Jersey Comeback” will need a comeback of its own now that a shortfall in state tax revenue threatens to upend his bold predictions that the economy will grow enough to pay for across-the-board income tax cuts next year.

Revenues are still mildly ahead for the year, but they fell 5 percent below budget estimates for April — casting a shadow over the opti­mistic spending plan that Christie laid out with bravura three months ago when he promised not only to expand programs in the new fiscal year but also to launch his 10 per­cent income tax cuts.

“This is no time to be cutting taxes,” said NJPP president Gordon MacInnes.

“Our leaders should concentrate first on putting the state’s fiscal house in order, not on politically appealing, but reckless, proposals to cut taxes.”

From The Philadelphia Inquirer, May 16, 2012:

Tax collections in New Jersey are running $230 million behind Gov. Christie’s projections after April revenue came up short, according to a state Treasury report released Tuesday. If the trend continues, Christie and lawmakers may have to revise their plans to cut taxes, or they may have to find other places to trim the budget.

NJPP budget analyst David Rousseau said Christie overshot when he based his budget on a robust growth of 7.3 percent in tax collections. Without adjustments to the budget, the state could run out of money before the end of fiscal year 2013, which begins July 1.

“I think the shortfall is somewhere between $500 million on the low side and approaching a billion on the high side,” said Rousseau. “This isn’t the time [for tax cuts]. . . . They would be better off making sure the fiscal house is sound.”

Just hours after both the Christie administration and the Office of Legislative Services issued gloomy revenue reports for April yesterday, NJPP budget analyst David Rousseau spoke to NJ Today‘s Mike Schneider about what the numbers mean for next year’s budget and for the tax cut proposals being discussed in Trenton.

A drop in revenue this year can have a snowball effect with the shortfall carrying over into the next year, he noted.

“You really have to look at whether the 7-plus percent growth rate that the governor had in his budget for 2013 is realistic at all any more,” Rousseau said.

When asked about how all this plays into the talk of tax cuts, Rousseau said the state’s leaders need to be more cautious and deliberative.

“I think that right now everyone needs to slow down,” he said. “It’s not the time to move forward on the tax cuts.”

“Let’s see what the administration has to offset the revenue shortfall and then move from there,” he added. “Clearly it’s not time to rush to judgement on this and it probably should wait at least until next year when we see what the economy is like, and maybe even for longer than that, until we really get some of the other needs that need to be addressed in this state taken care of.”

Watch Former State Treasurer Says Now Is Not the Time For Tax Cuts on PBS. See more from WNJT.

The Christie administration and the Office of Legislative Services (OLS) have released their revenue numbers for the crucial month of April … and they aren’t pretty.

It’s now clear that OLS’s earlier estimate of a $550 million shortfall was optimistic, and that the overall shortfall could approach $1 billion.

These numbers set the stage for the updated revenue projections for FY 2012 and FY 2013 that will be presented by the state treasurer and OLS next week. Those revised numbers will govern the debate over the changes that will need to be made to the governor’s proposed budget.

The Treasury’s report says overall collections for the major taxes are 1.2 percent below the already revised projections. If this trend continues over the final two months of the fiscal year, the state is looking at a potential shortfall of over $300 million for the current fiscal year and a total shortfall of at least $600 million for this and next fiscal year – and possibly more when the administration is forced to review its optimistic growth rates for FY 2013.

April income and corporate tax collections were actually below the amounts collected last year. In fact, revenue for all major taxes was less in April 2012 ($3.257 billion) than in April 2011 ($3.322 billion). The administration’s budget had projected an increase to $3.44 billion for April 2012.

OLS reports that major tax revenues are growing at about half the rate that the administration’s budget had assumed (2.7 percent versus 4.8 percent). Income tax growth is particularly weak, with OLS reporting year-to-date growth of 2 percent, substantially below the 4.9 percent expected by this year’s budget. This trend could result in a two-year revenue shortfall that approaches $1 billion.

These numbers make the administration’s estimated FY 2013 income tax growth rate of 8.4 percent seem even more unrealistic than it did in March. Now, even OLS’s projected FY 2013 growth rate of 7 percent seems to be overly optimistic. The growth estimates for sales and corporate taxes will also need to be revised based on the current trends.

So what’s next?

OLS and the administration will now combine this information with current economic projections to determine their respective revenue estimates for the remainder of this year and FY 2013. There is now no doubt that the administration must reduce its estimates for the current year and next year. The big questions are how much they will adjust them, and what the resulting impact on the budget will be.

Perhaps the even more important questions are how much lower OLS’s estimates will be, and whose numbers the legislature will rely on – the optimistic numbers from the administration, or the conservative numbers from OLS. History suggests that the legislature, regardless of party, will lean towards the higher revenue estimates, allowing them to spend more and limiting the number of additional budget cuts that have to be made.

Despite warnings from the Office of Legislative Services (OLS) that April income and corporate tax collections were down, the Senate leadership has scheduled consideration of their property tax credit proposal for this Thursday, May 17.

This committee will meet only days after the Treasurer formally releases the monthly revenue report and less than one week before the Treasurer and OLS provide Senate and Assembly budget committees with revised revenue projections for FY 2012 and FY 2013.

Based on the OLS warning last week, it is likely that the revenue projections may be even worse than the nearly $550 million shortfall projected by OLS in March. A revenue shortfall of that magnitude means substantial changes will need to be made to the governor’s budget presented in February.

Under these circumstances, the most sensible option is to postpone any tax cut beyond FY 2013. Instead, it looks like Senate leaders are trying to hurry their tax cut plan along. At the very least, they should wait until the revenue and budget picture becomes clearer.

With over $500 million in one-time revenue contrivances, a bottom-rated credit standing, and continued high unemployment, this is no time to be declaring fiscal stability in the Garden State.

From New Jersey Newsroom, May 10, 2012:

Gov. Chris Christie Thursday vetoed Democratic-sponsored legislation that would have begun to establish a health care exchange in New Jersey in line with President Obama’s Affordable Care Act.

NJPP senior policy analyst Raymond Castro was among those who criticized the governor’s veto.

“The governor’s veto is a major setback for the 1.3 million New Jerseyans who are uninsured, and the thousands more who can’t afford what little health coverage they have,” Castro said. “While 14 states have moved ahead to establish an exchange, New Jerseyans will have to wait for the Supreme Court decision on the Affordable Care Act. Worse, the governor does not provide an alternative if the high court does not support the Act. No matter what the Supreme Court decides, more state leadership is urgently needed to solve the growing uninsurance problem, which is threatening our state’s health and its economy.”