New Jersey Gov. Jon Corzine announced Wednesday that the state faces a $5 billion deficit for fiscal 2010 and a $1.2 billion shortfall in the current fiscal budget due to underperforming income and sales tax revenues.
The lower-than-expected October revenues prompted officials to revise the fiscal 2009 budget shortfall from last month’s $400 million estimate. Individual income tax receipts were $115.9 million, or 14% below October targets, while sales tax revenue came in at $27.7 million, or 4% below projections for the month. Business tax receipts dropped as well, with the state collecting $29.7 million, or 15.7% fewer corporate tax receipts.
Overall, the state generated $8.56 billion of total revenues from July through October, though the amount is $257.9 million below year-to-date targets. Personal income tax receipts are down by $152.6 million, or 5.6%, and sales tax revenues are down $85.3 million, or 3%. Conversely, corporate tax revenues are $1.7 million, or 0.2%, above year-to-date projections.
Corzine spoke to reporters about the new deficit numbers and said the executive branch will continue to look for spending cuts to the current budget of nearly $32 billion.
“We have been working on continuing to develop our spending in a way that will make sure that we have revenues matching expenditures of that $31.7 billion,” Corzine said. “We will work to that with regard to our spending to come up with the full effort that we talked about. We are in the process of reviewing line by line more cabinet cuts, which is intended to get to around $600 million in additional cuts for those folks. We are in the process of reviewing the major contracts that we have with outside vendors and consultants. As I suggested in the speech several weeks ago, we will also look at any capital expenditures as well.”
While New Jersey is feeling the effects of Wall Street layoffs, the governor said the drop in personal income tax revenue and expected future revenue drops will account for downturns in other industries beyond financial services. In addition, Corzine said any end-of-year Wall Street bonuses would affect New York’s revenue projections as Garden State residents pay taxes on those bonuses to the Empire State and New York City.
“We have pretty challenging waters ahead with regard to what is happening with financial services,” Corzine said. “I think you have probably seen more [declines] in gaming, and other downsizing as opposed to financial services. New Jersey is less dependent on the bonus aspect of Wall Street than is New York City and New York State because New Jersey residents pay the taxes there and don’t pay them here. You’ll see downsizing in casinos, in pharmaceuticals, but I don’t think that it was the Wall Street push that stands out in these numbers. The financial services do not stick out the way that construction does.”
Meanwhile, Connecticut Gov. M. Jodi Rell announced future deficit projections for the state. Connecticut now faces a $2.6 billion shortfall for fiscal 2010, which begins July 1, and a $3.3 billion budget gap for fiscal 2011. Lawmakers will begin a special session on Nov. 24 to address the state’s $302 million shortfall for the current fiscal year. Rell has proposed spending cuts to fill that gap and continues to favor belt-tightening over raising taxes.
“I have offered spending cuts up to the amount allowed by state law,” Rell said in a press release. “Today’s projections clearly show that more cuts will be needed. No area of government will be sacrosanct from cuts because no part of our economy has been unaffected. Families already struggling in this economy are not responsible for the mess the economy is in — but they are already paying the price and the price is too high. They cannot afford to pay even more in taxes — at any level of government.”