Gov. Chris Christie’s budget proposal includes revenue estimates that are far too optimistic.
That pronouncement came Tuesday from New Jersey’s Office of Legislative Services, a nonpartisan research group that provides information for N.J. lawmakers.
They say that income-tax revenue over the next 15 months is likely to come in about $500 million short of what the governor has been counting on.
Complicating the matter, they say, is that Christie’s budget hasn’t put enough safeguard dollars in place for such an outcome. Essentially, they say, if the state is going to count on high returns, it should have a bigger contingency fund just in case those returns don’t come through.
“A budget that anticipates a surplus of less than 1 percent while relying on revenue forecasts that fall at the high end of the likely range might raise concern,” said David Rosen, chief fiscal officer of the OLS.
The Christie Administration stands by its estimates.
They say the particulars of the state’s income-tax code make them primed to see a stark influx in tax revenue as the economy recovers. They point specifically to the fact that — compared with other states — a high percentage of their income-tax revenue comes from residents who profit from capital gains (as opposed to traditional working income). This fact, they say, bodes well for them in the current economic climate.
“We expect that we would see a faster acceleration of revenue as we come out of a recession. The history and the data support our view of it,” said state Treasurer Andrew Eristoff.
Last month, Christie’s laid out a budget plan that he said would spearhead a “New Jersey comeback.” The state’s financial house would be put in order and residents would receive a 10-percent income tax cut. Inherent in this plan was an expectation that the state would see a sharp uptick in overall income tax revenue.
It’s yet to be seen what will happen to this comeback if, as the OLS predicts, that uptick doesn’t occur.
Tuesday’s testimony was just a preview of what’s likely to be a long process of mutual compromise as the legislative and executive branches work on the budget’s final version.
The Democratic-led Legislature must pass the budget by the end of the current fiscal year on June 30. Christie will sign the new spending plan July 1.